20 unicorns will emerge in Southeast Asia by 2030, predicts Asia Partners’ Nick Nash

It’s a “golden age” for aspiring unicorns in Southeast Asia, according to Nick Nash, co-founder of growth equity investment firm Asia Partners. At current levels of affluence, the region is in a sweet spot – the same zone that China and Japan were at when a majority of their tech companies went public.

Nash was formerly the group president of internet company Sea, which runs gaming platform Garena, ecommerce site Shopee, and payments platform AirPay. He stepped down from the role in December 2018, after the Singapore-based firm’s October 2017 trade debut on the New York Stock Exchange. He went on to launch Asia Partners in January this year.

Asia Partners co-founder Nick Nash / Photo credit: Tech in Asia

Delivering the keynote address at the 2019 Tech in Asia Conference in Jakarta, Nash said that at present, Southeast Asia’ current zone of per capita income sits between China and India. At this zone, discretionary income increases exponentially – around six times – when income doubles, creating an opportunity for businesses looking to scale.

He added that most of the tech companies in China went public in or around that “zone of affluence” – a point where spendable income grows from 5% to 15% of total income – which occurred in the country between 2003 and 2013. Korea and Japan experienced a similar trajectory.

The same phenomenon could explain why it was challenging to build a large-scale business in India, despite its vast population potential of 1.3 billion. “On average, each of them only earns US$2,000 a year, and only US$100 of that is discretionary,” Nash said.

In comparison, with average incomes of US$4,600 a year and a discretionary income of about 15% of that or US$600, Southeast Asia’s affluence levels are equivalent to that of China’s in 2007. “We’re exactly 11 years behind China,” he continued.

He observed that every Chinese tech company that listed in the last 25 years did it in four steps. “They laid the table with telecommunications. [Then] they had a first generation of web companies, a second generation that was a little bit more specialized, and a third generation of very mobile-oriented companies that were also very offline-enabled.”

By studying the Chinese playbook, Nash predicts that 20 more unicorns will emerge from the region in the next decade, coming from sectors across online-to-offline, online health, social/chat, ecommerce logistics, and online travel, among others.

Playing to home court advantages

Southeast Asia’s complexities could be part of its home court advantage “because if something is complicated, at least we [Southeast Asians] can understand and navigate it,” Nash noted.

Local companies have prospered and even outdone their global competitors in some instances, thanks to their understanding of local markets as well as mastery of the supply chain and cross-border interactions.

“You’ve got six major economies, and all of them have a different gift,” Nash pointed out. Companies can go regional by capitalizing on each country’s relative strengths: the size of Thailand and Indonesia’s gross domestic product and population, Singapore’s accessibility global capital markets and abundance of technical talent – an advantage that Vietnam also has.

A missed opportunity