Caixin
Jun 23, 2021 02:38 PM
BUSINESS & TECH

After Grab: ASEAN’s Tech Giants Produce a New Startup Generation

Spenmo's Mohandass Kalaichelvan(left), and NextBillion.ai co-founder Gaurav Bubna. Photo: Spenmo and NextBillion.ai
Spenmo's Mohandass Kalaichelvan(left), and NextBillion.ai co-founder Gaurav Bubna. Photo: Spenmo and NextBillion.ai

(Nikkei Asia) — Gaurav Bubna was the head of a product team at Grab, developing custom mapping solutions to support millions of ride-hailing and food-delivery drivers navigating the congested and complex streets of Southeast Asia. Soon, he realized that the problem he was tackling for Grab and the opportunities it presented “were far more global.”

So with two Grab colleagues, Bubna left one of the most powerful and successful tech companies in Southeast Asia to co-found his own startup.

NextBillion.ai, the Singapore-based company they founded last year, aims to become “Google Maps for enterprise.” Its technology allows companies to quickly modify and improve digital maps by combining them with their own proprietary data, such as driver locations and delivery histories. The aim is to help ride-hailers, delivery apps and even traditional logistic companies around the world make their services more reliable, efficient and cheaper — just like Grab is doing in Southeast Asia.

NextBillion, which already serves businesses operating across 25 markets, has raised over $10 million from prominent venture capital firms such as Lightspeed Venture Partners and Microsoft’s M12 fund. This has helped its team quickly grow to about 60 people and, according to Bubna, “every single engineer and product manager” is from one of Asia’s tech giants, including ride-hailing leaders such as Grab, Indonesia’s Gojek, Ola of India and China’s Didi Chuxing.

NextBillion is just one of a growing number of Southeast Asian startups founded by former executives and employees of the region’s established tech titans. While it might seem strange to leave a thriving company like Grab just as it is about to go public, Bubna and others like him are eager to take the lessons they have learned as employees to become entrepreneurs themselves. They also have their eye on the financial reward, as being the founder of a successful startup can be more lucrative than being an executive at someone else’s company.

“I had a fantastic time working for Grab, no question about it,” Bubna recalled. But as long as they remained there, he said, “I personally and my co-founders personally could not impact the entire industry.”

Former Grab executive Mohandass Kalaichelvan gave a similar reason for leaving the ride-hailer to set up Spenmo, a Singapore-based business-to-business payment company, in 2019.

“I wanted to make an impact, and sometimes it can be hard to make an impact in a really large organization,” said Kalaichelvan, who was part of a regional team at Grab that oversaw its strategy spanning transport, payments, food and financial services. He was also worried that if he stayed longer at Grab, someone else would start a company with the same business idea he had.

His company provides payment solutions for small and midsize businesses in Southeast Asia. “Consumer is the game for Grab. They do a bit of merchant and B2B stuff, but not to the level I wanted to do,” he said.

Spenmo has raised seed funding from tech accelerators such as U.S.-based Y Combinator.

The first generation of Southeast Asian technology companies, founded about a decade ago, are entering their next phase. Grab announced in April that it plans to go public in the U.S. through a merger with a special purpose acquisition company, or SPAC. The company is aiming for a nearly $40 billion valuation, which would make it one of the most valuable tech companies in Southeast Asia. Gojek and Tokopedia, two of Indonesia’s largest startups, announced in May that they would merge and pursue an IPO by the end of this year.

As these companies quickly grew and attracted talent from across the region, they served as “academies” to train and inspire the next generation of entrepreneurs, allowing them to pursue new opportunities that these giants were unable to do. Most of these second-generation entrepreneurs tend to start their business in Singapore and Indonesia, where Southeast Asia’s big tech players are concentrated.

“One of the big changes [in the startup scene] in Southeast Asia is talent quantity and quality,” says Amit Anand, founding partner of Jungle Ventures, a Singapore-based early and growth-stage venture capital firm.

When the firm raised its first fund in 2012, “on an average in a year, we would see about 250 to 300 startups. That number today has grown to 3,000,” he says.

Anand attributes this rise to the presence of homegrown giants like Grab, Gojek and Tokopedia, as well as the arrival of global tech companies such as Google, Facebook and Amazon.com, which have set up Asia-Pacific headquarters in the region.

As of late 2020, nearly 6,000 founders or CEOs of startups in the region were alumni of big tech companies, according to research by Singapore-based investment firm Asia Partners.

Kiren Tanna, a serial entrepreneur, says that more Southeast Asian tech companies going public would likely encourage their employees to venture out into the startup ecosystem themselves.

“This gives entrepreneurs like me confidence that if you build a good business, you can also ring a bell on Nasdaq,” he said.

Tanna co-founded food delivery app Foodpanda in 2012, and the company was acquired by Germany’s Delivery Hero, one of the world’s major food delivery companies, in 2016. He was also a co-founder of Zen Rooms, a budget hotel startup in Southeast Asia.

“The region has changed a lot from 2012 in three main areas,” he says. “One is there are a lot more very strong entrepreneurs who have worked in large companies. ... The availability of talent has gone up a crazy amount. The second is the availability of capital in this market has gone up tremendously, and the third is the clear availability and possibility of exits. In 2012, we had no idea when or how companies [would] exit.”

Tanna co-founded his third startup, the e-commerce brand aggregator Una Brands, with executives from Lazada, Alibaba’s Singapore-based subsidiary, and Singapore-based last-mile logistics player Ninja Van. Launched in late 2020, Una announced that it raised $40 million in equity and debt in May.

Having worked at a successful tech company in the past is, of course, no guarantee that an employee will succeed as a founder when striking out on his or her own.

For one, the landscape has changed dramatically since Grab, Gojek and Tokopedia started their businesses a decade ago. There were far fewer startups in the region, meaning they were able to monopolize an unprecedented amount of venture capital money, most notably from the $100 billion SoftBank Vision Fund established in 2017.

The startup market today is more crowded than ever, and new generations of founders will have a much harder time standing out and proving to investors and customers that their business models are solid and sustainable.

Still, there is plenty of optimism surrounding Southeast Asia’s startup scene. The region’s digital economy has vast room for growth, and there is no shortage of venture capital money to fund it.

The rise of new generations of entrepreneurs may well be the missing piece for Southeast Asia to become the next startup hub, following the footsteps of the U.S. and China.

As NextBillion’s Bubna sees it, “Some of the next generations of the world’s best companies will come from this region.”

This story was first published in Nikkei Asia.

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