TOKYO/JAKARTA Nur Dwi Sasi's daily commute to her workplace in South Jakarta used to be a daunting task. The 47-year-old office worker had to walk in the scorching heat to catch a jam-packed minibus before changing to another, equally crowded bus. The trip could sometimes take up to three hours, and she was lucky if even one of those buses had air conditioning.
Her commute got a lot more comfortable a year ago, when she began using a smartphone app to hail motorbike taxis from startup Go-Jek Indonesia.
"Access to transport has become so much easier, because the driver picks me up at my house and goes directly to the workplace," she said. "At times when I have to go home late at night, Go-Jek also feels safer."
At around 15,000 to 18,000 rupiah ($1.13 to $1.35), Go-Jek rides are slightly more expensive than the bus trips, but for Nur Dwi Sasi, the extra expense is worth it.
Plenty of other riders seem to agree, and Go-Jek has proven not only a success, it has entered an elite club. The company is now valued at $1.3 billion, qualifying it as a unicorn -- a startup worth $1 billion or more.
Asia's unicorns have long been concentrated in China and India. In a list of startups by valuation compiled by CB Insights, Chinese mobile phone giant Xiaomi came second, valued at $46 billion, and compatriot Didi Chuxing third, at $33.8 billion. Indian e-commerce startup Flipkart ranked 12th with a valuation of $10 billion, while fellow online retailer Snapdeal, worth $7 billion, came in at 19th. Of the top 35 companies on the list, 10 were from China and three from India.
Now, a growing number of Southeast Asian startups are entering unicorn territory, too. In addition to Go-Jek, there is Garena, a Singapore-based online gaming portal and e-commerce provider valued at $3.75 billion, and ride-hailing service Grab, also of Singapore, worth $3 billion.
For years, startups across Asia have been described as local versions of Silicon Valley players. Grab, for example, is "the Singaporean Uber." But as their skyrocketing valuations show, investors are starting to realize that successful Asian startups are more than carbon copies of Western companies.
Local problems, after all, often call for local solutions.
Go-Jek, again, is a prime example. The company is often referred to as "Uber on motorbikes," and the thinking behind the business does have much in common with that of Uber Technologies. But as anyone who has traveled in Indonesia knows, it is practically impossible to get anywhere on time on four wheels, making the more mobile motorbike a better solution.
Go-Jek has also broadened its scope further than Uber has: Its drivers now carry not only people but also parcels and even masseurs to waiting clients. Even in China, where rapid motorization means traveling by car is now the norm, "Uber of China" Didi managed to beat off competition from the Silicon Valley company -- and eventually acquired Uber's Chinese business -- thanks in part to a deeper understanding of the local market.
"People say, 'What is Go-Jek? Is it Uber?' And instead what I see across Southeast Asia is people positioning themselves as 'the Go-Jek of country X,'" said Shane Chesson, a founding partner at Singapore-based venture capital firm NSI Ventures, an early investor in Go-Jek, at a recent Euromoney conference in Jakarta. "We have reached the point where companies are innovating beyond copying foreign players, and to the point where they have real things to teach other parts of the region."
SECOND PHASE Market-disrupting innovation almost inevitably creates friction with incumbent players or the government -- protests by taxi drivers in Indonesia a year ago resulted in the government tightening rules on ride-hailing apps -- but the tide of Asian innovation is here to stay, according to Teruhide Sato, founder of Singapore-based venture capital company Beenext.
"Asia has an abundance of issues like underdeveloped infrastructure and logistics, and they present great opportunities for startups to come in and solve real problems on the ground," he said.
Investors seem to share Sato's optimism. Venture capital invested in Asia's startups ballooned to $39 billion in 2016, accounting for around 30% of global startup financing that year and up nine times compared with 2010, according to a KPMG report. Southeast Asia in particular has seen its investment increase over eight times since 2012. The number of deals in Asia overall declined in 2016, but that is because "the due diligence and deals approvals process is taking longer than it has historically," the report said, a sign that the market is maturing.
Sato offered a similar assessment. "The ecosystem for startups in Asia is much more developed now compared to when I first started investing [in 2012]," he said.
One of the biggest changes he noted is the existence of unicorns. Sato reckons that these unicorns have "attracted both investors and talent to this region" and have helped usher in the second phase of the Asian startup scene, in which a growing number of unique and ambitious companies are sprouting up to tackle the region's problems.
One such example is BeamAndGo. The Singapore-based company offers an e-voucher payment system it hopes will change the way remittances are sent home by the 10 million Filipinos working abroad.
Remittances from overseas Filipino workers hit a record $26.9 billion in 2016. But sending money home can be an arduous process, one that often entails waiting in line for hours at a brick-and-mortar transfer outlet. It is even harder to make sure that the wages being sent back are not misspent on gambling, drugs or other vices.
BeamAndGo's solution is to send money home in the form of vouchers for specific goods or services, such as groceries, health care, education and prescription medicines. Workers select a product on smartphone, and the family gets sent a digital gift certificate via text message.
"This is a big help to me because I have a guarantee that my husband and child will receive groceries. I am at peace at the same time," said Rachell German, a Filipino worker in Singapore, on the company's Facebook page.
STRENGTH IN NUMBERS Behind the rise of companies like BeamAndGo is the growth in the Southeast Asian internet users. The region has the world's fastest-growing number of internet users, with 3.8 million new users coming online every month, according to a joint report last year from Google and Singapore's Temasek Holdings. The region already has 260 million internet users, and that figure is expected to expand to 480 million by 2020.
One of the companies riding this wave of new users is iflix, an internet TV startup popular with millennials. Based in Kuala Lumpur, the company offers on-demand streaming content ranging from Hollywood blockbusters to local TV shows, and has garnered around 4 million subscribers since its foundation in 2014.
Other startups are taking advantage of the internet's "matchmaking" potential.
For a young, developing region like Southeast Asia, education is key to accelerating economic growth, but not everyone can keep up. Indonesia, for example, ranked 62nd among 72 economies in terms of student performance in the 2015 PISA survey by the Organization for Economic Cooperation and Development.
Jakarta-based educational technology company Ruangguru aims to address this. The company's online platform connects students to over 25,000 registered tutors offering lessons in subjects on the school curriculum, as well as foreign languages and other topics. Founded in 2014, the company simplified the student-tutor matchmaking process and made it more transparent through the use of ratings and user reports. It also streamlined payment procedures.
Going beyond matchmaking, the startup is also collaborating with around 100 municipalities in Indonesia. The provincial government of South Sumatra, for example, is using Ruangguru's online learning materials to help students prepare for high school entrance exams.
Other types of matchmaking are also flourishing.
Cropital, a crowdfunding startup in the Philippines, connects potential investors to farming communities in need of capital. Lack of funding is a chronic problem for Filipino farmers, hampering their productivity. Many turn to loan sharks, but the exorbitant interest rates that these lenders charge often eat up any profit from the harvest.
Founded in 2015, Cropital has raised 5 million pesos (about $101,000) to support small-scale farmers and farming communities across the Philippines. The minimum amount for investment is 5,000 pesos, but more than 100,000 unique investors have already taken part. Around 80% of the funds come from domestic sources, while the remainder comes from overseas. Returns are based on terms agreed to by the investors and the farming community and depend on the risks involved.
"We haven't reached profitability, but we are revenue-generating as an organization. It comes with scale," said founder Ruel Amparo. "We are projecting to turn a profit by the first half of 2018."
In addition to providing capital, Cropital also trains farmers in financial literacy and basic business accounting, and ensures they have access to crop insurance and professional agriculturists. "The outcome has been positive," Amparo added.
SHALLOW MARKET Even with Asia's surge in startup action, funding activity remains centered on China, which accounted for the bulk of the $39 billion invested in the region last year. India took in $3.3 billion, while all of Southeast Asia, despite hitting a record sum, chalked up just $2.6 billion.
Southeast Asian countries also come up short in terms of the depth of their stock markets, leaving founders and investors with fewer exit options, like initial public offerings. According to Singapore-based venture capital firm Golden Gate Ventures, there have been only 11 tech IPOs in Southeast Asia since 2005.
This lack of options has left startups like Garena, Southeast Asia's most valuable startup, looking to the U.S. for their IPOs. According to various media reports, the Singaporean company has chosen Goldman Sachs to oversee an IPO that could fetch around $1 billion.
Realizing they are missing out, Asian stock exchanges are taking action. Indonesia plans to establish a dedicated section within its main board that will allow founders and investors to more easily take their companies public. In March, the bourse launched a startup incubator to help young companies along the road to listing.
Thailand's stock exchange is planning to set up a new marketplace for startups by the end of September that will provide easier access to entrepreneurs compared with the two existing markets. Listing criteria will be looser than the two existing trading boards, which require earnings records and a minimum capital registration of 50 million baht ($1.45 million). Companies will even be able to list on the day they are set up.
"We have 650 listed companies on our existing boards, but there are still a bunch of companies outside," Kesara Manchusree, president of the Stock Exchange of Thailand, said. "The environment is changing, and we can't [cater to all needs] with just a traditional exchange."
Governments have also started giving local startup scenes a push.
In China, Beijing is calling on local governments to foster innovation. Wuhan, the capital of Hubei Province, responded last October by announcing an $81 billion fund for investments focused on diversifying the job base. The money will be invested through a number of well-known U.S. venture capital firms, including Sequoia Capital and CBC Capital.
Indonesia, meanwhile, is aiming to become the biggest digital economy in the world by 2020, with Rudiantara, the minister of communication and informatics, waving the flag for promoting the country's startup scene. "Indonesia has to be positioned as competitively as possible on the international digital map," he told the Nikkei Asian Review last year.
Among the companies that have benefited from the Singaporean government's initiatives is Carousell, which runs a popular online marketplace for second-hand goods. Company co-founder and CEO Siu Rui Quek said government help and the participation of world-class venture capital companies in the Singaporean startup scene "have brought the mindset of the long game here, to support the new wave."
What Quek hopes to see now is more initiatives aimed at nurturing the next generation of innovative thinkers.
"In Asian societies, we tend to take fewer risks because of the stigma of failure. In order to build more unicorns here, we need to foster a culture of innovation, diversity and healthy risk-taking," he said.
"The youth should be exposed to innovation and technology from a younger age, and more opportunities to look at what's happening in other countries and how fast global tech companies are racing ahead."
Nikkei staff writers Wataru Suzuki in Jakarta, Tomomi Kikuchi in Singapore, Mikhail Flores in Manila and Yukako Ono in Bangkok contributed to this story.
