Where are the profitable tech firms in Southeast Asia?

Dear readers,

Last week, a founder asked me over coffee: “How many profitable tech companies are there in Southeast Asia?”

I replied: “You could probably count them with your fingers.”

I’m exaggerating, of course, but the truth is that many of the headline-hogging, well-funded tech startups in the region are losing money.

This shouldn’t be surprising, however, as venture-backed startups are supposed to sacrifice short-term profit for long-term gain. The ecosystem is also young, so give it time, I say.

Recent events, though, could change things. We’re at the part of the economic cycle where venture capitalists aren’t preaching “growth at all costs” and boasting about investing in a stable of unicorns anymore. Instead, they’re pushing for sustainable growth and gathering a herd of rhinos.

Profitability is an advantage when VC funding is scarce: It gives startups more financing options, such as securing loans or reinvesting profits.

In times like these, it helps to keep stock of who’s already there, and who’s on the way.

Ficus, a Vietnamese “new retail” company, looks to be close. Last week, it received US$50 million from Alibaba-backed fund eWTP Capital. The ecommerce logistics and retail firm logged US$176 million in revenue and US$25 million in net losses in 2019, with a gross margin of 32%. With credible founders and investors, Ficus could become a force to be reckoned with.

Other firms are already there. Here’s a couple we’ve written about last week:

Inmagine Group is the bootstrapping company behind popular stock asset site 123RF. It’s now fundraising to take on an industry Goliath: Adobe.

Biofourmis is a near-unicorn that has made AI and software that can detect the onset of heart failure symptoms. It can also customize treatments and prescriptions based on patient data. Its founder says the company is EBITDA-profitable, and its revenue in the first half of 2020 was already 10x more than what it had made the whole of 2019.

Here’s more that we’ve covered in the past (let me know if I missed any):