ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
The Nikkei View

Lessons can be learned from Southeast Asia's tech startups

Grab and GoTo show savvy raising funds overseas to meet local needs

Indonesian startups Tokopedia and Gojek merged their operations and aim to list on the U.S. stock market. (Source photos by Dimas Ardian and Ken Kobayashi)

A string of Southeast Asia's leading internet companies have expressed their intent to go public, with Indonesia's GoTo Group being the latest case.

Their strategy of procuring large funds from abroad, investing them in promising markets and carving out big shares by catering services to local needs will provide important lessons to young companies elsewhere.

GoTo Group, created through a merger of ride-hailing service Gojek and e-commerce powerhouse Tokopedia, aims to list its shares on the U.S. and Indonesian stock markets. Earlier, Singapore-based ride-hailing giant Grab announced plans to list its shares in the U.S. by the end of this year through a merger with Altimeter Growth, a special purpose acquisition company.

All three companies have been in business for only about 10 years. Nonetheless, Grab estimates its value at the time of listing will be close to $40 billion, and GoTo expects to be worth roughly the same amount. That is about twice the size of Japanese e-commerce giant Rakuten Group.

Key to the rapid growth of Southeast Asia's internet startups is the technological "leapfrog" triggered by the widespread use of smartphones. This allowed new and innovative services to burgeon in the region's underdeveloped public transportation and financial sectors.

Southeast Asia's population of over 650 million people further enhances the startups' potential.

Grab and other tech startups still need to find a way to grow while generating profits, as they remain in the red. Nevertheless, they hold many lessons for entrepreneurs in other parts of Asia, such as those in Japan, where companies struggle to grow in scale.

First is to secure sizable high-risk money from around the globe.

Grab and Gojek raised huge amounts of money from SoftBank-affiliated funds and major overseas companies like Google that are willing to tolerate risk in exchange for high returns. The startups then allocated this capital to high-growth sectors and businesses -- a move that eventually enabled the companies to obtain high market shares.

Second is to localize service.

The young startups put considerable effort into meticulously responding to local needs. This allowed the companies to build a unique digital ecosystem that would avoid direct competition and outmaneuver giant rivals like Amazon.com.

For example, Grab has become indispensable in Southeast Asia by expanding its services from ride-hailing to food delivery and payment settlement.

Third is to combine businesses to pave the way for new services.

Symbolic of this move is the merger between Indonesian giants Gojek and Tokopedia. Their combination was meant to create a unique business in which drivers from the ride-hailing service could deliver products purchased online.

Invigorating the economy requires influential companies that break the status quo. Startups with visionary business models and financial backing play an important role across Asia and especially in countries like Japan, where many large corporations are trapped in a vicious cycle of low growth and atrophy. Companies should think out of the box and seize opportunity.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more