Southeast Asia’s e-commerce ecosystem is still at a “very, very nascent stage” and many more business models and companies will be formed in the region, the founding partner of a venture capital firm said.
“We’re talking about single-digit digital penetration, compared to overall commercial penetration,” Amit Anand of Jungle Ventures, a Southeast Asian startup, told CNBC’s “Squawk Box Asia” on Thursday.
When asked about the competition between Grab, Sea and Goto for the heart of the region’s e-commerce market, he said, “I think they’re still in the opening act of this movie.”
“In no way do I think the success or failure of one company is going to determine the outcome of the industry as a whole.”
Jungle Ventures announced Thursday that it has raised $600 million to invest in startups, surpassing $1 billion in assets under management. That makes them “the first Singapore-based independent venture capital firm investing in Southeast Asia and India to reach this milestone,” according to the company.
‘The Power of the Internet’
As many as 40 million people in six countries in the region (Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand) became new Internet users in 2020, according to the report.
Anand noted that the trend of the region’s younger demographic being “100%, 120% online” will continue.
“And Covid is just pushing more and more consumers, more and more businesses to do things over the internet.”
Social commerce, for example, has “much greater” potential than traditional e-commerce, Anand added. Social commerce involves the use of social networking websites such as Facebook, Instagram, and Twitter to promote and sell products and services.
“We haven’t even scratched the surface of that…this region has been a very, very fragmented and diverse geography.”
“And if you’re looking to bring the power of the internet to every nook and corner of this region, partnering with those local influencers, those local players and bringing the technology to them is the way to go,” he said.
Do not rush?
With higher interest rates, inflation and a possible recession, Anand said three of his companies have deferred their IPO plans. However, the companies will “definitely” go public in the “medium to long term,” he said.
“The promise of being the CEO of a publicly traded company and the benefits that come with it are definitely much more attractive than the effort for it,” he explained.
“It’s very promising that tech companies in the region can do both local and global IPOs.”
Anand added that Jungle Ventures’ advice to its companies is not to rush back into the market, given recent volatility and supply constraints.
“We’re looking at a somewhat major correction … if you can, you should watch this a little bit more before you go back into the market so you have a little more predictability,” he said.
“Our general orientation for entrepreneurs in the region will be that this will be a restricted market on the supply side and [if there is] any need to bolster supplies, they need to be more focused in their efforts.”