Valuations of Southeast Asian startups becoming ‘irrational’ -Golden Gate

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SINGAPORE, Dec 2 (Businesshala) – Valuation of startups in Southeast Asia has become irrational due to huge capital inflows from global investors thanks to popular online platforms like Grab&C (SE.N), a partner in venture capital firm Golden Is. Gate Ventures told Businesshala.

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Justin Hall, a partner at Golden Gate Ventures, told Businesshala Next Conference that China’s actions in its tech sector have also contributed to capital injections into the sector, causing valuations of many startups to outweigh their business principles.

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“One of the biggest factors when it comes to irrational valuations … is the influx of US and global money. There is an extraordinary amount of money coming into this sector … and the end result is that you have … very little Chasing a lot of money after deals,” Hall said.

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Golden Gate’s portfolio companies include payments platform Stripe and delivery firm Ninja Vans.

According to a report by Southeast Asian venture capital firm Santo Ventures, in the first half of 2021, the number of investments in the sector increased by 20% compared to the previous year, with Indonesia and Singapore attracting the bulk of the funds. has done. Total fund flow was $4.4 billion.

The growth potential of the region is fueling investor interest, with its Internet economy projected to more than double in gross trading volume by 2025 to more than $360 billion.

Such interest has recently helped spawn several multi-billion dollar businesses.

Grab, the region’s largest ride-hailing and delivery firm, will make its market debut on the Nasdaq on Thursday following a record $40 billion merger with a special purpose acquisition company (SPAC). Its Indonesian rival Goto Group raised $1.3 billion last month, with plans for an IPO next year.

However, these companies are not necessarily a template for small unicorns, said Dmitry Levitt, a partner at Cento.

“I would say the recipe for Indonesia to raise the rounds in a big way has only played out,” he said, adding that there were opportunities in Vietnam and other Southeast Asian countries.

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Reporting by Sayantani Ghosh and Myong Kim in Singapore; Editing by Kim Coghill

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