Investor interest in Southeast Asia’s digital and technology start-ups has been on the rise of late, with private equity firm Belt Road Capital Management (BRCM) injecting A$2.25 million in Digital Classifieds Group (DCG), an online classifieds business, on Thursday.
Although based in Australia, DCG has launched online portals in countries such as Cambodia, where it owns the real estate portal www.realestate.com.kh as well as leading general classifieds websites in Laos, www.yula.la.
In a statement, DCG CEO Mathew Care said the company’s major investments in its technology and core human resources had seen increased investor interest in recent funding rounds.
“We are presently reviewing a range of expansion opportunities, particularly in Southeast Asia, where we have seen a tremendous surge in internet penetration and rapid urbanisation,” Mr Care said, adding that the initial approach from BRCM was unsolicited.
Mr Care said the additional funding was highly strategic, given BRCM’s unique focus on countries exposed to China’s One Belt One Road Initiative, particularly Mekong-based countries such as Cambodia, Laos, Vietnam, Myanmar and Thailand.
Meanwhile, BRCM is also eyeing opportunities in Myanmar and expects to close its first deal in the country “shortly,” said chief investing officer Alex Odom, without mentioning details. He added that. BRCM “is sector agnostic, so we are looking at a wide scope of potential investments.” Mr Odom revealed, though, that technology is among the sectors he is eyeing in the country.
BRCM is a private equity investment manager based in Phnom Penh, Cambodia. It focuses on investments in the Greater Mekong Sub-Region consisting of Cambodia, Myanmar, Lao PDR, Thailand and Vietnam. The company partners with promising small and medium enterprises to facilitate sustainable growth and expand access to new markets.
BRCM recently began deploying $50 million in capital from its initial round of fundraising and plans to launch subsequent investment funds in the near future.
It isn’t the only fund seeking out potential tech winners in Myanmar. Last week, Innoveller Co, a three-year-old software as a service (SaaS) provider for bus ticketing solutions in the country, received a six digit sum under Series A funding from Myanmar VC firm BOD Tech Ventures. A second local tech firm, nexlabs, also received a six-digit equity injection from Singapore VC firm Vulpes Innovative Myanmar Investment Company (VIMIC), during the week.
Hunting for unicorns
Investors are eyeing a slice of Southeast Asia’s internet economy as it is expected to be worth $50 billion by the end of this year and will likely be worth four times more by 2025, according to a November 2017 report by Google and Singapore sovereign wealth fund Temasek Holdings.
At 330 million, the number of monthly active internet users has risen by 13 percent per year between 2015 and 2017, making the region’s internet economy the fastest growing in the world.
Indeed, between 2016 and Q32017, Southeast Asian internet companies were able to raise more than $12 billion in capital, up from just $1 billion in 2015. Three quarters of the capital was invested in so-called unicorn companies, that is, start-ups valued at over $1 billion. Currently, Southeast Asia is home to seven internet unicorns: Go-Jek, Grab, Lazada, Razer, Traveloka and Tokopedia.
While so-called unicorns have yet to emerge in Myanmar, the country is expected to have the highest increase in smart phone adoption in the region in the next few years, according to Mondato.
In January 2017, 1 in 4 people in Myanmar use the Internet on a regular basis, according to a new report released by We Are Social. It said Myanmar now has some 17 million Internet users representing 26 pc of the country.
At a time when liquidity is drying up and access to funding is notoriously difficult, Myanmar’s most promising digital start-ups may yet receive the capital they need to take off.