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As economies gradually emerge from pandemic restrictions, the companies that managed to weather 2020 will be able to resume business, having passed the ultimate test of their viability.   © Illustration by Parvati Pillai
The Big Story

Asia's hidden high-growth companies reach for the sky

Nikkei-FT-Statista survey shows standout performers in Singapore, Japan, India and more

KENTARO IWAMOTO and WATARU SUZUKI, Nikkei staff writers | Southeast Asia

SINGAPORE/TOKYO -- Last year, as the pandemic tore through Asia, a great sorting of the business world ensued.

The future looked dim for startups, as customers and funding dried up. Many whole industries were near collapse. But, gradually, it became clear that there were pandemic "winners" as well. The most resilient of the pack, and those who were able to transform themselves to the new environment, have been able to grow and attract funding -- particularly in the low-interest-rate environment of stimulus spending.

As national economies gradually emerge from the pandemic restrictions, meanwhile, many of these companies that weathered 2020 - no matter what shape they are in - will be able to resume normal business, having passed the ultimate test of their viability.

Nikkei has worked with the Financial Times of London and Germany's Statista to rank Asia's 500 fastest-growing companies over 2016-19. The results of this research is presented here and on the accompanying table.

The Nikkei-FT-Statista High-Growth Companies Asia-Pacific 2021 shows which companies entered the pandemic as success stories. The rankings do not show the impact of the pandemic on their growth; instead, they show a range of companies that have resilience and business acumen.

See Nikkei Asia's Top 20 list here, and the full interactive list of Asia-Pacific's 500 fastest-growing companies on the FT website. 

Crucially, whenever the business environment might return to a pre-pandemic-style normal, the companies that were doing well before the pandemic struck may well resume their success. Many of these companies are being revealed to a wider audience for the first time, thanks to this research.

Past performance, however, is no indicator of future results. The pandemic year was catastrophic for many businesses and it is possible that some companies on this list will not recover.

Singapore is heavily represented on the list. The business hub of Southeast Asia, it is perhaps unsurprising that it accounts for six of the top 20 ranked companies. The city-state bills itself as a gateway connecting companies to the wider region, with its developed digital and transportation facilities a draw for investors to site their operations in the city-state.

It was one of the few places that actually saw an increase in investment last year, drawing $17.2 billion Singaporean dollars ($12.7 billion) in fixed-asset investments in 2020, compared to SG$15.2 billion the previous year.

"The Singapore financial center still has many long term competitive advantages, including being a sovereign state with political and macroeconomic stability, a stable, convertible currency, a high-quality financial regulatory environment and world-class infrastructure," Rajiv Biswas, Asia-Pacific chief economist at IHS Markit told Nikkei Asia.

See the full, downloadable list of 500 companies here

Singapore-based companies account for six of the Top 20 in the Nikkei-FT-Statista ranking.   © Reuters

Three other countries that account for many high-growth companies on the list are India, South Korea and Japan.

In Japan, the rise of fast-growing startups can be attributed to a dramatic shift in risk appetite in recent years. Startups used to be a rare breed in Japan, where talent and capital were tightly kept inside big companies under a lifetime employment system. Today, that has changed, thanks largely to a series of successes, such as the watershed 2018 initial public offering of Mercari, an e-commerce company which blew away the widely held view that startups are small and risky.

"In the past, failure in starting a business was not acceptable because it was very difficult to recover from," said Shinichi Takamiya, a managing partner at venture capital fund Globis Capital Partners. "That is no longer the case. Now, whoever swings the bat wins. There is a mindset that making mistakes will become a positive experience."

"In the past, failure in starting a business was not acceptable. ... That is no longer the case. Now, whoever swings the bat wins"

Shinichi Takamiya, managing partner at venture capital fund Globis Capital Partners, on Japan's strengthening startup culture

South Korea, meanwhile, has some of the world's most advanced digital infrastructure backing its businesses. Thanks largely to a massive government push, it has the fourth-highest digital penetration rate in the world, with 97% of the population accessing the internet as of January, according to data gathered by Statista.

In India, meanwhile, high-growth companies are benefiting from the digital push that the country has seen in the past few years, aided by smartphone penetration. India's total smartphone user base is expected to grow to 829 million by 2022 from 500 million at the end of 2019, according to the India Cellular and Electronics Association.

Indian businesses are also helped by the country's demographics: About 65% of the country's population of over 1.3 billion is below 35 years of age. Fifty percent fall roughly into the "Generation Z" category -- below the age of 25. Many are keen to become entrepreneurs or to be employed as part of the current startup ecosystem, which is receiving a slew of incentives from the government of Narendra Modi in the form of speedy clearances and tax benefits.

"Traditionally, India has been an offline market. But, slowly and steadily, people are now getting used to digital experiences, especially [with the availability of online] food and travel aggregators and other services," Sanchit Vir Gogia, chief analyst, founder and CEO of tech consultancy firm Greyhound Research, told Nikkei. "There are so many problem statements to be solved in the country and that is the key reason why India is attracting so much talent and a lot of these [high-growth firms]."

Unsurprisingly, even before the pandemic, technology companies grew the fastest throughout Asia. Among the top 500 in the ranking, technology companies accounted for 25.4% of the total, followed by support services 4.4%, industrial goods 4.4%, construction at 4.2%, and e-commerce 4.0%.

  © Illustration by Parvati Pillai

The survey covered both private and public companies headquartered in 13 countries and regions in Asia-Pacific that had annual revenue of more than $100,000 in 2016 and more than $1 million in 2019. The ranking is based on the revenue growth between 2016 and 2019.

Although the search was extensive, the ranking does not claim to be complete, as some companies declined to make their figures public or did not participate for other reasons. China, due to logistical difficulties and problems comparing accounting, has also not been represented. And some countries may have been better represented in the rankings because their business environment facilitates communication.

By examining company databases and other public sources, Statista identified tens of thousands of companies in the region as potential candidates for the ranking. These businesses were invited to participate in the competition by post, email and telephone.

Carro and Carsome: On a roll

Judging by the rankings, the best business opportunity in Asia is easy to pinpoint: online used-car sales platforms in Southeast Asia did exceptionally well. That admittedly narrow-sounding niche accounted for two of the companies in the top 20, including the number one slot. Unsurprisingly, they are competitors.

Carro, the top-ranked company, is based in Singapore, launched in 2015 by 36-year-old Singaporean entrepreneur Aaron Tan. Today it has a presence in Singapore, Indonesia, Thailand and Malaysia. Its revenue has soared about 142 times to $86 million in 2019 compared to 2016.

Carro certifies that the cars it takes in are fit for use by providing potential buyers with a detailed report of flaws that exist on vehicles, and offers a 30-day wear and tear guarantee on its sales. It also uses artificial intelligence to inspect vehicles for defects, which it says speeds the process by up to 20% and reduces human error by up to 80%.

"The idea is more about how do we use AI or machines really to automate as much as we can and more importantly provide customers a differentiated online experience -- that's what we want," Tan said.

It was not an easy start at all, Tan recounted in an interview with Nikkei. Soon after the launch in 2015, Carro faced a lawsuit from a local company for alleged copyright infringement -- which the competitor dropped only after eight months. "We had been sued along the way, right, by the big boys," he said. "That was one of my worst times, honestly, as the CEO of a startup. If you have a pending lawsuit as a startup, nobody will fund you."

  © Illustration by Parvati Pillai

Tan, who was formerly a director at Singtel Innov8, the venture capital arm of Singapore Telecommunications, credited his backers and the rapid rise of digitalization in the region as catalysts for his startup's growth. Among Carro's investors are SoftBank Ventures Asia, EDBI -- the investment arm of Singapore's government agency Economic Development Board -- and Japan's Mitsubishi Corp.

Despite a quarter-on-quarter revenue drop of around 70% from April to June 2020 as Southeast Asia's economies gradually shutdown due to the pandemic, Tan said his company, which concludes its financial year in March, is on track to see revenue growth of 2.5 times versus the previous year.

"The demographic shift for us, whereby more and more people are more online ... that is good," he said, acknowledging how the explosion of e-commerce amid the pandemic as Southeast Asia turned to the internet for consumption activities has lifted his business.

Tan has his sights set on raising more than $150 million by closing a Series C funding round within the next six months, and is eyeing a public listing in future, likely in the U.S., he told Nikkei. He said his company is already in the black, making positive earnings before interest, taxes, depreciation, and amortization in the past two years.

Carro's bigger competitor, Carsome of Malaysia, was 16th in the ranking. Carsome is the largest online used car trading platform in Southeast Asia, with a presence in Malaysia, Indonesia, Singapore and Thailand. Its revenue grew nearly 25 times over the three years through 2019 to $203 million, according to the rankings.

Carro founder, 36-year-old Aaron Tan. (Photo by Dylan Loh)

Eric Cheng, the co-founder and CEO of Carsome, told Nikkei in an interview that the company would be hitting $1 billion in revenue this year, given the pent-up demand for used cars during the pandemic. "We have reached an operating profit level, and expect to achieve profitability on the EBITDA level by this year," he said.

With $1 billion in sales, Cheng believes that Carsome is financially ready to face public investors via an IPO. The company, however, is holding on to 2023 as its target year for a listing.

"Although we are already there financially, I believe that we still have to fine-tune processes such as governance and market reporting," he said. Carsome intends to list in a financial hub along the lines of New York, London or Hong Kong -- where, according to Cheng, "the business model would be appreciated."

Cheng said Carsome will not be looking at geographical expansion in the medium term, however, wants to strengthen its presence in existing markets with new product offerings. "We are now only 1.5% of the $40 billion used car market in Southeast Asia. There is vast growth potential for us to comfortably aim for a 3% share," he said.

In addition to enabling consumers to sell their cars via an online platform, Carsome would introduce a car sales function where consumers can purchase their secondhand vehicle from the company itself.

The service has been introduced in Malaysia and will be running in Indonesia and Thailand soon, said Cheng. "We understand the risk involved when we have our own inventories, but we believe in the prospects and demand for used cars," he said.

Wakefit: Comfortable niche

The rise of the Asian middle class is an obvious theme that shows through in the Nikkei-FT-Statista rankings. Wakefit, an Indian mattress seller, is just one example. It sells "sleep and home solutions" direct to consumers, and came in 13th in the ranking. The Bangalore-based company was founded in 2016, and, according to a spokesperson, started selling mattresses online because it was a stagnant market where prices were high and innovation was low.

When they started the company, the founders visited about 100 customer homes to understand what consumers wanted. They figured they could provide products to middle-class households at 40% to 50% cheaper prices than what was available on the market, with the same quality. As the startup grew in size, it launched a home solutions range as well, which includes sofas and wardrobes.

The company, which counts Sequoia Capital India as one of its investors, is expecting to clock revenues of 4.5 billion rupees ($62 million) this financial year ending on March 31, more than double the 1.99 billion rupees it generated last fiscal year.

  © Illustration by Parvati Pillai

Ninja Logistics: Stealthy rise

The logistics industry was buoyed by the pandemic, called upon to cater to the housebound around the world. One such company that was doing well even before then was Singapore-based Ninja Logistics (also known as Ninja Van), ranked 14th. Operating across six countries in Southeast Asia, its revenue grew about 28 times in three years through 2019 to $249 million.

Last year boosted its growth even more, Lai Chang Wen, Ninja Van co-founder and CEO, told Nikkei. He said the company delivered around three times more parcels last year across the whole of Southeast Asia than in 2019.

"Over the last few years, Southeast Asia has seen a surge in consumers shopping through online platforms. This has, in turn, fueled the growth of the e-commerce delivery business and is one of the biggest factors that has impacted our revenue growth," he said.

He expects delivery demand will continue to grow even after the pandemic ends, saying: "The onset of the pandemic has just accelerated the pace of [e-commerce] growth, with more consumers experimenting with shopping online for the first time, existing online shoppers buying more items across various online platforms, and more businesses taking a hyper-digital approach toward their retail strategy."

Lai expects the trend to continue. "What we have seen is likely to be a permanent shift in consumer behavior, with more consumers relying more heavily on online shopping due to the convenience and flexibility it offers."

Ninja Logistics' revenue grew around 28 times in the three years through 2019 to $249 million. (Photo courtesy of Ninja Van) 

AI Inside: No more paper trail

In a high-wage economy like Japan, increasing worker productivity is big business.

AI Inside, at No.10 in the rankings, is a Japanese startup that converts handwritten documents into a digital format. The process works by scanning handwritten slips, like invoices, and uploading the file to AI Inside's software where the characters are automatically converted.

AI Inside was founded in 2015 by President and CEO Taku Toguchi, who has been engaged in AI research since 2004. A software-as-a-service company offering both monthly and pay-as-you-go services, it listed on Tokyo Stock Exchange's Mothers board, where shares of startup companies are publicly traded, in December 2019. It holds more than 12,900 contracts, mainly small and medium-sized enterprises.

For the company's supporters, the high reading accuracy of AI Inside's software sets it apart. Reading accuracy generally falls around 80%, but the company claims its own rate exceeds 90%, thanks to its image correction function -- even when encountering peculiar handwriting.

"In the future, AI that goes beyond the human brain will become the foundation of industry," said Toguchi. Given the strong demand for digitization of documents, AI Inside is racing to develop new revenue sources, including by expanding further into Asia. In December 2020, it also announced support for English, Chinese, Thai, and Vietnamese languages.

  © Illustration by Parvati Pillai

Electric Kiwi: Knowledge is power

Electricity retailer Electric Kiwi, at No. 4, was founded in New Zealand in 2014 and launched its services in 2015. The company has grown in popularity by combining software technology with smart meters, devices that collect electricity consumption data and are installed in 90% of households in urban areas of New Zealand.

"There is a lot of investment across the sector to implement these smart meters, but unfortunately there was not an equivalent amount of investment from retailers in New Zealand to actually leverage that technology to the full extent," said Nick Haines, Electric Kiwi's chief financial officer.

Electric Kiwi reads the electricity usage status every 30 minutes, and users can check how much electricity they have used on its app. Users can also choose one free hour of power during off-peak times -- between 9 a.m. to 5 p.m., or between 9 p.m. to 7 a.m. -- and change the time slot using the app. Despite being a late entrant, Electric Kiwi has gained a 4% market share among households.

While the companies in the ranking have made significant growth in the past few years, it doesn't guarantee that the pace will continue.

"The world is fundamentally changing because of COVID, and even the normal we are expecting may be a bit different. The ideal scenario of getting everyone vaccinated and eradicating the virus may not really be feasible," Aldi Adrian Hartanto, vice president of investments at MDI Ventures told Nikkei.

"Given this high uncertainty, founders need to be mature, even if their company is at their early stage, and always have backup plans in the back of their mind," he added.

Additional reporting by Nikkei staff writers Dylan Loh, Kim Jaewon, Prem Kumar, Kiran Sharma, Fumi Matsumoto and Kentaro Tsutsumi.

An earlier version of this story listed Twinny in fourth place in our ranking of high-growth Asia-Pacific companies. After publication, however, Twinny said it had erroneously reported its 2019 revenues to Statista, the data group that prepares the list. The company's 2019 revenues were $1.13 million, not $13 million, putting it in 101st place. The story and graphic have been updated to reflect the correction.

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