southeast asia tech investment -h1 2020...dmp $259 $203 $458 $1,021 $919 $1,229 $1,597 $2,087 $1,384...

Southeast Asia Tech Investment - H1 2020

dmpABOUT CENTO VENTURES

2

Cento Ventures is a venture capital firm focused on technology startupsbuilding products and services emerging from the digital transformation ofpromising growth markets, particularly Southeast Asia.

We are based in Singapore and backed by a team well experienced ininternet business. We operate three funds that invest across industriesthrough a disciplined, well-researched approach to locate technologyinvestment opportunities originating from the Southeast Asian region.Three main principles guide our investments:

- Sectors ready for digital transformationThere is an excellent opportunity for technology to solve some of theinefficiencies present in emerging markets. However, technology alone doesnot digitalise industries. Most of our investments apply innovative businessmodels to large industry sectors that are set in their ways, using technologyas an enabler.- Tech startups at an early stage, but with proof points

Our investments are usually at Series A, where we lead the round. This helpsus establish a solid relationship with the founder, and to influence companystrategy. We only invest once a company can show that a market exists forits product and that it is ready to use extra capital to scale.

- Founders with great ambitionWe look for founders who want to build large digital companies that areleaders in their category. In a fragmented region, such as Southeast Asia,operating across multiple countries often essential. Our preference is forbusiness models that are light on physical assets and where the foundershave ambitious plans to scale internationally.Cento Ventures is convinced that the opportunity exists for Southeast Asianfounders to build transformational digital companies, and we look forward toworking with more startup teams to create new success stories.Learn more about us at cento.vc or our Facebook or Linkedin pages.

dmpThe Covid-19 pandemic has made 2020 an extremely unusual year so far, withgovernments and companies in the region responding and adapting regulations andoperations for much of the first half of the year. As events developed, we expected tosee a major impact on technology investment trends. This report does show a lowervolume of deals and capital invested compared to H1 2019. The total number of dealshas declined by 15% compared to the same period in 2019, and the amount of capitalthat invested fell by 13%. These are significant decreases, but perhaps less thanmight have been expected. A closer look at the data reveals interesting findingsemerging in the first half of 2020:

Overall deal volume still robust

The first half of 2020 still saw more than 300 deals which, while lower than in eitherhalf of 2019, remains a higher volume than the comparable period in 2018. Theregion’s leading tech companies continued to raise large rounds with both Grab andGojek announced major new funding events.

Larger round sizes

We have seen a decline in the number of deals sized at less than $3M. In the case ofdeals from $0.5M and $3M this was a second consecutive quarter of decline, whilethe number of deals sized from $3M-$10M has increased. It is also worth noting thatthere has been a gradual increase in the size of deals named as ‘Series A’.

Series A rounds now average $5.4M, up from $4.1M in 2019, and $3.4M in 2018. Atrend toward larger round sizes seems to be underway and may be accelerated asstartups choose to raise more money to ensure they have an additional cash bufferduring uncertain times.

Indonesia and Singapore regain dominance

Having seen a surge of interest in Vietnamese deals, which made up 21% of thecapital invested in 2019, H1 2020 saw a reversion to the more typical geographicdistribution. 74% of the capital was invested in Indonesian startups, and thecombination of Indonesia and Singapore startups accounted for 67% of the totalnumber of deals done. While this is a reversion to the pattern we have seen inprevious years, it may be somewhat influenced by the travel restrictions leadinginvestors to focus more heavily on domestic deals.

Sector diversification continues

While investment continues to flow into the super-app companies (our ‘multi-vertical’category) and to online retailers, we also continue to see growth across a widerrange of sectors. In H1 2020, investment into startups in Payments and Logisticssectors has already exceeded the 2019 total. Fintech startups, other than payments,also saw strong interest. The healthcare sector, having seen a lot of new investmentin 2019, accounted for less in H1 2020.

INTRODUCTION

3

dmpINTRODUCTION

4

This is rather surprising given the presence of a global health emergency. Weexpect to see more investment in this sector during the second half of theyear.

New unicorns

While we didn’t confirm any new unicorns in H1 2020, we did see anexpansion of the group of startups exceeding $100M in valuation, and ofcourse some of the previous companies edged closer to the $1B mark. Keynew names appearing are from both independently established companies,JustCo, and companies emerging from existing unicorns, Go-Pay.

Decline in exits

Liquidity events are where perhaps the greatest change has been seen.While the number of exits stayed consistent with the previous half year, theproceeds generated fell by nearly 50%. Median exit deal size rose from $5Min 2019 to $27M, and the top decile amount fell from $242M in 2019 to $77M.Our suspicion is that some potential deals may have stalled, as the sort ofextensive due diligence required by acquirers was harder to accomplishduring this period.

Of the deals that were done, startups from Indonesia and Singaporeaccounted for more than half of the proceeds. Acquirers were primarily fromChina, Singapore and Indonesia.

Looking ahead to the rest of 2020

The first half of 2020 has shown that tech investment in Southeast Asia whilenot reaching new heights, does remain fairly strong. That said, bothinvestments and acquisitions take time to set up. Deals completed in H12020 may well have been originated before Covid-19 struck. Pandemic-related restrictions were at their peak during Q2 of 2020, which means the fulleffects will likely only show up in the investment numbers for Q3 and Q4.Many startups in the region have continued to grow despite the variouslockdowns, travel bans and other constraints placed on them. We hope thatthe threat from the Covid-19 virus recedes significantly, that more investmentactivity can resume, and that 2020 overall turns out to be another year ofgrowth for technology in the region.

Thank you

Mark Suckling, Laphat Tantiphipop

dmp

$259 $203 $458 $1,021 $919 $1,229 $1,597 $2,087 $1,384 $4,370 $8,684 $3,551 $6,495 $2,226 $5,636

43 54

111 110

224 203

224

155

209 207 204 217

371

329 315

-

5 0

1 00

1 50

2 00

2 50

3 00

3 50

4 00

$ -

$ 1, 00 0

$ 2, 00 0

$ 3, 00 0

$ 4, 00 0

$ 5, 00 0

$ 6, 00 0

$ 7, 00 0

$ 8, 00 0

$ 9, 00 0

$ 10 ,0 00

2013H1

2013H2

2014H1

2014H2

2015H1

2015H2

2016H1

2016H2

2017H1

2017H2

2018H1

2018H2

2019H1

2019H2

2020H1

Capital Invested, $M # of Deals

$5.6B INVESTED IN H1 2020

5

Capital invested, $M and deals done, #Despite the emergence of Covid-19, H1 2020still ranks third in terms of total capital raisedand the numbers of investment for SoutheastAsia internet technology.

The capital flow is driven, as in previousperiods, by mega-rounds (US$ 100M+) raisedby Gojek, Grab, and Ninja Van, as well as arecord investment volume for $10M to $50Mdeals. Dollar value of deals below $10Mcontinues to hold steady.

The numbers exclude various eventsgenerally viewed as related to technologyinvestment in but considered not entirelyrelevant to venture space within ourframework, e.g., ICOs, project financing,corporate subsidiary investment. We alsoexclude financing events declared as SEA-related but pertaining to companies thatprimarily rely on revenue sources outside ofthe region.

Source: Cento research

dmp

$0.3 $0.1 $0.3 $0.4 $0.6 $0.6 $0.7 $0.6 $0.8 $1.2 $1.2 $1.5 $1.9 $1.7 $2.1

$0.1 $0.2 $0.6 $0.3 $0.7

$0.9 $1.5

$0.6

$3.2

$7.5

$2.1

$4.6

$0.5

$3.6

$0.3 $0.2 $0.5

$1.0 $0.9 $1.2

$1.6 $2.1

$1.4

$4.4

$8.7

$3.6

$6.5

$2.2

$5.6

43 54

111 110

224 203

224

155

209 207 204 217

371

329 315

-

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$ 1. 0

$ 2. 0

$ 3. 0

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$ 5. 0

$ 6. 0

$ 7. 0

$ 8. 0

$ 9. 0

$ 10 .0

2013H1

2013H2

2014H1

2014H2

2015H1

2015H2

2016H1

2016H2

2017H1

2017H2

2018H1

2018H2

2019H1

2019H2

2020H1

$100M or smaller deals $100M+ deals # of Deals

US$ 3.6B DRIVEN BY US$ 100M+ DEALS

6

Capital invested, $B and deals done, #Mega-deals (those with the value of dealssized above US$ 100M) remained a sizablecontributor to the region’s total investmentvolume. This deal size accounted for 64% ofthe investment proceeds in the first half of2020, a continuous decline from 71% and86% in the same period of 2019 and 2018.


dmp

$0.1 $0.1 $0.2 $0.1

$0.2 $0.2 $0.3 $0.2 $0.3 $0.3 $0.3

$0.4 $0.6

$0.5 $0.5

$0.1 $0.03 $0.1 $0.1

$0.3 $0.3

$0.4

$0.3 $0.3

$0.4 $0.4

$0.8

$0.9

$0.8

$1.2

$0.1

$0.2

$0.1 $0.1

$0.1

$0.3

$0.4 $0.5

$0.3

$0.4

$0.4

$0.4

4353

110 107

222

200

220

152

208 202 198210

365

326308

0

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1 00

1 50

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2 50

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$ -

$ 0. 5

$ 1. 0

$ 1. 5

$ 2. 0

$ 2. 5

2013H1

2013H2

2014H1

2014H2

2015H1

2015H2

2016H1

2016H2

2017H1

2017H2

2018H1

2018H2

2019H1

2019H2

2020H1

≤$10M >$10M- $50M >$50M - $100M # of deals

EXCLUDING MEGA-DEALS, $2.1B INVESTED IN H1 2020

7

Capital invested, $B and deals done, #, excluding US$ 100M+ transactionsHowever, it's also useful to look at SoutheastAsia's investment trends excluding the mega-deals which can obscure the underlyingtrends, and are often hard to match to aprecise time period.

In H1 2020, the value of deals below $10Mheld steady at about US$ 0.5B, while dealsbelow $3M continued on a downwardtrajectory from a peak in H1 2019. Deals sizedbetween US$10-50M, that normallycorrespond to Series B and C, remained a keyarea of growth.

With impact of “mega” deals removed, SEAecosystem remained on its growth trajectorydespite COVID-19 challenges.


dmp

$304 $448 $405 $778 $948 $830 $1,185

1420 20

27

36 37

54

0

1 0

2 0

3 0

4 0

5 0

6 0

$ -

$ 20 0

$ 40 0

$ 60 0

$ 80 0

$ 1, 00 0

$ 1, 20 0

$ 1, 40 0

2017 H1 2018 H1 2019 H1 2020 H1

$250 $417 $548 $264 $376 $415 $403

3

5

7

45

6 6

0

1

2

3

4

5

6

7

8

$ -

$ 10 0

$ 20 0

$ 30 0

$ 40 0

$ 50 0

$ 60 0

2017 H1 2018 H1 2019 H1 2020 H1

$550 $3,193 $7,472 $2,084 $4,562 $521 $3,554

1

5

6

7

6

3

7

0

1

2

3

4

5

6

7

8

$ -

$ 1, 00 0

$ 2, 00 0

$ 3, 00 0

$ 4, 00 0

$ 5, 00 0

$ 6, 00 0

$ 7, 00 0

$ 8, 00 0

2017 H1 2018 H1 2019 H1 2020 H1

$169 $178 $144 $303 $406 $271 $346

30 3226

48

67

44

56

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

$ -

$ 50

$ 10 0

$ 15 0

$ 20 0

$ 25 0

$ 30 0

$ 35 0

$ 40 0

$ 45 0

2017 H1 2018 H1 2019 H1 2020 H1

$99 $117 $102 $109 $168 $158 $127

6975

67 66

114

9385

0

2 0

4 0

6 0

8 0

1 00

1 20

$ -

$ 20

$ 40

$ 60

$ 80

$ 10 0

$ 12 0

$ 14 0

$ 16 0

$ 18 0

2017 H1 2018 H1 2019 H1 2020 H1

$13 $17 $13 $14 $27 $23 $22

7260 67

53

134142

107

0

2 0

4 0

6 0

8 0

1 00

1 20

1 40

1 60

$ -

$ 5

$ 10

$ 15

$ 20

$ 25

$ 30

2017 H1 2018 H1 2019 H1 2020 H1

STRONG GROWTH IN $10M - $50M DEALS

8

$0.5M or smaller deals $0.5M+ to $3M deals $3M+ to $10M deals

$10M+ to $50M deals $50M+ to $100M deals $100M+ deals

Source: Cento researchCapital invested, $M

Deal #

dmp

-13%-16%

-8%

-21%

-7%

-15% -13%

-22%-27%

-42%

SE Asia India N America EU Global

Change in Capital Invested Change in # of Deals

SE ASIA INVESTMENT DECLINES LESS THAN OTHER REGIONS

9

The number of Southeast Asia internettechnology investments in H1 2020 iscomparable to India and remained the mostresilient compared to the same period in NorthAmerica, Europe, and worldwide. However,the amount of total capital invested falls in linewith other regions.

Notes:The denominators to both the capital investedand the number of deals in each region arebased on its respective H1 2019 numbers.

Source: Cento researchCrunchBase Global and North America Venture Report Q2 2020t

Dealroom European VC Q2 2020KPMG Venture Pulse Q2 2020

% of VC capital invested and deals done by region, H1 2020 vs. H1 2019

dmpSERIES A ROUNDS GET LARGER

$0.7 $0.4 $0.5 $0.7 $0.5 $0.6 $0.6 $0.9

$2.7$2.4

$2.9$2.3 $2.5

$3.4$4.1

$5.4

$4.1

$6.2

$11.4 $11.2$10.6

$11.8$12.3 $12.3

2013 2014 2015 2016 2017 2018 2019 2020 H1

Pre-A A B

102 84 87 87

196 192 154

76

69 61 65

90 70

7110 23

15 26

25

20

31

6 14 16

15

22

33

27

2017 H1 2018 H1 2019 H1 2020 H1Pre A A B C+

10

Deals done by series, # Average deal size by series, $M


dmpProceed (US$M) 2013 2014 2015 2016 2017 2018 2019 2020 H1

Multi-vertical - 52 346 770 2,550 4,535 3,429 2,764

Payments 19 26 86 115 115 261 576 692

Retail 71 182 209 837 941 1,910 774 406

Logistics 1 15 34 64 136 129 346 385

Financial Services 37 7 139 138 189 443 572 263

Real estate and infrastructure 4 2 9 17 41 518 169 115

Advertising and Marketing Technology 8 22 122 21 82 38 144 98

Business Automation 6 13 29 29 44 113 169 92

Healthcare 0 12 26 37 102 12 223 72

Local services 9 376 442 826 50 92 101 61

Employment 3 4 8 11 22 24 39 37

Education 0 7 12 9 16 61 162 22

Entertainment / Non-Gaming 1 4 52 84 353 17 151 19

Travel and hospitality 34 13 78 176 392 51 528 16

Entertainment / Gaming 4 8 11 11 5 6 19 7

Others - - 1 3 5 2 38 5

Comms & communities 4 23 16 48 1 10 3 2

PAYMENT AND LOGISTICS SECTORS BREAK NEW RECORD

11

Capital invested by sector, $M

Led by Grab and Gojek, the region investmentremains heavily concentrated in the ‘Multi-vertical’ sector. Other dominant sectors suchas retail and financial services are following asimilar capital trajectory with 2019.

Payments and Logistics already registeredrecord investment at the half-year mark. Otherupward trending sectors include Real Estate,Advertising and marketing, Businessautomation, and Local services. In contrast,startups in the healthcare sector attracted lessinvestment.

A few sectors experience a sharp decline,namely education, travel, and non-gamingentertainment.

Notes:For a detailed definition of each sector, pleasesee our methodology slide.


Multi-vertical

Payments

Retail

Logistics

Financial Services

Real estate and infrastructure

Advertising & Marketing

Business Automation

Healthcare

Local services

Employment

Education

Entertainment / Non-Gaming

Travel and hospitality

Entertainment / Gaming

Others

Comms & communities

dmp

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Seed Follow-on Round 1 Follow-on Round 2 Follow-on Round 3

SEA 2014 SEA 2015 SEA 2016 China India Europe

% of companies raising seed round that raised follow-on rounds

12

China and India is based on 2008 – 2011 cohorts and Europe is based on 2011 cohort.Companies are tracked 4-5 years after announcing their initial investment round.

SE ASIA CATCHING UP IN LATER STAGE FUNDING

We tracked Southeast Asian technologystartups that announced seed fundingbetween 2014 - 2016 and compared that withthe rate of follow-on fundraising in China,India, and Europe.

Southeast Asia startups ability to raise follow-on rounds are broadly in line with those fromEuropean countries, but significantly trailbehind China and India comparables in theirfirst and second rounds. Nevertheless, thehealthy later stage follow-on funding trend of2014 cohort is a promising indicator that theregion fundraising trajectory does have thepotential to match larger ecosystems.

Source: Cento research https://www.cbinsights.com/research/regional-vc-funnels/#head13

http://www.atomico.com/news/the-state-of-european-tech-2016

dmp$100M+ COMPANIES CONTINUE TO MULTIPLY

13

SE Asia beyond recognized leaders:Companies with valuations above $100M, $500M, and $1B


>$10

B

Malaysia ThailandRegional

>$1B

Philippines

Publicly-listed company

* List of companies are not exhaustive

Vietnam

2020 New Entry

Indonesia Singapore

>$50

0M

Carro

Although Southeast Asia is home to 10companies valued above $1B (with Sea Groupmarket-cap having reached $50B) a morecomprehensive view of the region’s capability togenerate shareholder value in the digital space isprovided by looking at companies we believe arevalued in excess of $100M and $500M, based onthe latest substantial financings, liquidity eventsor known business developments.

>$10

0M

dmp

Razer

OTHER $100M+ COMPANIES PRESENT IN THE REGION

14

Selected $1B+ and $100M+ enterprise value businesses, executed via prior acquisition / non-third party funded subsidiary

An overview of the value beingcreated in the digital space inSoutheast Asian would be incompletewithout noting:

• A significant and growing set ofdigital businesses previouslyacquired by or created within largercompanies that are continuing togrow around their respectiveopportunities within Southeast Asia

• A number of overseas players -usually from adjacent markets inNorth Asia - focusing on SoutheastAsia as a primary source of growth.

• A number of Southeast Asia-originating companies that built theirdomestic advantage into asignificant international footprintbeyond Southeast Asia

Indonesia MalaysiaSingapore ThailandRegional

Search

Bigo

Select $100M+ enterprise value businesses by global players targeting Southeast Asian market or by Southeast Asia based players targeting a global opportunity.

Vietnam Philippines

Source: Cento research* List of companies are not exhaustive

>$10

0M*

>$1B

Publicly-listed company 2020 New Entry

dmp26

18

17

7

6

5

5

5

5

4

3

3

2

2

1

Retail

Payments

Financial Services

Local services


Multi-vertica l

Business Automation


Logistics

Healthcare

Advertising and Marketing Technology

Travel and hospitality

Education

Employment


15

# of companies with $100M+ valuation by sector


RETAIL & FINTECH PRODUCE MOST $100M+ COMPANIES

$3.9 $1.5 $5.9 $16.4

$100M $500M $1B $10B

$53 $253 $533 $5,474

Capital consumed by SE Asia companies with $100M+, $500M+, and $1B+ valuations

* Only include $100M+ companies that raised capital from 2013 – 2020 H1Excluding international companies that fundraise to expand in SE Asiaor SE Asia based companies that primarily rely on revenue source outside SE Asia.

Total Capital invested FY2013 – H1 2020, $B

Average capital consumed per company*, $M

dmpVIETNAM ACTIVITY COOLS, WHILE INDONESIA GAINS

16

Source: Cento researchCountry of origin is defined as where the company was founded

and where it is believed to generate its core revenues

The share of Southeast Asia’s capitalallocated to Indonesian startups rebounded inH1 2020 (much was related to Gojekinvestment) while there was a substantial dropin Vietnam investment compared to 2019. Theallocation of deals remains similar to previousyears, with Singapore gaining a larger share.

Notes:The data in this slide excludes companies witha truly regional footprint (e.g. Grab, SeaGroup, and Lazada) and would bias the data ifallocated to a particular country.

Share of capital invested by country

Share of deals done by country

65%

69%

54%

74%

20%

19%

18%

12%

3%

3%

2%

3%

8%

2%

3%

5%

2%

6%

21%

5%

2%

1%

1%

2%

2017

2018

2019

2020 H1

30%

31%

24%

30%

34%

32%

33%

37%

12%

10%

10%

8%

10%

8%

9%

4%

8%

16%

20%

16%

5%

4%

4%

5%

2017

2018

2019

2020 H1

Indonesia Singapore Malaysia Thailand Vietnam Philippines

dmp

$135 $279 $648 $264 $316 $369 $447

52

72

55 56

110

92 101

-

2 0

4 0

6 0

8 0

1 00

1 20

$ -

$ 10 0

$ 20 0

$ 30 0

$ 40 0

$ 50 0

$ 60 0

$ 70 0

2017 H1 2018 H1 2019 H1 2020 H1

Capital Invested, $M

# of Deals

18%

17%

15%13%

7%

7%

7%

16%


Financial Services

Healthcare

Retail

Business Automation

Payments

Advertising and MarketingTechnologyOthers

SINGAPORE: DIVERSE SECTOR ALLOCATION

17

Capital invested, $M and deals done, # # of deals by deal size


15 17 9 933 31 36

24 3126 24

4932 34

713

8 18

20

1618

48

84

6

1213

2017 H1 2018 H1 2019 H1 2020 H1

>10

>3-10

>0.5-3

<0.5

$M

$11.5$13.4 $12.8 $12.2

$2.8 $3.0$4.6 $5.1

$0.7 $0.9 $0.7 $0.8

2017 2018 2019 2020 H1

B

A

Pre-A

Average deal size, $M Top sectors by capital invested H1 2020, $M

dmp

$159 $1,213 $1,720 $1,538 $1,544 $558 $2,803

57 53 49 58

87

58

80

-

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

9 0

1 00

$ -

$ 50 0

$ 1, 00 0

$ 1, 50 0

$ 2, 00 0

$ 2, 50 0

$ 3, 00 0

2017 H1 2018 H1 2019 H1 2020 H1


# of Deals

68%

13%

9%

3% 3% 4%

Multi-vertica l

Payments

Retail

Financial Services

Logistics

Others

$12.2 $12.3

$17.4

$14.2

$2.6$5.1 $4.6

$6.2

$0.4 $0.4 $1.0 $1.4

2017 2018 2019 2020 H1

B

A

Pre-A

21 18 2211

3512

24

13 15 816

21

20193 9 11 15

17

1214

56 6 10

13

13

23

2017 H1 2018 H1 2019 H1 2020 H1

>10

>3-10

>0.5-3

<0.5

INDONESIA: LARGE DEALS PROMOTE GROWTH

18



$M


dmp

65%

15%

8%

7%

1% 4%

Payments

Local services

Advertising andMarketing TechnologyRetail

Financial Services

Others

12 10 7 814

31

10

11

45 6

6

7

6

5

1 3 2

22

0

0 4 1

1

3

3

2017 H1 2018 H1 2019 H1 2020 H1

>10

>3-10

>0.5-3

<0.5

$7.0

$12.8

$9.4

$13.0

$2.0$3.0

$1.4 $1.30.2 0.3 0.2 0.3

2017 2018 2019 2020 H1

B

A

Pre-A

$39 $17 $105 $50 $32 $64 $131

28

15 19 17

23

41

21

-

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

4 5

$ -

$ 20

$ 40

$ 60

$ 80

$ 10 0

$ 12 0

$ 14 0

2017 H1 2018 H1 2019 H1 2020 H1


# of Deals

MALAYSIA: DECLINE IN SMALLER DEALS

19


$M



dmp

$22 $153 $9 $77 $19 $111 $176

15

23

9

18 15

39

12

-

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

4 5

$ -

$ 20

$ 40

$ 60

$ 80

$ 10 0

$ 12 0

$ 14 0

$ 16 0

$ 18 0

$ 20 0

2017 H1 2018 H1 2019 H1 2020 H1


# of Deals

82%

14%

4%

Payments

Financial Services

Others

$10.5 $10.5n/a*

$7.0

$2.1 $2.6 $3.3

$15.9

$0.7 $0.5 $0.2 $0.7

2017 2018 2019 2020 H1

B

A

Pre-A

5 4 4 7 9

25

3

7 124

5 4

6

2

23

4 2

6

3

42

2

4

2017 H1 2018 H1 2019 H1 2020 H1

>10

>3-10

>0.5-3

<0.5

THAILAND: FINTECH DOMINATES

20



$M


* Data excluded due to the lack of Series B in 2019

dmp

$4.5$2.9

$6.1

$22.0

$3.2 $1.8$4.5

$2.4$0.2 $0.4

$0.6 $0.5

2017 2018 2019 2020 H1

B

A

Pre-A

38%

21%

16%

13%

4%8% Retail

Employment

Real estate andinfrastructureFinancial Services


Others

Source: Cento research, Do Capital

$37 $9 $69 $221 $283 $515 $166

19 11

33

23

59 58

38

-

1 0

2 0

3 0

4 0

5 0

6 0

7 0

$ -

$ 10 0

$ 20 0

$ 30 0

$ 40 0

$ 50 0

$ 60 0

2017 H1 2018 H1 2019 H1 2020 H1


# of Deals

10 821

1224 26 215 2

10

7

20 20

11

41

1

1

11 6

2

00

1

3

4 6

4

2017 H1 2018 H1 2019 H1 2020 H1

>10

>3-10

>0.5-3

<0.5

21


$M


VIETNAM: COOLING OFF

dmp

47%

24%

8%

8%

6%7%

Financial Services

Retail

Logistics


Education

Others

5

0 1 24

10

4

5

7 4 1

5

3

4

2

1

0

0

2

1

4

0

0

02

0

02

2017 H1 2018 H1 2019 H1 2020 H1

>10

>3-10

>0.5-3

<0.5

$20 $20 $5 $42 $16 $14 $58

12

8

6 7

12

14 14

-

2

4

6

8

1 0

1 2

1 4

1 6

$ -

$ 10

$ 20

$ 30

$ 40

$ 50

$ 60

$ 70

2017 H1 2018 H1 2019 H1 2020 H1


# of Deals

PHILIPPINES: RECORD CAPITAL INVESTED

22



$M


$9.7

$26.0

$6.0 $5.0$2.4 $3.2 $2.4

$8.6

$0.7 $0.3 $0.3 $1.1

2017 2018 2019 2020 H1

B

A

Pre-A

dmp

$1,229 $845 $1,825 $344 $1,896* $718 $379

$3 $928

$103

$105 $7

2017 H1 2018 H1 2019 H1 2020 H1

Trade Exit + Secondary IPO

EXIT PROCEEDS ARE SMALLER

23


Liquidity events, #Proceeds realized at exit, $M Exit valuations, $M

19 28 25 30 50 27 26

1

5

1

4

2

2017 H1 2018 H1 2019 H1 2020 H1

Trade Exit + Secondary IPO

$266

$94

$242

$77

$56$45 $42

$51

$21$8 $5

$27

2017 2018 2019 2020 H1

Top Decile Top Quartile Median

* $1.7B is driven by YY acquisition of Bigo

dmpLARGE EXIT EVENTS ARE FEWER

24

Source: Cento researchAmount, $M

Events, #

Liquidity events and proceeds, <$1M Liquidity events and proceeds, $1M+ to $5M Liquidity events and proceeds, $5M+ to $20M

Liquidity events and proceeds, $20M+ to $50M Liquidity events and proceeds, $50M+ to $100M Liquidity events and proceeds, >$100M

$43 $36 $36 $113 $96 $35 $98

5

3 3

9 10

3

9

2017 H1 2018 H1 2019 H1 2020 H1

$22 $21 $19 $18 $23 $14 $26

6 6 6 6

7

5

7

2017 H1 2018 H1 2019 H1 2020 H1

$3 $6 $8 $10 $10 $1 $2

5

10 12

11

19

7

3

2017 H1 2018 H1 2019 H1 2020 H1

$1,109 $1,394 $1,753 $1,450 $497

2 2 2

1

3

2017 H1 2018 H1 2019 H1 2020 H1

$175 $86 $185 $192 $60 $77

3

1

3 3

1 1

2017 H1 2018 H1 2019 H1 2020 H1

$54 $141 $25 $123 $126 $111 $183

2

4

1

4 4

3

6

2017 H1 2018 H1 2019 H1 2020 H1

dmp

63%

38%

33%

33%

14%

23%

23%

29%

13%

4%

23%

17%

1%

2%

12%

8%

32%

8%

10%

<1%

1%

12%

2017

2018

2019

2020 H1

41%

33%

30%

36%

29%

15%

30%

44%

10%

9%

4%

8%

8%

11%

6%

4%

6%

25%

21%

8%

6%

7%

10%

2017

2018

2019

2020 H1

Indonesia Singapore Malaysia Thailand Vietnam Philippines

ID AND SG LEAD IN LIQUIDITY GENERATION

25

Source: Cento researchCountry of origin is defined as where the company was founded

and where it is believed to generate its core revenues

Compared to capital invested, the allocation ofliquidity proceeds and exit events is much moreequitably distributed about key Southeast Asiacountries. Indonesia and Singapore consistentlyaccounted for >50% on both metrics. Theremainder of the exit events spread across theremaining countries, with Malaysia and Vietnamfrequently contributing a third of the liquidityproceeds while Thailand and the Philippinesillustrate a limit track record.

Notes:The data in this slide excludes companies with atruly regional footprint (e.g., Grab, Sea Group, andLazada) and would bias the data if allocated to aparticular country.

Share of liquidity proceeds by country

Share of liquidity events by country

dmp

42%53%

42% 44% 41% 44%49%

43%

27%

28%

27% 19%30%

19%

22%

19%

12%

20%

27%29%

24%

15%

22%

19%

19%

5% 8% 4%

21%

7%19%

2013 2014 2015 2016 2017 2018 2019 2020 H1

Digital Co - SE Asia Digital Co - Others Traditional Co Asset Manager

Distribution of liquidity proceeds by acquirer type*

19%

2% 5%13% 13%

46%

23% 20%

18%

86%

58%

66%

78%

37%

71%

31%

52%

12%

31%

21%

7%

7%

3%

15%

10%5%

1% 1%

9%3%

33%

2013 2014 2015 2016 2017 2018 2019 2020 H1

Digital Co - SE Asia Digital Co - Others Traditional Co Asset Manager

26

Distribution of deals done by acquirer type*

Source: Cento research.*The data is exclusive of IPO events.

Digital Co – Companies with core business driven by digital technology.Traditional Co – Companies that primarily rely on traditional business models.Asset Manager - VC, PE, and investment holding companies.

ACQUIRER TYPES REMAIN VARIED

dmp$3,900

$2,944

$1,158

$763 $716

$382$205 $182 $150 $97

China

Singapo

re

Austra

lia

Indon

esia USAJa

pan

Malaysia

Norway UK

Philipp

ines

96

56

40

2822 21 19 18 18 17

Singapo

re

Indon

esiaJa

pan

Vietnam

Malaysia

USA

Philipp

inesChina

Thailan

d

Austra

lia

Top 10 acquirers’ countries of origin*, by deals done, 2013-2020 H1, $M

27

Source: Cento research*Based on trade exit and secondary events with known acquirers

Top 10 acquirers’ countries of origin*, by proceeds, 2013-2020 H1, $M

SE AsiaOther Asia Others SE AsiaOther Asia Others

ASIA-BASED ACQUIRERS PREDOMINATE

dmp17%

5%

1%

67%

12%

1%

9%

18%

84%

11%

51%

3%

4%

3%

9%

2%

1%

10%

81%

62%

44%

4%

China

Singapore

Australia

Indonesia

USA

Indonesia

Singapore

Malaysia

Thailand

Vietnam

Philippines

Regional

Others

28


Share of liquidity proceeds by target country for the top 5 acquirers’ countries of origins, 2013 – 2020 H1

ACQUIRERS FOCUS BY COUNTRY

dmp

28% 10%

45%

42%

3%

7%

2%

15%

7%

1%

64%

6%

10%

5%

40%

6%

50%

17%

55%

14%

2%

4%

15%

1%

10%

27%

7%

2%

1%

2%

China

Singapore

Australia

Indonesia

USA

Business Automation

Education

Employment

Entertainment / Non-GamingFinancial Services

Local services

Payments

Real estate &infrastructureRetail

Travel & hospitality

Others

29


Share of liquidity proceeds by sector for the top 5 acquirers’ countries of origins, 2013 – 2020 H1

ACQUIRERS FOCUS BY SECTOR

dmp

$217

$556

$135

$1,567

$1,632

$1,651

$6,343

$260

$1,501

$834

$706

$3,296

$11,232

$13,420

Philippines

Vietnam

Thailand

Malaysia

Singapore

Indonesia

Regional

Total Investment Total Liquidity

30

MALAYSIA SHOWS HIGHEST CAPITAL EFFICIENCY


Total investment vs liquidity proceeds by country, 2013-2020 H1, $M

Southeast Asia’s digital ecosystem hasattracted over $31B in investment andgenerated over $12B in liquidity between 2013and the first half of 2020. Companies thatoperated regionally accounted for the majorityof the exit volume, followed by Indonesia,Singapore, and Malaysia which generated over$1.5B each.

In terms of capital efficiency, Malaysia is theonly country where the exit proceeds exceedthe total capital invested. This may changes asmore of the the region’s growing $100M+enterprise value companies enter M&A stages..

0.5X

0.1X

0.5X

2.2X

0.2X

0.4X

0.8X

Liqu

idity

/ In

vest

men

ts R

atio

dmp

Methodology

dmpMETHODOLOGY

32

In this report, we analysed and verified close to 3,500 financing and liquidity events. Inevitably, a fewlarge deals would avoid detection on occasion of exceptionally secretive nature of the transaction ordue to the methodology we apply. It is also our impression that our pre-Series A deals data in theregion is far from exhaustive due to a sheer volume of deals in $ 10 - 250K range happening in themarket – while total dollar value of inflow and outflows is unlikely to be impacted heavily, do take our“number of deal” assessments for pre-Series A with a large handful of salt. Finally, as new facts cometo light and as erstwhile announcements are verified, we adjust our databases retroactively, leading tomild inconsistencies between various versions at the same period.

Category definitions and company profiles include:

This report aims to describe the state of financing and liquidity generated by companies focused ondigital technology-driven opportunities in Southeast Asia. The exact definition of what a digitaltechnology-driven opportunity constitutes is a subject of much debate. While leaving biotech, newmaterials and space tech out is relatively straightforward (but including software and digital servicesenabling these industries), telling an offline company with digital elements apart from a business wherevalue creation is primarily tied to either its technology core or its digital distribution is anything butsimple.

We have generally taken a view that if something is valued as a technology company, we can trust itsinvestors that it probably is. At the same time, we also endeavour to exclude categories that, whileadjacent to digital economy, tend to attract non-VC capital to a degree where their financing /liquidation events interfere with the signal from the rest of the ecosystem (notably, excluding thecompanies with valuations determined by token economics). Furthermore, we currently do not includetraditional TV stations, content producers, sports and entertainment brand, non tech-enabled consumerbrands, telcos, IT infrastructures and system integration companies as well as holding level entities thatbuy or develop technologies in addition to their core business into our reporting.

Key premises:

Numbers and conclusions in this study rely upon a company’s reported last round valuation. At best thisis a partial reflection of a company’s true value. To all in our audience who appreciate the importance offinancing terms over headline valuations, and who recognise that a more complete understanding of anyunderlying business is helpful, we apologise. To atone for this oversimplification, we’d like to take thisopportunity to give a commendation to the great work being done by a few in academia who probedeeply into the contradictory nature of how tech valuations are reported, and produce splendid researchthat will one day help us as an industry upgrade our reporting systems and, perhaps, change how techcompany narratives are formed. In this report, our recognition goes to Will Gornall and Ilya A.Strebulaev (professors at the Sauder School of Business at the University of British Columbia and theStanford Graduate School of Business, respectively) for their comprehensive work on “Squaring VentureCapital Valuations with Reality”, available here:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455 and with media coveragehttp://nymag.com/intelligencer/2018/11/fake-unicorns-are-running-over-the-venture-capital-industry.html

Geographies covered:

This iteration of our report does not make an attempt at covering some of the newer digital ecosystemswithin ASEAN beyond the customary six countries, or the developments in countries starting to gravitatetowards SE Asia venture scene such as Pakistan, Bangladesh, Sri Lanka, Hong Kong, and Taiwan.

Data sources and completeness :

Our data is compiled from a number of sources, although we primarily rely on public pressannouncements and community disclosures from the companies and their investors. Our teamresearches the validity of claims to an extent possible and supplements incomplete information withinsights from our own industry sources and, on occasion, somewhat educated guesswork.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455

http://nymag.com/intelligencer/2018/11/fake-unicorns-are-running-over-the-venture-capital-industry.html

dmpMETHODOLOGY

33

Company classification:

Country of origin:

Determined by the country in which the company was founded, and has its primary base of operation(defined in terms of revenue, if known). At the (subjective) point where the company has bothoperations in multiple countries in Southeast Asia and substantial revenues generated in multiplecountries, then it may be classified as Southeast Asia / regional in the country of origin.

Sector classification:

Cento’s definition of the industry segment in which the company’s primary business focus sits. A fulltaxonomy of sector allocation is listed below. In cases where a company focus on multiple sectors withdifferent units generating thought to generate substantial revenue, then multi-vertical category is used.We also note that a company’s sector may change as the company progresses; the company’s sectoris evaluated according to the primary business focus during the event of financing.

• Advertising & Marketing Technology: companies that facilitate the acquisition of customersincluding coupons and rebates, price comparisons and affiliate marketing

• Business automation: tools that automates non industry-specific business activities such as CRM,ERP, workplace communication tools, etc.

• Comms & communities: social networks and dating

• Education: provision of goods and services revolving teaching and learning, including adult trainingand education

• Employment: companies that manage and facilitate the management of employees includingonboarding, benefit, payroll, etc.

• Entertainment/ Gaming: gaming development, distribution and publishing

• Entertainment/ Non-gaming: content production and news aggregation

• Financial Services: companies that apply technology into traditional banking services i.e. lending,wealth management, etc.

• Healthcare: provision of goods and services revolving around medical and wellness servicesincluding, but not limited to, e-pharmacy, medical tourism and telehealth

• Local Services: platforms that connect local merchants/ service providers to consumers in an urbansetting including, but limited to, ride-hailing services, local search and directory and food delivery

• Logistics: companies that facilitate the movement of goods including, but not limited to, acquiring,storing and transporting of goods

• Multi-vertical: our name for diverse digital businesses such as Grab & Gojek, often called ‘super-apps’

• Payments: companies that facilitate movement of capital

• Real Estate and infrastructure: construction, buying & selling and management of real estate assets,including the tools facilitating those activities

• Retail: companies that sell or rent goods using internet technology, including tools that facilitate thoseactivities e.g. Store-front management software, POS systems, etc.

• Travel: tourism and hospitality

Currency:

$ refers to United States Dollar (US$) unless otherwise stated.

dmpMETHODOLOGY

34

Deal definitions:

Deal stage:

Each series definition is determined as follows:

- Pre-Series A: Purpose of investment tends to be building the idea/team; in some cases, the companygenerates revenue.

- Series A: The product has been built and proven via initial but repeatable revenue. Investmentpurpose tends to be establishing domestic position, and sometimes scaling regionally.

- Series B: Investment purpose tends to be building scale, either domestically or regionally.

- Series C+: any amount invested later than Series B. Series C, Series D, later series investments,pre-IPO, mezzanine.

We have also estimated a particular company’s valuation through a recent substantial financing orliquidity event and known business developments

Deal type:

We focus mainly on venture capital deals – investments made by fund entities into early stage startups,whether they are from independent funds of corporate venture capital entities. This is a subset of thetotal number of early stage tech deals in the region.

We separate the following from most of our data, apart from the ‘total capital invested and total dealsdone’ chart:

- Corporate transfers: events where a corporate entity funds an entity in the region in which it owns amajority or significant minority stake (e.g. Rocket Internet, Lippo Group)

- Project financing: A deal which was a partnership for an identified purpose – e.g. Grab-Honda.

- Non-Southeast Asia deals: e.g. India and China focused companies that happen to use Singapore fortheir corporate domicile.

dmp

www.cento.vc

[email protected]

+65 6816 2810

Office address: 56B Pagoda Street, Singapore059215

Mailing address: Cento Ventures, 3 Church Street,Level 8, Singapore 049483

Contact

35

http://www.cento.vc/

mailto:[email protected]

southeast asia tech investment -h1 2020...dmp $259 $203 $458 $1,021 $919 $1,229 $1,597 $2,087 $1,384...

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