Tech

Valuation of Southeast Asian startups becomes ‘irrational’ – Golden Gate

FILE PHOTO: A lanyard displaying the logo of Southeast Asian e-commerce and gaming conglomerate Sea Ltd is pictured at its office in Singapore
FILE PHOTO: A lanyard displaying the logo of Southeast Asian e-commerce and gaming conglomerate Sea Ltd is pictured at its office in Singapore, March 5, 2021. REUTERS / Edgar Su / File Photo

December 2, 2021

By Sayantani Ghosh and Miyoung Kim

SINGAPORE (Reuters) – Valuations of startups in Southeast Asia, home to popular online platforms like Grab and Sea, have become preposterous due to massive inflows from global investors, a partner at venture capital firm Golden Gate Ventures told Reuters.

Justin Hall, a partner at Golden Gate Ventures, said at the Reuters Next conference

“One of the biggest factors when it comes to irrational valuations… is US and global money flow. There is an extraordinary amount of money pouring into the area… and the end result is you have… too much money chasing too few trades,” said Hall.

Companies in Golden Gate’s portfolio include payment platform Stripe and distribution company Ninja Van.

According to a report by venture capital firm Cento Ventures, Indonesia and Singapore in the first half of 2021, the number of investments in this region increased by 20% year-on-year to a record level. Total inflows amounted to $4.4 billion.

Investor interest is being fueled by the region’s growth potential, with the internet economy forecast to more than double to $360 billion in gross merchandise volume by 2025.

Such interest has helped spawn a number of multi-billion dollar businesses recently.

Grab, the region’s largest ride-hailing and delivery company, will go public on Nasdaq on Thursday following a record $40 billion deal with a special purpose acquisition company (SPAC). Indonesian rival, GoTo Group, raised $1.3 billion last month, ahead of an IPO scheduled for next year.

However, these companies are not necessarily a template for smaller unicorns, says Dmitry Levit, a Cento partner.

“I can say that the formula of lifting a big round for Indonesia has only a chance to work,” he said, adding that Vietnam and other Southeast Asian countries still have a chance.

(Reporting by Sayantani Ghosh and Miyoung Kim in Singapore; Editing by Kim Coghill)

https://www.oann.com/valuations-of-southeast-asian-startups-becoming-irrational-golden-gate/?utm_source=rss&utm_medium=rss&utm_campaign=valuations-of-southeast-asian-startups-becoming-irrational-golden-gate Valuation of Southeast Asian startups becomes ‘irrational’ – Golden Gate

Caroline Bleakley

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