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'Unicorns' graze on Asia's startup pastures

GrabTaxi's smartphone app allows users to hail a ride within minutes in Singapore.

TOKYO   The rise of the "unicorns" continues. And while most of these not-so-mythical creatures -- new ventures valued at $1 billion or more -- can be found in the U.S., more and more are cropping up in China and elsewhere in Asia.

     As of mid-January, there were 150 unicorns worldwide, according to U.S. research company CB Insights. These startups are valued at a combined $525 billion. Of the 150 companies, 37 are based in Asia.   

     Uber Technologies is the biggest of them all, with a valuation of $51 billion, according to CB Insights. By country, the U.S. ranked first in terms of the number of unicorns, with 92 startups surpassing the $1 billion mark.     

     China came in second, with 25 companies. These include leading smartphone manufacturer Xiaomi, valued at $46 billion. Although the Chinese economy is dominated by state-owned companies, many private enterprises are sniffing out new opportunities, such as ride-hailing service Didi Kuaidi and drone manufacturer DJI Innovations, which also made the list.

     India, which is home to e-commerce company Flipkart, ranked third. The number of unicorns is also climbing in Israel, Singapore, Thailand and Argentina.

BOOM TIMES   Startups are not only proliferating in China, they are thriving -- some to an astonishing degree. Driving the boom is a combination of an expanding market and favorable fundraising environment.

     Consider the ascent of Shanghai-based e-commerce portal operator Bolome. Less than a year since it was founded, the company is already racking up monthly sales of roughly $8.5 million. Created by Japanese and Chinese entrepreneurs in February last year, it offers Japanese and South Korean products to Chinese consumers at low prices. 

     Bolome generated sales of about 10 million yuan ($1.51 million) in August. Just two months later -- after China's largest search engine operator, Baidu, and other companies pumped a total of $30 million into the company -- Bolome forecast the figure would be five times higher in December.

     Bolome came along at the right time. China's e-commerce market has been swelling at an annual pace of 30% and is on track to hit nearly $600 billion. Venture capital companies poured an estimated $17 billion into China in 2014, over 20 times the amount they sunk into Japan, according to industry sources.

     Though they may not be unicorns just yet, a number of promising startups have also emerged in Taiwan in recent years, helped by support from large companies and the government. Many of them have two things in common: the desire to leverage the expertise the island's manufacturers have amassed over the years, and plans to expand into Japan.

     Along Songshou Road in central Taipei, stores selling brightly colored electric scooters are often packed with young people.

     The reason for the flocks of curious shoppers is Gogoro, a startup that has been called "the Tesla of scooters." Adding to the company's appeal is a service that enables Gogoro owners to change their batteries at any of about 100 stations in the capital. This spares motorists the often time-consuming process of charging up. The company also has an app that lets users check their battery levels on their smartphones.

     Gogoro launched full-scale sales of its electric scooters in spring 2015. Sales soared after the company cut prices in October, rising to 700-800 units a month. The bikes are especially popular among people in their 20s and 30s. Taiwan, with its excellent transportation and manufacturing infrastructure, is "a paradise for startups," said Jessica Chuang, public relations manager at Gogoro. 

     Another Taiwanese startup, Fandora, runs a platform to make merchandise such as T-shirts in cooperation with outside designers and other artists. Fandora handles the manufacturing and marketing and shares the profits with the artists. Nearly 2,000 artists, mostly in Taiwan, are registered with the company.

FERTILE PASTURES   Forward Ventures -- the operator of Coupang, a South Korean e-commerce site -- will invest 1.5 trillion won ($1.23 billion) to add distribution centers and delivery personnel to improve its "rocket delivery" service. This brings goods to a customer's door in as little as two hours after a purchase is made.

     "We will create an innovative, first-of-a-kind delivery system," Kim Beom-seok, CEO of Forward Ventures, said at a news conference in Seoul in November.     

     Forward Ventures has grown sharply by leveraging its highly efficient delivery network. The company's smartphone app has been downloaded 25 million times, equivalent to half the South Korean population.

     Its e-commerce site, which handles everything from consumer electronics to sundries and food, was launched in 2010. After five years in business, annual total sales made on the Coupang website now stand at 2 trillion won. Having received a $1 billion capital injection from Japan's SoftBank Group last summer, Forward Ventures' corporate value has risen to an estimated $5 billion.

     GrabTaxi, which was established in 2011 in Singapore, now provides a smartphone-based ride-hailing service in 26 cities across six Southeast Asian countries. Its popularity has grown especially in urban areas where traffic jams are severe, and catching taxis on the street is often difficult.

     GrabTaxi's app had been downloaded more than 6.1 million times as of September. The number of registered drivers tripled in a year to hit roughly 110,000. Uber also competes in Southeast Asia, but GrabTaxi has grown quickly by tailoring its service to fit the local market. For example, GrabTaxi handles cash payments, as credit cards are not yet widely used in the region.

     Some Asian unicorns are now operating across national borders in the region. Lazada is one of them. The Thai startup has become the biggest e-commerce company in Southeast Asia by setting up online shopping sites in Thailand, Singapore, Malaysia, Indonesia and Vietnam, among others. Having built a cross-border retail platform that enables it to serve the newly created ASEAN Economic Community, Lazada is well positioned to turbocharge its growth.

     Aiming to tap into this activity before its rivals do, Google in May established Campus Seoul in the South Korean capital -- its first startup incubation facility in Asia. Jeffrey Lim, head of the operation, said the goal is to nurture unicorns in Asia and then set them loose on the world market.

Nikkei staff writer Shinichiro Tanaka contributed to this report.

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