DBS-MW-TNB discussion on identifying the next unicorn in Southeast Asia

Momentum Works, DBS and TNB Aura hosted a joint panel discussion titled ‘Predict, Prepare for and Ride the tech trends in Southeast Asia’ on 27 June 2022. Jianggan Li, CEO of Momentum Works, spoke alongside Santanu Mitra, Managing Director of Digital Economy Group, DBS Bank, Joe Zhang, Principal from TNB Aura,  and Sachin Mittal, Head of Telecoms, Media and Technology, Group Research, DBS Bank. They bantered about the elephant in the room – tech stock crash, rising interest rates, impact on businesses, ecommerce and of course, Web3. The talk was pretty insightful and we’ve highlighted the questions and selected answers from the panel here: 

1. How do you as a VC identify the next unicorn in Southeast Asia?

Joe: TNB Aura has a ‘Global Unicorn Methodology’. It is a data-driven methodology to identify and invest in selected companies that are primed for the future and ready to change the face of their industries. 

The Southeast Asian market is most similar to China about 7-10 years ago in terms of economic development, digital penetration, consumer behaviour and demographics. After studying the different successful businesses that reached unicorn status or went public in the Chinese stock market or NASDAQ, TNB Aura identified the biggest industries and models which are also applicable to SEA. This knowledge combined with our talks with startup founders help us get a better sense of the business models that could grow on a very large scale in the future.

2. The market correction disruption has resulted in companies’ slowing down IPOs and funding rounds. Mindsets have changed. Investors are now looking for companies that can be profitable and sustainable.

The mantra is no longer “grow at all cost”, but “how do you grow sustainably, with positive ROI, and with a longer runway?.” What is your take with regards to one of the key tech sectors – i.e. ecommerce? 

Santanu: The fast growing point was due to oversupply. People who needed to raise 100 million dollars were being offered 200-300 million dollars. These high valuation expectations are now being corrected by rising interest rates. Companies that have reached a certain scale can quickly turn a lever from growth to profitability. However companies which are sub-scale will find it incrementally challenging and will ultimately be the ones who are impacted. The reason for this is that ecommerce runs on scale and is the key differentiator between businesses.

Previously, there was a mentality to become a superapp but there is a reality check now. Some companies are now focusing on letting the ecosystem evolve on its own, and are focusing on building their core strengths. We can expect consolidation and aggregation of these enablers in the ecosystem around key themes such as logistics, payments, etc.

3. We are currently seeing a new wave of disruption – this time through Web3. Some say that this is overhyped and there’s a bubble that will burst soon. Others have invested significantly into these Web3 innovations. Of course, it’s not  just black and white – there are many layers involved. What are your views on this?

Jianggan: Web3 technology is still in a developmental phase and there are not many use cases right now. For any major technology, the tech always comes first and the use cases emerge later. Currently, NFTs are an interesting use case in Web3, as its proof of authentication of digital assets. We can expect many more applications to arise that could add value to people and the ecosystem. A lot of startups are carrying out different experiments to see which model has increased growth and positive ROI in a dynamic industry.

The best attitude towards Web3 is to stay humble and stay curious. Find something interesting and try it out. You can’t miss the waves or stand by the side. If you are curious to get started in Web3, check out our report or join our event happening on Jun 29, 2022 to understand how Web3 can be incorporated in your personal/work life.

Overall, the panelists were optimistic about the future. There are many ways to tackle the uncertainties, and cross-industry discussions like this help bridge the gap. Do check out the full recording here. If you have any questions after taking a look at the event, do drop us a line at [email protected]. We’d be keen to tackle the elephants in the room.