Chinese online retail giants Alibaba and Tencent are betting big on Asian startups following the massive amounts of cash they have set aside to fund start-ups in Asia.
Both Alibaba and Tencent have reportedly invested a lot of capital to be used towards funding the most promising startups in Southeast Asia. This is interesting considering that both firms are said to be rivals but it seems that they agree that the region has a lot of potential and thus the need to invest in it. However, more companies are joining the startup funding train according to a Reuters report.
The report from Reuters revealed that JD.com and Baidu have also joined Alibaba and Tencent in investing roughly $12 million in China United Network Communications. The latter is a state owned operator that is listed in Shanghai. The companies aim to pump more private capital into enterprises as part of a wider initiative for funding enterprises that are operated by the Chinese government.
Southeast Asia is characterized by heavy demand for tech
Southeast Asia has rapidly developed into a business oriented area that is quite attractive for investors. The region has roughly 600 million consumers and is home to six major markets including Malaysia, Vietnam, Thailand, Indonesia and the Philippines. These markets are characterized by a rapidly growing middle class. Mobile technology is considered one of the reasons behind the rapid growth and these markets are characterized by heavy demand for smartphones and other mobile products.
“Southeast Asia has 260 million internet users with 3.8 million more going online per month,” stated a recent report co-authored by Google.
The internet-using population is expected to grow to 480 million people over the next three years. It is still miles away from China’s internet population but it definitely means that there is a lot of opportunities to come up within the region. The new opportunities usually lead to business ideas and aspiring start-ups. However, most of them are usually cash strapped and thus the need for a program that helps these start-ups to get off the ground.
The same report also claims that all businesses that have cropped up as a result of the internet will be worth $200 billion by 2025, which is 5 to 6 times more than the value in 2015. E-commerce is expected to grow from the reported $5.5 billion in 2015 to $88 billion in 2025. Half of that growth will be generated by Indonesia according to the report.