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Begin-ups from Southeast Asia are suspicious of the IPO

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SINGAPORE – The appetite for startups in Southeast Asia is growing as investors seek to capitalize on the region’s vast potential and look for the next blockbuster IPO.

That hunger could go on for some time, however, according to the managing partner of one of the region’s early venture capital firms, who said some startups are holding back from going public.

“There are definitely companies in our portfolio that are being asked from multiple angles, but they are [the companies] I just don’t have an appetite yet, “Golden Gate Ventures’ Vinnie Lauria told CNBC.

Southeast Asia was the subject of an investment frenzy in 2021, attracting a reported $ 6 billion in the first quarter. IPO announcements by Grab, GoTo and Bukalapak have instilled new confidence in the region.

If we had two exploding, that could literally keep people away from Southeast Asia for 10 years.

Vinnie Lauria

managing partner, Golden Gate Ventures

However, Lauria said several companies in its portfolio have declined or postponed various IPO offers – either through a SPAC or a direct IPO – because they say they are not mature enough and prefer to be “ready” .

A listing on the stock exchange certainly gives start-ups greater control by investors and regular reporting requirements. Lauria, whose portfolio includes online classifieds company Carousell and auto marketplace Carro, declined to specifically name companies, but said two of the prospects are above or near a valuation of $ 1 billion.

Proceed cautiously

Southeast Asia is currently home to around 20 unicorns – startups valued at $ 1 billion or more – the region’s tech startups are expected to be worth $ 1 trillion by 2025.

Some have already announced that they will go public. Others, however, became more cautious. However, Lauria said 2022 could mark a tipping point, with nearly half potentially making the list by then.

“Of the 20 or so unicorns in Southeast Asia, we will likely see eight of them walking this path next year,” he said.

The hesitation of some founders can run counter to a VC’s pursuit of exits when investments can be realized and paid off. But Lauria said he was looking for the long term. After all, as the saying goes, “a bad apple ruins the heap”.

“If we had two exploding it could literally take people away from Southeast Asia for 10 years because they lost a lot of money there,” he said.

“Let’s take it a little slower and make sure the companies that get there are of phenomenal quality. I think it will be a lot better in the long run, ”said Lauria.

“Pioneering” second generation start-ups

Still, the outlook for Southeast Asian startups is looking increasingly hopeful, according to Lauria, who said the region is now entering the next phase of growth as the second generation of entrepreneurs emerges.

“We’re just starting to see the opening notes of a second generation. But I think it’s pretty groundbreaking,” said Lauria.

The strong second generation on the horizon gives me a lot of confidence for the next 10 years.

Vinnie Lauria

managing partner, Golden Gate Ventures

Typically, a generation of founders lasts seven to eight years, during which experience and technology develop. This not only improves the quality of the start-ups and the quality of the teams, but also the amount of capital that they can raise.

“For a long time, the experience in Southeast Asia was as great as in a market like the USA. A lot is changing now, ”continues Lauria, who started her business in Singapore in 2011.

“Having this strong second generation on the horizon gives me a lot of confidence for the next 10 years,” he said. “Southeast Asia gets this platform, which is then hard to lose. That brings it to the stage worldwide.”

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