What Viki’s USD 200M exit means for Singapore’s startup ecosystem

Rakuten’s reported USD 200M acquisition of Singapore and San Francisco based startup Viki is by many accounts positive news. In fact, it is the biggest known exit for a Singapore web and mobile startup in recent memory, eclipsing sgCarMart’s USD 48M deal earlier this year.

While large exits are lucrative for investors, their benefits go beyond the monetary: They create a virtuous cycle of innovation that sustains startup ecosystems.

Exits ensure a re-circulation of talent and capital. Founders can go back into the game or use their returns to invest in startups. As mentors, they can guide the next generation of entrepreneurs on turning a solo project into a profitable 100-person company, how to negotiate deals, and how to exit.

Would-be investors and entrepreneurs would take a closer look at tech startups. For investors, it’s all about the ROI on their capital. For entrepreneurs, it’s about whether a particular country is a viable place to start a tech company.

Exits make startup life more glamorous. Of course, never underestimate the pitfalls and psychological sacrifices of starting up. But every risk must have its reward, and the higher the upside, the more people would be willing to go down this route.

So, given how acquisitions can benefit the startup ecosystem, it should definitely be an indicator to watch out for.

But just how groundbreaking is this USD 200m deal? Here’s the TL;DR version: it adds credibility to Southeast Asia’s ecosystem, but that doesn’t mean that Singapore is in the top echelon of tech innovation.

Let’s break it down:

Viki is a win not just for Singapore, but for Southeast Asia.

First, let me emphasize that Southeast Asia is not just about Singapore. Far from it. There are thriving ecosystems in Philippines, Indonesia, Vietnam, and Thailand. These markets are huge, full of potential and are set to grow even bigger as millions more discover the Internet.

That said, Singapore plays a crucial role in the region. Its business-friendly tax policies, efficient government, and low corruption make it an attractive place to form a startup or an investment firm. It’s a vibrant events hub too, serving as a safe and secure epicenter for the region’s startup communities. Many deals have their beginnings as chatter in Singapore.

So, any win for Singapore does have a knock-on effect on the region, since many startup dealmakers and investors located in Singapore are well-aware that there are problems in the region waiting to be solved, and savvy entrepreneurs who are out tackling them.

Southeast Asia’s ecosystem is on the up and up.

Four out of ten of the largest acquisitions in Southeast Asia occurred in the past two years. This year is especially significant for Singapore, with eight recorded deals and two of them (Viki and sgCarMart) landing in the tens of millions.

While not a well-known fact, Malaysia is seeing some success not in terms of acquisitions, but the number of tech companies going public. In fact, four out of five largest public tech firms in Southeast Asia hail from Malaysia, ranging from USD 56.99M to USD 268.20M in market cap, says Khailee Ng, an investor at 500 Startups: