Opinion | How Southeast Asia’s start-up exit environment is maturing with tech in the vanguard
- Big family offices are still acquiring start-ups but local stock exchanges are now more hospitable to new offerings
In the venture capital game, most fund managers in the West envision an exit scenario in the form of a start-up chief executive ringing the opening bell on the day of their IPO at the NYSE.
While going public has long been the holy grail for start-ups in developed markets such as China and Silicon Valley, the prospect of an IPO is still a somewhat new concept for tech companies in Southeast Asia.
After the region’s collective tech and venture capital ecosystem really started to take off in recent decades, the vast majority of exits came in the form of M&A by large local incumbents and old-money conglomerates.
In markets like Indonesia, the exit dream for most founders was to build an online company from scratch and have it get bought out by the likes of a state-owned enterprise or a big family office. In Indonesia, for example, one would think of Djarum Group, Emtek, Kompas, Telkom, Salim, or some of the other usual suspects.
In many cases, these exits were what we might call “acquihires”, in which the buyer simply absorbs the talent and winds down the start-up (often as a defensive play). In 2019 though, the dream is already different.
Not only has the number of successful start-up exits been steadily on the rise year-on-year since 2014, but we’re also starting to see exits come in different forms.