Exit-ing times: Investors eye the Southeast Asian tech startup space

There's widespread anticipation that Southeast Asian tech startups are set for a surge of exits in coming years. What's behind the optimism? Or is it actually pessimism?

Southeast Asia is set to see a significant increase in tech startup exit activity over coming years, according to predictions from industry figures. The exodus of tech founders is expected to be driven by the pull from an influx of investors looking to make big gains in the early-stage sector, combined with the push factor resulting from the Asian economic slowdown, softening currencies, slowing stock markets and a generation of tech founders now ready to retire or seek new opportunities.

A minimum of 700 startups across the region are forecast to exit across the years 2023-25 according to a new report entitled "Southeast Asia Exit Landscape: A New Frontier" from Singapore-based Golden Gate Ventures, a VC outfit specialising in early-stage investment, and business school INSEAD.

The joint forecast starts by examining Crunchbase data from the 2015-2018 period. Combining this with forecast future funding, the authors produce figures for probability and average time to exit for startups across Southeast Asia. The report also contains insights drawn from a survey of ten regional partner organisations.

The authors point to steadily increasing investment from corporate VCs and global private equity firms, as well as the growing number of acquisitions by fast-growing startups that have achieved unicorn status and initiatives by stock exchanges to facilitate tech listings. All these factors bring funds into the marketplace looking for startups in which to invest, which naturally tends to boost the attractiveness and accessibility of exits for founders.

Golden Gate partner Justin Hall goes so far as to suggest that a "pipeline to exit" has emerged in the region. Hall says that the pipeline is now well developed in the first stage - smaller acquisitions - and the second stage where established startups merge into a major regional player.

"It will be interesting to see how the third stage - the exit of the regional entity itself - will take shape in coming years," he comments.

Unicorns are gobbling up tomorrow's unicorns

To continue reading this article register now