Asia’s tech industry is about to enter a golden age

Ebihara is the founding general partner of Rebright Partners, an early stage venture capital firm focused on Southeast Asia.

Until the last decade, two of the world’s major countries, United States and Japan, have been investing in what was then the third largest economy in the world: China.

But since the beginning of the 2010s, Japan has been shifting its investments into Southeast Asia and out of China, a trend reversal that began in 2013. The US, on the other hand, has been slowly but steadily increasing its investment in India while continually pumping money into China.

That was the first half of this decade. Here’s what been happening in Asia’s tech scene in the past year.

Southeast Asia is a growth engine

We witnessed a few massive, unprecedented fundraising deals in Southeast Asia.

Lazada raised US$250 million from Singaporean sovereign wealth fund Temasek at US$1.25 billion in valuation. This is the largest internet startup funding in Southeast Asia ever, to my knowledge. While Lazada is considered a Rocket Internet company, the latter actually owns only 23.8 percent of Lazada.

Their annual gross merchandizing volume (GMV) is estimated to reach US$270 million. That means the valuation is roughly four times of the GMV. Comparing ecommerce players between regions, their GMV ratio is rather interesting.

Meanwhile, Indonesian ecommerce leader Tokopedia raised US$100 million from US top tier venture capital firm Sequoia Capital and Japan’s largest telco and internet conglomerate, Softbank. Tokopedia’s valuation is unknown. According to Softbank documents, Tokopedia’s GMV last year was US$100 million.

Another mega deal that happened in Southeast Asia in 2014 was GrabTaxi. The taxi app grabbed US$250 million with an undisclosed valuation from Softbank. Wall Street Journal reports their valuation to be US$1 billion.

Beyond these deals, we’ve seen quite a number of fundraising deals in the US$10 million valuation and above range, such as Redmart, Bukalapak, and so on.

That’s phenomenal progress for Southeast Asia’s tech scene. It meant that Singapore’s total amount for venture capital funding (US$1.7 billion in 2013, 2014 could be double that amount) is significantly higher than Japan’s.

By the way, when I mention Singapore, I’m not just talking about Singapore startups. As the saying goes, “Singapore is the Delaware of Southeast Asia.”