Why Now is The Golden Age of Asia Startups

The Asian economic miracle began with Japan in the wake of the Second World War. Since then, Asia has continued to produce economic miracles, and be a breeding ground for great companies.

Currently, Southeast Asia is home to some of the world’s most dynamic, promising startups, with Grab and GoTo’s initial public offerings (IPO) some of the most hotly anticipated events of the year. Kevin Aluwi, who co-founded the Indonesian ride-hailing unicorn, Gojek, who are half of GoTo, believes that this is the start of a Golden Age of Southeast Asian tech companies.

A Vast Opportunity

Southeast Asia has over 680 million people, or 8.58% of the world’s population. The median age in the region is 30.2 years. So, we are talking about a large region with a youthful population. In addition, the region is experiencing a lot of growth. The World Bank estimates that, for instance, the Philippines will grow by 5.7%, Malaysia by 5.5%, Vietnam by 5.3%, and Indonesia by 5.1%.

All these countries are growing at rates unimaginable in the West. The region has not developed to the level of Japan, or the United States, so there are opportunities which are closed off in other markets. Companies have the opportunity to make a generational impact on society and help in the developmental transformation of the region.

Startups Are Leading the Development of the Country

In the last decade, several unicorns have emerged from the region. Gojek and Tokopedia were each multi-billion startups before they merged to form GoTo. Southeast Asia has also given birth to unicorns such as Bukalapak, Carousell, Sea Group. Despite the emergence of these unicorns, the region still has barely tapped into the vast opportunities that existed a decade ago.

The success of startups such as Gojek is built on their ability to meet the demands of a vast, growing and increasingly prosperous region. Given the region’s developmental qualities, companies have enormous opportunities in the informal economy, where they can play an organizing role and harness existing networks to develop large, fast-growing businesses.

An example of how companies can have a meaningful impact on the economy is that GoTo contributes 2% of Indonesia’ gross domestic product (GDP), through its ride-hailing, payments and ecommerce services. To really understand the impact of these businesses on the region, you can’t compare them with today’s peers in the West. Rather, you have to look back to the influence of firms such as John D. Rockefeller’s Standard Oil, or JP Morgan during the Gilded Age.

In other words, you have to compare them with businesses that were able to shape the economy in profound ways. As large as Amazon, Alphabet, or Apple are (Apple is 10% of the U.S. GDP, for instance), these companies do not play as profound a role in the fate of the economy as Asia’s startups do even those offering steak and seafood restaurants.

In Asia, companies have the opportunity to lift people out of poverty, improve standards of living, and transform the region into a first world economy. The fate of Asia is hinged on the success of these unicorns and these companies are impacting the lives of millions of Southeast Asians.

One advantage which companies in the less developed parts of the world have is that they can make the jump to the best technology out there, without having to go through the intermediate developmental stages. You see it in China, South Korea and Japan, where companies, and the country at large, have leapfrogged to new technologies during their developmental stages, because they aren’t encumbered by legacy technologies and decades old behavioral patterns that make change difficult.

It’s why, for instance, Japan was able to jump to advanced robotics, a field it still leads and which the West has barely caught up to in terms of the lives of its citizens. Forward-thinking companies have the opportunity to drive change in ways that are simply harder to do in more developed countries. If you want to see what the future of technology looks like, you have to look to Asia.

China has gone further in its adoption of ecommerce than any other country in the world, and this is because it didn’t have the legacy businesses and systems that have made the transition much slower in the United States. Whereas Amazon has to dethrone Walmart in retail, JD.com’s biggest rival is Alibaba, another ecommerce giant. China leads the world in creating so-called “super apps” that can do anything. To date, no U.S. platform has developed a true super app.

For investors looking for an opportunity to make a huge societal impact and to be part of startups that are doing futuristic things, the place to be is not Silicon Valley, it’s Asia, and more specifically, Southeast Asia. The region is getting better at creating fertile ecosystems for startups, and we are likely to see more unicorns from there.