Catcha Group Or That SEA Would Have More Internet Here’S a Midway Checkpoint of Those Users Than the US? Predictions

December 2018

8 Predictions for the Southeast Asian Tech Scene – A Checkpoint Plus 3 New Predictions for Indonesia 2 FOREWORD

Hey folks! brand-new ones just for Indonesia! Even I never expected that SEA’s tech If you know me, you know how much of entrepreneurs would be killing it at this Let’s see how many we get right. And a Southeast Asia (SEA) believer I am! level! more importantly, let’s see if SEA can surpass even Catcha’s wildest I’m always impressed, inspired and But my team and I like a challenge. So expectations in the next 24 months! invigorated by the talent, opportunities, we thought we’d try to predict the BOOM! and growth coming out of this region. future. That’s why, since 2017, we’ve That’s why I’ve focused my entire released our predictions for where the journey as an entrepreneur out of here. SEA tech landscape would go.

Would you have guessed that a local Earlier this year, we announced 8 startup would acquire its competitor, predictions which we felt would reshape the largest provider and pioneer of e- the market till 2020. And today, just in Patrick Grove hailing services? time for Wild Digital Indonesia 2018 (our Co-Founder & Group CEO rockin’ premier tech conference), Catcha Group Or that SEA would have more Internet here’s a midway checkpoint of those users than the US? predictions. Bonus: we’ve added 3

If you have any questions on the report, please reach out via [email protected]. Opinions expressed are solely perspective of Catcha Group. Neither Catcha Group or any of its respective affiliates or employees makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document. All figures as in USD.

www.catchagroup.com © 2018 Catcha Group. All Rights Reserved. About ABOUT CATCHA GROUP Our portfolio of companies – past and present Catcha Group is Southeast Asia’s leading internet group. The Group was established in 2004 and is headquartered in Kuala Lumpur, Malaysia.We build and invest in disruptive internet companies across emerging markets Video on Demand service for emerging markets, currently globally. Today, we are also looking at solutions to grow the tech and start-up present in 24 countries with 5m+ monthly users, raised $303m in funding since inception in 2015 ecosystem via co-working spaces, building Malaysia’s first KL Internet City, applying blockchain to equitize content creation, and delivering impact. Malaysia’s largest coworking space with over 100,000 sqft in total to date

18+ 60+ Purpose-built digital hub for the SEA regional tech ecosystem Years of enabling disruptive Investments globally held businesses directly or indirectly SEA’s leading digital media group. Acquired by Media Prima 3,000+ #1 for $24m in May 2017 Employees globally across Market leadership across portfolio of companies multiple categories SEA’s No. 1 network of online automotive portals with 7 brands 5 $550m+ across Malaysia, Thailand and Indonesia IPOs in the last 10 years Combined value of 2 strategic (4 on ASX, 1 on Bursa Malaysia) exits over the last 3 years Leading operator of online classifieds businesses in emerging markets. Its 17 portfolio companies are present in 19 markets 30+ 10x Countries which our portfolio Average return on investment SEA’s leading internet and digital conference, held across 5 companies are present in across major portfolio assets cities with 1000+ attendees

Operator of Asia’s no. 1 network of property websites. Acquired $2bn+ by Rupert Murdoch’s REA Group for $534m in Nov 2015 Value creation since inception across portfolio REVIEW

8 predictions for the SEA tech scene over the next 24 months, as made in February 2018 6

REVIEW 8 Predictions for the SEA tech scene over the next 24 months, as made in February 2018

By the end of 2019, SEA will have 460m • Internet penetration is on track, with 350m internet users internet users and $10b raised in private tech Tech funding in 2018 has reached $9.1b, 50% more compared 1 funding to 2017.

First Decacorn ($10b+ valuation) will emerge • Yes, Grab is now SEA’s first decacorn. 2 from SEA

• No sign of this yet but startups valued from $10mil to A new Unicorn will be built in less than 3 $100mil are raising funds at record volumes in 2018, years from launch 3 compared to the last 3 years.

Chinese companies remain the largest source • Yes, China is emerging to be the largest source of funding in 4 of tech funding SEA.

REVIEW (CONT.) 8 Predictions for the SEA tech scene over the next 24 months, as made in February 2018

5 At least 2 more IPOs in excess of $500m • There have been no new IPOs in SEA in 2018.

Consolidation of the SEA tech landscape – • In March 2018, Grab acquired Uber’s operations in SEA, with there will be 2 acquisitions in excess of Uber taking a 27.5% stake in Grab. 6 $500m

• Yes. Corporates such as Toyota, Hyundai and Microsoft have Corporates and governments in SEA will invested in SEA startups. Government participation has also invest at least $1bn in the startup ecosystem 7 been increasing.

• Virtual currencies are only legal to trade. However, At least one SEA country will accept/issue a Philippines, Indonesia and Singapore have regulatory 8 virtual currency as a legal tender frameworks in place. Thailand is also mapping out its own central bank digital currency.

PREDICTION #1 ✓ On By the end of 2019, SEA will have 460m internet users and $10bn raised in private track tech funding SEA Private Tech Funding, # Internet Users, Fixed Broadband Speed (2007-2019E) 460m ▪ SEA currently has 350m internet SEA private tech funding users. Indonesia, Malaysia, 23 Mbps 22.8 Mbps 22 Mbps 350m Philippines, Thailand among the 21 Mbps Internet users 20 Mbps Top 10 most engaged countries on 19 Mbps Fixed broadband speed 18 Mbps mobile internet globally 17 Mbps 16 Mbps ▪ Fundraising in SEA in 2018 has 15 Mbps 246m 16.0 Mbps 14 Mbps 219m increased by more than 50% 13 Mbps 11.2 Mbps $10.0b 12 Mbps 186m compared to 2017 11 Mbps $9.1b 10 Mbps 166m 9 Mbps 148m 7.8 Mbps 8 Mbps 127m 7 Mbps 111m 5.5 Mbps 6 Mbps $6.0b 80m 3.9 Mbps 5 Mbps 68m 75m 2.9 Mbps 4 Mbps 1.9 Mbps2.3 Mbps 3 Mbps 1.1 Mbps1.2 Mbps1.5 Mbps1.6 Mbps 2 Mbps 1 Mbps $2.3b 0 Mbps -1 Mbps $1.3b -2 Mbps $0.8b $0.1b $0.2b $0.1b $0.5b 2007$0.0b 2008$0.0b $0.0b2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

Source: World Bank, Google-Temasek Report, Internet Live Stats, Akamai, Crunchbase, Pitchbook; Figures are as at 30 Nov 2018. Only disclosed deals from startups that are backed by angels, accelerator/incubator, seed funds, and VC/PE funds are included.

PREDICTION #2 ✓ On First Decacorn ($10bn+ valuation) will emerge from SEA track China in 2010 SEA in 2019E

Internet Population Average SEA unicorn 459m 460m valuation could reach up to $12.4bn

Combined Market Capitalisation of Market Leaders $94.5b $86.5b*

Tencent: $13bn Tencent: $13bn Baidu: $6.6bn Baidu: $6.6bn

Source:, Crunchbase, Company Annual Report, Press Releases. *Estimation is based on extrapolation from SEA market capitalisation in 2017, assuming SEA between 2017 and 2019 achieve the same growth rate of market capitalisation per internet user as China between 2008 and 2010

PREDICTION #2 ✓ On First Decacorn ($10b+ valuation) will emerge from SEA track

Funds raised by SEA unicorns

$7.1b $6.5b

$2.8b

2016 2017 1H 2018 Funds raised

▪ SEA recorded 524 deals by venture capitalists, 4 times more compared to 2012. ▪ Most funding in 2018 went to SEA’s unicorns, with Grab emerging as the region’s 1st decacorn, after landing investments from Toyota, SoftBank, and a number of financial firms including including OppenheimerFunds, Ping An Capital, Vulcan Capital, Macquarie Capital and Lightspeed Venture Partners.

Source: Google-Temasek Report, Crunchbase, Pitchbook, press release, company website; Figures are as at 30 Nov 2018.

PREDICTION #3 ⌽ Not A new Unicorn will be built in less than 3 years from launch known

Companies Year founded Year achieved Years taken Unicorn status * It is becoming faster than ever 1995 2014 19 to become a Unicorn – it took * 4.7 years on average for the 2007 2015 8 Unicorns above to attain $1b+ valuation 2009 2015 6

2009 2014 5

2010 2016 6

2011 2014 3

2012 2017 5

2012 2015 3

Company X 2018/2019 2021 < 3 years

Source: Crunchbase, press release, company website.

PREDICTION #3 ⌽ Not A new Unicorn will be built in less than 3 years from launch known

Funds raised by SEA non-unicorns

$1.4b

$1.0b $1.0b $0.9b $0.8b $0.7b $0.4b $0.4b $0.3b SEA’s internet economy is currently 2016 2017 1H 2018 experiencing a funding surge as the ecosystem Startups valued <$10 mil matures – startups valued from $10mil to Startups valued $10mil - $100mil $100mil are raising funds at record volumes Startup valued $100mil - $1b compared to the last 3 years.

Source: Google-Temasek Report, Crunchbase, Pitchbook, press release, company website; Figures are as at 30 Nov 2018.

PREDICTION #4 ✓ On Chinese companies remain the largest source of tech funding track

In terms of fund value, China is still leading the way in SEA investments, despite having a slightly lower number of fund Total SEA Private Tech Funding deals compared to Japan.

$9.1b

$6.0b

$2.3b $1.3b $0.5b $0.8b

2013 2014 2015 2016 2017 2018 Source: Pitchbook, Crunchbase, Tech in Asia. Data as at 31 Dec 2017. Only deals with disclosed investors and size of more than $100m are included.

PREDICTION #5 ⌽ Not At least 2 more IPOs in excess of $500m known

• As funding levels increased over the last few years, the SG SG size of exits increased as well. raised $529m raised $884m in We have seen IPOs at a much Total SEA Private Tech Funding in Oct larger value than M&As in Nov 2017 @ $4.9b 2017 recent years. The successful @ $4.4b CHN ? Acquired IPOs of Sea and Razer have boosted investors’ confidence SG in SEA’s future Tech IPO Jun 2017 prospects. $3.13b* • In 2018, M17 Entertainment, CHN parent company of Singapore- AUS AUS Acquired $9.1b Acquired Acquired based dating app Paktor, JPN withdrew its US IPO. Acquired SG $6.0b MY MY Apr 2016 Nov 2014 Nov 2015 $1.96b* SG Sep 2013 $586m $534m $200m $2.3b $1.3b $0.5b $0.8b

2013 2014 2015 2016 2017 2018 Source: Pitchbook, Crunchbase, Techcrunch. Data as at 30 Nov 2018. * Alibaba acquired 51% stake in the deal, later in Jun 217 acquired another 32% stake at a valuation of $3.13bn

PREDICTION #6 ✓ On Consolidation of the SEA tech landscape – there will be 2 acquisitions in excess of $500m track

▪ With enormous late-stage funding, tech unicorns will use M&A to 1 expand product offerings. Notably, Grab and Go-Jek are building out CEO 2018 SG Anthony their mobile payments capability via M&A Acquired Tan: “Deals similar to ▪ Increased funding and valuations lead to higher expectations by IDN Kudo may 2 investors for faster and bigger results, which then drive the tech Apr 2017 be targeted” M&A market as companies cant rely on organic growth anymore $100m

▪ With hugely successful startups acquiring more companies, it will 3 help create a stronger M&A ecosystem, thereby generating more liquidity and encouraging more investment in the region The most active Unicorn acquirer in SEA ▪ We have seen this done by Google and Facebook in the US and 2016 4 Alibaba and Tencent in China – it will happen here as well

• We have seen startup valuations increase dramatically over years. As valuation expectations normalize moving forward, we expect to see more corporates and unicorns using M&A to grow. 2017

• In March 2018, Grab acquired Uber’s operations in SE, with Uber taking a 27.5% stake in Grab.

Source: Bloomberg, The Strait Times, company website.

PREDICTION #7 ✓ On Corporates and governments in SEA will invest at least $1b in the startup ecosystem track The increasing number of opportunities in SEA’s tech ecosystem have seen corporates such as Toyota, Microsoft, Google and Razer beginning to invest in other startups – which goes hand-in-hand with increasing government participation. In 2018, the total investment from corporates and governments has already surpassed $1b.

2018

Corporates Governments

Source: Screenshots from the Jakarta Post, The Star Online, Digital News Asia, Straits Times, Deal Street Asia, Techcrunch, Reuters, Bangkok Post, Lowyat.net

PREDICTION #8 ⌽ Not At least one SEA country will accept/issue a virtual currency as a legal tender known Then Now

Jan 2014 – Central Bank of Malaysia has no plans Dec 2017 – Central Bank of Malaysia releases to regulate bitcoin (Source) draft rules for cryptocurrency exchanges (Source)

Jan 2015 – Monetary Authority of Singapore to October 2018 – Singapore’s Central Bank Will Aid regulate virtual currency intermediaries for money Crypto Startups in Opening Bank Accounts laundering and terrorist financing risks (Source) (Source)

Jul 2014 – Thailand approves fully-legal Bitcoin August 2018 – Thailand is mapping out its own exchanges (Source) central bank digital currency (Source)

March 2014 – Central Bank of Vietnam officially July 2018 - Import of ASIC cryptocurrency mining does not support Bitcoin (Source) equipment is temporarily banned (Source)

Jan 2015 – Central Bank of Indonesia warns July 2018 – Trade Ministry has declared against Bitcoin use (source) cryptocurrency a legally tradable commodity, and is setting regulations and taxations (Source)

Mar 2014 – Central Bank of the Philippines issues Jan 2018 – Central Bank of the Philippines grants warning on digital currencies (Source) first cryptocurrency exchange licenses (Source)

While most governments do not recognize virtual currencies as legal tenders now, governments are becoming more open to virtual currencies’ role in society due to massive public interest

A closer look at the local tech scene 19 Indonesian tech scene over the next 24 months PREDICTION 1:

Funding in Indonesia will exceed funding in Singapore

Increasing market leader performance Larger market size

To date, Indonesia's unicorns and Indonesia's larger market size indicates Singapore's unicorns have raised a a larger opportunity to grow compared similar amount of funding. With to Singapore - this is reflected in Indonesia expecting to have more increasing number of Series C funding unicorns by 2019, they will soon take deals. the lead.

Source: Google-Temasek Report, Crunchbase, Pitchbook, press release, company website; Figures are as at 30 Nov 2018.

PREDICTION #1 Funding in Indonesia will exceed funding in Singapore

To date, Indonesia’s market Internet 133mil 5mil leaders have raised almost Population the same amount as Singapore’s unicorns. With Combined Market Indonesia expecting to have Capitalisation of ~$20bn $22bn* more unicorns by 2019, they Market Leaders will soon take the lead.

Tencent: $13bn Tencent: $13bn Baidu: $6.6bn Baidu: $6.6bn

Source:, Crunchbase, Company Annual Report, Press Releases, Reuters.

PREDICTION #1 Funding in Indonesia will exceed funding in Singapore

Total invested in Indonesia Singapore is experiencing a decline in number of Series C funding deals, while Indonesia (# Series C deals) Indonesia is slowly increasing. Indonesia also 57 Singapore (# Series C deals) has a market of 133 million Internet users – 45 44 42 26 times larger than Singapore – giving it 35 36 35 37 36 32 33 more room to grow as reflected in the 27 29 29 24 24 increase of total funds invested in Indonesia 23 21 17 18 17 13 15 across the years. 12 10

$3.0b

Indonesia private tech funding $1.4b

$0.7b $0.2b

2014 2015 2016 2017

Source:, Crunchbase, Singapore Venture Capital & Private Equity Association, Tech in Asia, CB Insights.

At least 2 unicorns from the fintech and healthtech sectors

Large unbanked population Healthtech's increasing Increasing funding interest and with high adoption popularity in Asia Pacific strong government support

Investors are diversifying Indonesia's growing away from ecommerce. Indonesia is bound to Internet-savvy middle The Indonesian follow in China and India's class indicates increasing government have begun footsteps to explore demand for fintech to put in place initiatives healthtech innovations. services. to support fintech and healthcare.

PREDICTION #2 At least 2 unicorns from the fintech and healthtech sectors

Fintech adoption Indonesia fintech market size (transaction value)

Internet users 2x 133mil 67mil 57mil 64mil 25mil 5mil

$54b

46% 52% 45% 39% $19b $22b 21% 25% $15b

Indonesia Malaysia Phillippines Singapore Thailand Vietnam Indonesia 2016 2017 2018 2025

64% of Indonesians aged 25 years and older are unbanked, which represents a strong opportunity for fintech startups who can step in. With high adoption rates and a market whose transaction value is set to double by 2025, the fintech sector in Indonesia is set to grow exponentially.

Source: World Bank, We Are Social, Daily Social, Statista, CB Insights, Google-Temasek

PREDICTION #2 At least 2 unicorns from the fintech and healthtech sectors

Government support Banks investing in fintech Fintech deal activity in Indonesia (#) $22.4mil 2.5x 53 $89mil

$15mil

Up-and-coming startups 21 $16.5mil 11 3 $45mil Indonesia $37mil 2014 2015 2016 2017

The Indonesian government is in the midst of establishing regulatory frameworks, a fintech hub, and has issued support to fuel fintech growth in line with its exploding ecommerce sector. Indonesia’s largest banks have also started to invest heavily in fintech by either establishing funds, incubators or acquiring fintech startups. Together with an increasing trend in the number of fintech deals in Indonesia, the environment is ripe for an Indonesian fintech unicorn to emerge.

Source: CB Insights, Jakarta Post, Finnews.asia, press releases, company website.

PREDICTION #2 At least 2 unicorns from the fintech and healthtech sectors Market share

Others Indonesia 14% 5% India 32% Indonesia healthcare market size Asia Pacific healthtech funding trend* Japan 8% 18x Australia 8% $1000 Singapore China 11% $800 22%

$600 $363b $400

$200 $20b

Total funding per stage ($M) stage per funding Total $0 Indonesia Early Series A Series B Series C Series D 2010 2025 2016 2017 2018 In 1H 2018, funding for healthtech in Asia has reached $3.3b across 107 deals – this is estimated to continue increasing and Indonesia already holds the 2nd largest market share in Southeast Asia behind Singapore. Indonesia’s healthcare market is also projected to be worth $363b in 2025, but currently there are only 160,000 doctors to serve a population of 250 million people.

Source: Galen Growth Asia, Healthtech.id, CB Insights. Figures are as at 30 June 2018. *includes Southeast Asian countries, China, India, Australia, Japan, New Zealand, Bangladesh and Taiwan.

PREDICTION #2 At least 2 unicorns from the fintech and healthtech sectors

Indonesia’s top two categories to invest in (% of of responses)

Increasing local activity Government support Fintech Healthcare 64% 70%

29% 20%

Local investors Foreign investors Indonesia’s top two categories to decrease investment Up-and-coming startups in (% of of responses) E-commerce $13mil Social media 60% $12.1mil 43% 21% 10%

Local investors Foreign investors Both local and foreign investors are looking diversify their investment away from e-commerce, with healthcare and fintech becoming the top two categories that they are interested to invest in. This is aligned with increasing activity amongst local companies and growing government support in Indonesia.

Source: Google-AT Kearney study, Tech In Asia, Reuters, press release, company website.

www.catchagroup.com © 2018 Catcha Group. All Rights Reserved. 27 Indonesian tech scene over the next 24 months PREDICTION 3: Indonesia will have the largest share of ‘Nexicorns’ - startups worth >$100mil

Increased internet Fastest growing Strong funding Largest market size penetration internet economy opportunities

Indonesia already has the largest Indonesia's By 2050, Indonesia number of Internet Indonesia is internet economy will have the third users. This will receiving is predicted to largest middle continue to increasing funding grow to $100b by class population in increase as interest. 2025 emerging markets infrastructure improves.

PREDICTION #3 Indonesia will have the largest share of ‘nexicorns’ - startups worth $100mil

133mil SEA internet economy market size (GMV)

Internet users 67mil 57mil 64mil $100b 25mil 5mil

$43b $33b $27b $22b $21b $21b $10b $12b $9b $8b The Rp 14 trillion Palapa Ring project $8b $7b $6b $3b $5b $2b $5b aims to expand domestic broadband service nationwide, particularly in Indonesia Singapore Thailand Vietnam Malaysia Phillippines remote Indonesian regions. 2015 2018 2025

• Indonesia has a market of Internet users that is 27x bigger than Singapore. • Indonesia has the largest and fastest-growing internet economy in Southeast Asia, and is predicted to grow to $100 billion by 2025.

Source: Google-Temasek Report, CB Insights, The Jakarta Post; Figures are as at 30 Nov 2018.

PREDICTION #3 Indonesia will have the largest share of ‘nexicorns’ - startups worth USD100mil

SEA internet economy market size (GMV) Fundraising in Indonesia is ahead 1032 of the rest of SEA, and only slightly behind Singapore. Also, Total number of deals 834 the number of companies in $7bn Indonesia that have raised first- round funding has increased by $6bn 504 more than 300%, compared with 2012 – indicating a growing investor interest in the country.

$3bn $3bn

$2bn $1bn $1bn $1bn $1bn

Indonesia Singapore Rest of SEA 2016 2017 1H 2018

Source: Google-Temasek Report, Crunchbase, Pitchbook. Figures are as at 30 Nov 2018.

PREDICTION #3 Indonesia will have the largest share of ‘Nexicorns’ - startups worth USD100mil

Projected size of middle class population by 2050 While Singapore currently has 900mil the largest share of Nexicorns, 800mil the country is projected to 700mil have a much smaller middle 600mil class population by 2050. 500mil Meanwhile, Indonesia will have 400mil the largest middle class 300mil population amongst its SEA 200mil peers, and already has the 100mil largest total number of mil startups. India China Indonesia Phillippines Thailand Malaysia Singapore

# Small startups (<$10m) 2010 377 348 749 1807

# Little Ponies (>$10m) 16 7 8 7 27 2015 # 2015 # Nexicorns (>$100m) 7 1 2 3 12 # Unicorns (>$1b) 4 0 0 0 4

Source: HSBC, Economist intelligence Unit, Google-Temasek Report