In the second part of this series, I delve into the sentiment that the tech startup party in Southeast Asia might be nearing its conclusion. This “party is over” feeling reflects two distinct phases within the ecosystem. The discussion includes the past decade’s transformation, the rise of unicorns, the pandemic’s impact, and the changing dynamics of the startup world.


The first phase, termed the unicorn era, emerged about a decade ago when billion-dollar companies were still a novelty. The growth of these unicorns was fueled by low-cost capital and unique aspects of the venture ecosystem. However, the pandemic triggered a new phase, the “new laws of physics,” marked by negative cost of capital. The transition between these two phases and its implications for the region is worth exploring.


Significant shareholder value is locked in the equity of large digital companies, amounting to an astonishing $2.5 trillion in the US alone. The question arises whether there is enough corporate dry powder and global exchange liquidity to absorb this value. With this valuation pertaining only to the US market, the sustainability of the unicorn era remains a pertinent question.


A paper on the CLP ecosystem offers insights into factors influencing the past decade’s startup landscape. It’s key to understanding the current situation. Methods employed to systematically breed unicorns range from traditional funding rounds to exponential growth-driven valuations and corporate involvement. There are seven distinct methods of unicorn breeding, including spinning tech stories around traditional businesses.


Recently, a trend of rationalization in unicorn breeding is observed, marked by cost-cutting measures and a decrease in mega deals within Southeast Asia. The impact of rising interest rates and the unique financial landscape of the past decade is noteworthy. The prospects for the next decade and potential changes it may bring to the unicorn ecosystem are exciting to consider.


Comparisons with other emerging markets like Latin America, and the Middle East & Africa offer broader perspectives. While Latin America saw a surge and subsequent decline of investments, the Middle East and Africa are experiencing an increase in capital investment, indicating significant growth potential and structural opportunities.


Looking ahead, every ecosystem eventually reverts to the mean, though the extent of contraction is uncertain. The potential for growth and stability in regions like the Middle East and Africa is worth considering. As we move forward, we’ll delve deeper into Southeast Asia’s response to the changing landscape, regional comparisons, and factors shaping the unicorn ecosystem.


In summary, the dynamics of Southeast Asia’s unicorn ecosystem are shifting, with a transition from the unicorn era to a new normal. The sustainability of current valuations, given locked shareholder value and liquidity concerns, is under scrutiny. Rationalization within the industry, comparisons with other emerging markets, and future prospects are key considerations as we anticipate the changing landscape of Southeast Asia’s tech investment.

Check out part 1part 3, and part 4 of this event summary.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].


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Jianggan Li is the Founder & CEO of Momentum Works. Prior to founding Momentum Works, he co-founded Easy Taxi in Asia, and served as Managing Director of Foodpanda. The two years running Rocket Internet companies has given him a lifetime experience on supersonic implementation, and good camaraderie with entrepreneurs across the developing world. He holds a MBA from INSEAD (GMAT 770) and a degree in Computer Engineering from Nanyang Technological University. Unfortunately he never wrote a single line of code professionally - but in his first job he was in media, travelling extensively across Asia & Europe, speaking with Ministers & (occasionally) Prime Ministers. Apart from English and his native Mandarin, he is also fluent in French and conversational in Cantonese & Spanish. He tried to learn Latin (for three years) and Sanskrit (for six months) as well. In his (scarce) free time, he reads, travels, hikes and dives. Pyongyang, Tehran & Chisinau are among the interesting cities he has been to.