India’s proxy battle for Southeast Asian tech

Disclosure: None of the companies mentioned here are clients of North Ridge Partners, with the exception of NextPay, which is a former client.

Everyone is talking about the proxy tech war between US and Chinese technology giants in Southeast Asia. It’s a discussion that has picked up significantly since the trade and geopolitical tensions between the two countries have escalated.

Today, however, let’s talk about another emerging influence in Southeast Asia: the quiet, steady, but surely increasing impact of Indian technology startups.

India has been known as an exporter of tech talent globally since the 1980s, and we’re now seeing it not only export talent but also export its startups to Southeast Asia via organic expansion, strategic investments, mergers and acquisitions, or joint-venture partnerships.

In this post, we look at some examples of such startups, the factors driving this trend, and what it means for the region’s technology ecosystem.

New wave of Indian startups in Southeast Asia

SoftBank-backed Oyo and Ola were among the first of the better-known Indian startups to adopt an aggressive international expansion strategy. In recent times, we’ve seen other lesser-known but well-funded startups also move into Southeast Asia.

Facebook and Sequoia Capital-backed Meesho, a social commerce platform founded in India in 2015, launched in Indonesia in early 2020 and has quickly grown to become the most downloaded social commerce app in the country. Meesho’s rise has largely been unopposed competitively in social commerce, as the sector is still in its relative infancy in Indonesia.

Livspace, a home interior and renovation platform that was established in Bangalore in 2014, recently raised US$90 million. Backed by Ingka Investments and Jungle Ventures, the company also announced its intention to further expand into Indonesia and Malaysia. It already operates in Singapore.

Meanwhile, Pine Labs, which is backed by PayPal Ventures, Sequoia Capital, and Temasek, has emerged as one of India’s foremost payment technology players. It’s got big plans for Southeast Asia after closing an investment round in January 2020 from Mastercard. In July 2020, the company made a strategic investment in Southeast Asian fintech platform Fave to access its regional merchant base and loyalty solutions.

CarDekho, an India-based car retail platform backed by Ping An and Sequoia Capital, has also raised a total of US$250 million since being founded in 2015. The startup expanded to Indonesia in 2016 via a joint venture with local media conglomerate Emtek Group and to the Philippines in 2019 after acquiring Carmudi from Rocket Internet. Its Indian competitor Droom already operates in Singapore and Malaysia and scaled into Thailand last year.

CarDekho and Droomm are battling each other while fending off competition from homegrown players such as Carro, Carsome, and BMG.

In a unique move, Indian fintech platform Ecaps and the Philippines’ Ayannah merged in June 2020 to form Ayannah Global, a pan-Asian open banking platform offering digital financial services to consumers and small and medium-sized enterprises (SMEs) in India, Philippines, Indonesia, and Vietnam.

There are several other examples of Indian startups that are expanding to Southeast Asia, establishing a base relatively quickly, and competing vigorously with local peers.

Similar market dynamics

Common evolving business models

Shared investor ecosystems

Proxy war?

Singapore as a launch pad into Southeast Asia

Long-term impact