Ride-hailing operator Grab is expected to invest heavily in regional startups, including those from Vietnam, as the SoftBank Group-backed unicorn strives to expand the reach of its all-in-one app, according to Chris Yeo, head of investment arm Grab Ventures.
The Singapore-based company plans to make two to four new strategic investments in startups every year, targeting companies at Series B or higher fundraising stages, said Yeo in an interview with the Nikkei Asian Review, adding most of these deals will be for minority stakes.
In addition to Indonesia and Malaysia, Grab will look more at Vietnam because it sees “increased deal flow on potential opportunities there,” Yeo said.
Separately, Grab is "actively looking out for potential acquisitions as well," he said.
Unlike SoftBank's nearly US$100 billion Vision Fund, which invests globally, Grab will focus on advancing its strategy of becoming the region's super app, including services such as food delivery and digital payments.
The main reason for the investments must be synergies with existing business, but financially it must make sense, but that's not the first and the most important, Yeo said.
Grab has set five target areas for startup investment: mobility, financial services, food, logistics and enabling technologies such as artificial intelligence and machine learning, Yeo said.
After the ride-hailer acquired Uber Technologies' Southeast Asian business in early 2018, it launched Grab Ventures to facilitate more startup investments and nurture early stage startups in the region.
Company database Crunchbase revealed 70 Southeast Asian startups were acquired by other businesses in the region during 2018, while 54 went under buyers from the rest of the world. Only seven of these fledgling enterprises took the path of initial public offerings.
The data shows a change from the early 2010s, when IPOs and acquisitions by companies from outside Southeast Asia accounted for most of the region's startup exits.
In 2018, startups in Vietnam attracted US$889 million in funding from 92 deals, nearly triple the value recorded in 2017 at US$291 million for the same number of deals, according to Topica Founder Institute (TFI), a Hanoi-based startup accelerator program.
In the next three years, startups in Vietnam are expected to receive large funding in Series A worth US$205 million, US$320 million and US$440 million every year from global venture capital firms including Softbank Vision Fund, Sequoia, SK, Temasek, Insignia, Golden Gate Venture, and others.
According to the Vietnamese Ministry of Planning and Investment, from 400 startups in 2012, the number has been rising steadily to 1,800 in 2015, and later reached over 3,000 in the 2017 – 2018 period.
Vietnam’s startup ecosystem has been developing with over 40 venture capitals, a two-fold increase against 2015, including those from Vietnam’s leading corporations such as FPT, Viettel, Vingroup, CMC, among others.