A unicorn is a privately held startup company valued at over $1 billion USD. In the ASEAN, those companies are not just focused on self-expansion, but on aiding other small- and medium-sized enterprises (SMEs) with leadership building, promotion, collaboration and platform use. With complete platform systems outlining consumer access, payment systems and universities, many unicorns provide a proven methodology to help the SMEs gain access to financing and advertising opportunities.
In most untapped economies, it’s the Venture Capitalists (VC) that fund growth, yet in Southeast Asia, it’s the rise of Peer-2-Peer lending (P2P) unicorn financing that is paving the way. Unicorn companies like GO-JEK, Grab, Tokopedia, Lazada and Sea Group are at the forefront of assisting SMEs to get off the ground with customer-to-customer (C2C) and business-to-customer (B2C) programming and investment opportunities.
We look at what’s next for the unicorns of Southeast Asia
Small- and medium-sized enterprises represent the backbone of Southeast Asian economies, with about 64 million companies throughout the region. They represent between 88.8% and 99.9% of economic enterprises and between 51.7% and 97.2% of total employment, according to the Association of Southeast Asian Nations. With so much opportunity, it makes sense that unicorns would want to participate in sustaining these growing economies.
Which unicorn companies are making an impact?
In recent years, globally-renowned giants like Grab, Go-Jek, Google and WhatsApp have invested their time and funding into the Southeast Asian countries. These titans have seen the innovative nature of the region and are starting to provide digital entrepreneurship workshops for the local SMEs, actively pushing the digitalisation drive.
GO-JEK, which started as a motorcycle ride-hailing service has improved their social impact and economic support with access to delivery services, banking and hospitality conveniences (like ordering a masseuse or cleaner to come to your home). By signing up, SMEs gain a platform with which to list services, acquire clients and manage payment systems, all on one convenient platform. GO-JEK currently operates in over 50 cities in Southeast Asia with a mission statement to ‘improve social welfare by ensuring efficiency in the market,’ and partners solely with SMEs – by the people, for the people, with ease of access for start-up companies and small-time SMEs. GO-JEK also comes with its a cashless payment system called Go-Pay.
Grab, in contrast, has taken over Uber’s Singapore division and will soon replace Uber in Southeast Asia with the hopes of ensuring safe and easy travel. Where this is practical from a western-business perspective, with the ease of in-app ride-hailing and standardised up-front rates based on distance, Grab may find some difficulty in getting a solid foothold in countries like Thailand. In Thailand, the government taxi, tuk-tuk and songthaew services typically cost only 100 baht (about $3 USD) per journey, regardless of distance – within reason. Grab offers a similar platform as GO-JEK, with listed services including delivery, hospitality services and managed payment systems; although, it appears to focus its services towards a class of clientele with interests in corporate sponsorship. With that said, Grab may be a better platform for the established SMEs looking to expand their clientele. Grab exists in 195 cities over eight Southeast Asian countries with over 90 million mobile-device downloads. For access to clients, it’s a booming resource for SMEs. Grab also pairs with OVO to provide their users with cashless payment systems.
Tokopedia is an eCommerce tech company with a mission statement of ‘democratizing commerce through technology’. Tokopedia was the first Southeast Asian tech company to receive VC funding and now sits at a value of about $7 billion. Tokopedia’s major platform, called The Marketplace, is a free C2C for merchants and buyers, as well as a B2C for Official Stores. Tokopedia’s conglomerate also has platforms in banking, credit and payment systems, FinTech and the Mitra Tokopedia application, allowing anyone, especially SMEs, to sell Tokopedia’s digital products. In terms of client access, Tokopedia is eCommerce at its best and from the perspective of SMEs, there’s undoubtedly room offered to anyone who aims to launch a small business, especially with Mitra Tokopedia. Tokopedia also pairs with OVO for cashless payment systems in The Marketplace.
Lazada is an extremely popular, easy to use, shopping and selling platform with over 300 million products and 155,000 sellers. Lazada Group is a subsidiary of Alibaba Group and though presently doesn’t offer C2C, they have just launched a programme to co-develop advanced modules in eCommerce for entrepreneurs and SMEs in Singapore under the name LazStar Academy.
To paraphrase: the Lazada Group will join forces with higher learning institutes and data analytics experts to jointly develop online and offline training courses for entrepreneurs and small and medium enterprises (SMEs) to become more nimble and capitalise on the eCommerce boom in the region.
We explore the mobile app trends in Southeast Asia
Sea-Group is a Taiwanese tech conglomerate holding for Garena, Shopee and payment systems through Airplay, which gives them wide access to Apple products. With the mission, ‘to better the lives of the consumers and small businesses in our region with technology,’ it’s easy to see that social responsibility is high on Sea-Group’s priority list, making them useful for the growth of SMEs. Shopee is a B2C complete with a University to help startup SMEs learn how to use programmes and promote business and sales.
The biggest obstacle SMEs in Southeast Asia generally face is financing opportunities, in a region of the world where approximately 73% of the population is unbanked. With the exponential growth of P2P unicorn companies, there is the opportunity to provide financing to SMEs at a level that can seriously improve economic growth. So, perhaps the mythical unicorn can grant wishes after all.