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View all search resultsWhat ASEAN’s big tech IPOs mean for angels
Despite massive user bases and ballooning valuations, even the region’s largest tech firms have yet to turn a profit.
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n just the first six months of 2021, Southeast Asian companies raised a record US$4.9 billion via initial public offerings (IPOs), a staggering 50 percent increase compared to the same period in 2019. Inarguably, the standout market was Indonesia, which saw 23 companies going public on its domestic exchange, the IDX. Among them was tech giant Bukalapak’s blockbuster listing in July 2021, which clocked in at a whopping US$1.5 billion.
Without a doubt, we’re on the eve of a domino sequence of big tech IPOs in the region. Bukalapak was just the beginning, and it was already preceded by Sea Group’s success on the Nasdaq. Both retail and institutional investors alike have a multitude of tech listings to look forward to: Grab’s Spac listing in New York, GoTo’s imminent listing on the IDX and Traveloka’s potential listing.
However, Southeast Asia’s angel investors have traditionally been much more hesitant when it comes to tech investing in the region. This is not exactly surprising. Investing in startups is a risky business, and even more so when you are an angel investor.
Angel investors are high-net-worth individuals and often back startups when they are in their most nascent phases (i.e. the pre-seed and seed stages). On top of financial backing, angel investors, with their experience in the industry and vast networks, usually provide some form of mentorship and look at investment horizons of five years or more. But, when it comes to the red-hot tech industry, startups come and go like the wind. Angels simply cannot afford to pour money into every tech venture they encounter.
Naturally, ASEAN’s angels tend to err on the side of caution. When it comes to dealmaking, a company’s plan for rapid growth and expansion takes a backseat to a solid roadmap to profitability and long-term sustainability.
Such a philosophy runs contrary to the tech investing maxim in the region today. Despite massive user bases and ballooning valuations, even the region’s largest tech firms have yet to turn a profit. Grab, despite its upcoming $40 billion Spac deal, is still burning through cash to stay afloat. Similarly, industry titans like GoTo and Sea Group remain unprofitable.
But the industry landscape is changing. Recent developments have proven that liquidity is now a very real prospect for angels. All this time, the question of liquidity has been rather blurry, especially for high net-worth individuals who are deciding whether to start early-stage angel investing in the tech space.
