At $3.75b, Garena is the most valuable startup in Southeast Asia

Nick Nash, group president of Garena at Tech in Asia Singapore Conference 2015

Garena, a startup founded in 2009 that morphed itself from a gaming company to an all-rounded internet firm, is reaping huge dividends. Its latest financing round skyrocketed its valuation to US$3.75 billion, making it the most valuable startup in Southeast Asia. The company is also on track to generate “well over US$300 million” in revenue this year.

Garena is largely made up of three big business units: Digital content, ecommerce, and payment. Its digital content business is highly profitable and is providing the needed fuel to fund its other fast growing units. The company’s big transformation is spearheaded by two of its fast-growing products: Shopee, a mobile ecommerce marketplace, and AirPay, an e-payment product.

It’s double Grab’s valuation, which now stands at US$1.8 billion.

Based on stats disclosed by Garena to Tech in Asia, Shopee has generated US$346 million in annualized gross merchandise volume (GMV) in February 2016 (about US$28.9 million per month). Comparing to its June 2015 annualized GMV, Shopee has grown by over 60 times.

Its payment platform, AirPay, has processed $337 million in annualized gross transaction volume in February 2016 (about US$28.1 million per month). At the gross margin level (not including marketing and operating costs), Airpay is profitable. Shopee isn’t profitable as the group focuses fully on growth as inspired by Jack Ma’s Taobao founding days.

“Shopee is the fastest growing ecommerce business the region has ever seen and is among the fastest growing in the world,” claimed Group President Nicholas Nash.

Shopee’s closest competitor is Carousell, a mobile e-commerce startup backed by Rakuten and Sequoia Capital. We have reached out to Carousell for comments and will update if we hear back.

A person familiar with Garena and Carousell data revealed to Tech in Asia that “Shopee’s valuation is definitely bigger than Carousell’s.” The person further added that Shopee’s total Android download count is way bigger than five million. Google Play stated that Carousell was downloaded in the range of one to five million times.

At US$3.75 billion, Garena has cemented its placing as the most valuable startup in Southeast Asia, doubling Grab’s valuation which currently stands at $1.8 billion. Its latest investor Khazanah Nasional Berhad is a sovereign wealth fund of the government of Malaysia with an investment portfolio that includes Alibaba, WeLab, Cainiao, Blippar and an indirect investment in Uber.

“We are proud to welcome Khazanah as a shareholder in Garena,” said Garena’s founder, chairman and group CEO, Forrest Li. “Khazanah’s deep experience in building world-class businesses will help us strengthen our leadership position across our digital content, ecommerce, and payment platforms and advance our global mission of ‘connecting the dots.’

Watch: The story of Garena