Southeast Asia’s e-commerce ecosystem is still at a “very, very nascent stage” and many more business models and companies will be formed in the region, said the founding partner of a venture capital firm.
“We’re talking about single-digit digital penetration, as compared to the overall commerce penetration,” Amit Anand of Jungle Ventures, a Southeast Asian company, told CNBC’s “Squawk Box Asia” on Thursday.
“By no means I think the success or failure of one venture is going to determine the outcome of the overall industry.”
Jungle Ventures announced on Thursday it raised $600 million to invest in start-ups, exceeding $1 billion in assets under management. That makes them “the first independent, Singapore-headquartered VC firm that invests across Southeast Asia and India to reach this milestone,” according to the company.
As many as 40 million people in six countries across the region — Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand — became new internet users in 2020, the report said.
The trend of the younger demographic in the region being “100%, 120% online” will continue, Anand observed.
“And Covid is only pushing more and more consumers, more and more enterprises to do things over the internet.”
Social commerce, for example, has a “much larger” potential than traditional e-commerce, Anand added. Social commerce involves the use of social media websites such as Facebook, Instagram and Twitter to promote and sell products and services.
“We’ve not even scratched the surface of that … this region has been a very, very fragmented and a diverse geography.”
“And if you’re looking to get the power of internet to every nook and corner of this region, partnering with those local influencers, those local agents and bringing technology to them is the way to go,” he said.
With higher interest rates, inflation and a possible recession, Anand said three of its companies have deferred their IPO plans. However, the companies will “definitely” go public in “mid to long term,” he said.
“The promise of being the CEO of a publicly listed company and the benefits that come with it are definitely much more attractive than the effort for it,” he explained.
“It’s very promising that tech companies in the region can do both local and global IPOs.”
“We are seeing somewhat of a major correction … if they can, they should watch this a little bit longer before coming back to market so they have a little bit more predictability,” he said.
“Our guidance overall to entrepreneurs in the region will be that, this is going to be a supply-side-constrained market and [if there is] any need to shore up supplies, they need to be more focused in their efforts.”