Southeast Asia’s tech giants might “gobble up” startups after going public, says the enterprise capitalist

SINGAPORE – Southeast Asia’s tech giants could buy startups with money they receive when they go public, according to an early-stage managing partner of a venture capital firm.

“They will basically devour a bunch of startups,” Vinnie Lauria of Golden Gate Ventures told CNBC’s Street Signs Asia on Friday.

He said that if Indonesian giants Gojek and Tokopedia successfully merged, Grab, Sea and GoTo, the combined company, would be among the likely buyers.

“When they’re listed on a stock exchange, they have the capital to grow and valuation for these types of acquisitions – a mix of cash and equity,” he said.

Lauria noted that this “is exactly what happened in China 10-15 years ago” when Baidu, Alibaba and Tencent bought out smaller companies.

Southeast Asia’s technology leader

SoftBank-backed Grab announced earlier this month that it would go public in a $ 39.6 billion deal as part of a SPAC merger with Altimeter Group. This is the largest such merger to date.

Special purpose vehicles are shell companies that raise capital and merge with or acquire private companies. These deals offer companies an alternative route to IPO that bypasses the traditional IPO.

Sea, which is listed on the New York Stock Exchange, held its IPO in 2017. The GoTo merger has not yet been completed and both Gojek and Tokopedia are still private companies.

Lauria said his company estimates that by 2025 there will be “a few hundred acquisitions, mainly led by these Dekakorns”. The term “Decacorn” refers to a startup valued at over $ 10 billion.

Bicycle passengers wear a helmet with the Gojek logo.

afif c. kusuma | iStock Editorial | Getty Images

Lauria said the Southeast Asian startup ecosystem may also reach a stage where some investors want a payout.

“(They) will not necessarily be pushing for the company to sell itself, but they will look for second buyers. They will be very interested in a merger, some kind of M&A deal,” he said.

“Secondary markets – which were very, very low in Southeast Asia – are expecting a very strong recovery there,” he added.

Undervalued Sectors

In terms of sectors with growth potential in Southeast Asia, Lauria still considers Fintech to be “very undervalued”.

“There are great opportunities ahead as Visa and MasterCard do not have the same level of penetration in Southeast Asia and therefore alternative payments will be enormous,” he said.

Health care and education are also areas of interest.

“Anything that has to do with health technology is going to be great,” he said, and investors should be “definitely” into educational technology.

“It’s going to be very different in Southeast Asia than it is in the western world, and we’re going to see some really interesting innovations here,” he said.

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