!Alexander Jarvis, Operating Partner, Jungle Ventures

8 Myths about Asia

Today we call it

You need to be in the Valley to build a big consumer company

#1

China has already created a company of scale (Sorry America…)

• Alibaba’s sales for 2014 are forecasted at $420BN, 2.5x over 2012. • Amazon reported sales of $74.4BN for fiscal 2013 and EBay… fiscal 2013 of $16 Billion,

less than one-tenth Alibaba’s 2012 sales

• 1m active customers • 79m monthly visits • Millions of Euro per month in

revenue !

• 1.6m customers served • 27m monthly visits • Millions of Euro per month in

revenue

Rocket are building companies of scale across SEA, achieving a lot in just 2 years

Source: http://www.kinnevik.se/en/Investor/Kinnevik-Rocket-capital-markeys-day-2014/

APAC is set dominate ecommerce, 41% larger than America in 2016

2.2%!

Asia-Pacific! North America! Western Europe!

Eastern Europe! Latin America! Middle East & Africa!

2.1%!

27.9%! 35.9%! 28%! 3.6%!

3.1%!

1.6%!

2011!

30.5%! 33.5%! 26.9%! 3.8%!

3.4%!

1.9%!

2012!

33.4%! 31.5%! 25.7%! 3.9%!

3.5%!2013!

36.2%! 29.7%! 24.3%! 3.9%!

3.6%!2014!

2015!

2016!2.3%!

38.2%! 28.8%! 23.4%!3.8%!

3.6%!

2.3%!

39.7%! 28.2%! 22.6%!3.7%!

3.5%!

Source: eMarketer, 2013

B2C Ecommerce Sales Share Worldwide, by Region, 2011-2016 - % of total

• 2013: Sales is expected to grow 18.3% to $1.298 trillion with Asia-Pacific surpassing North America to become the world's #1 market for B2C ecommerce sales.

• Despite strong growth, North America’s share of global sales will drop from 33.5% in 2012 to 31.5% in 2013 as Asia-Pacific surges ahead.

• Asia-Pacific in 2013 will see sales increase by more than 30% to over $433 billion — or more than one-third of all global B2C ecommerce sales.

• Three Asia-Pacific markets — China, India and Indonesia — will see faster B2C ecommerce sales growth than all other markets worldwide in 2013.

There already are ‘big’ consumer companies

Definitely need to be in the Valley for

ENTERPRISE startups!

#2

Heard of these guys?

There are already APAC unicorns in enterprise

Internet penetration in Asia is too low

#3

Almost 200m users online in SEA already

Source: UBS

How does Asia stack up globally?

Source: US census bureau, InternetWorldStats, CNNIC, Tencent, Facebook, Vkontakte, ITU, CIA

APAC has almost half of global users, simply put

Source: US census bureau, InternetWorldStats, CNNIC, Tencent, Facebook, Vkontakte, GSMA Intelligence

Internet traffic will be double the US in 2015

2012 2013 2014 2015 2016 2017 CAGR ’12-17

By Geography (PB per Month)

Asia Pacific 310 614 1,168 2,053 3,377 5,257 76%

North America 222 380 632 993 1,466 2,087 56%

Western Europe 181 276 426 655 976 1,384 50%

Middle East and Africa 50 96 182 333 559 861 77%

CEE 66 116 211 365 577 845 66%

Latin America 55 97 179 304 481 723 67%

Total (PB per Month)

Mobile data and internet 884 1,579 2,798 4,703 7,436 11,157 65%

Source: CISCO VNI, 2013

Social media penetration in APAC is the global average

Source: US Census Bureau, CNNIC, Tencent, Facebook

Internet penetration may be comparatively low,

but there’s still a LOT of people online

Asians just copy, they don’t innovate

#4

CAGR of tech patents in SEA is 7x USA

Growth of tech patents in SEA VS USA

-45%

0%

45%

90%

135%

180%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

SEA USA

Source: Patents by technology, OECD. SEA consists of ID, MY, PH, SG and TH

CAGR

SEA 14%

USA 2%

Asia’s share of global tech patents is converging

% of global tech patents in Asia VS USA

0%

10%

20%

30%

40%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Asia USA

Source: Patents by technology, OECD. Asia consists of ID, MY, PH, SG, TH, CN, HK, IN, AU & NZ

2 of Fastcompany’s most innovate companies are Asian

India - Zipdial: Missed call innovation led to one of its kind partnership with FaceBook

Singapore - Rotimatic: Will lead to female empowerment

• Remember.. you keep saying you don’t invest in an ‘idea’

• Asia has barriers (AKA problems): • Payments • Logistics • Market fragmentation • etc…

• In America you can effectively outsource every aspect of your business

• In Asia you have to figure out a creative solution to make every aspect of your business work

• Why have business model risk when you have execution risk?

Have you tried executing in Asia?

Innovation is overrated. Think about ‘copying’

differently, you have to hustle in Asia

You can’t get an exit in Asia

#5

• Approximately 1,000 startups in the preceding 3 years !

• 12 successful exits worth S$600 million in 2013 !

• 1.2% exit rate is not too shabby !

• 2x more exits in 2013 than 2011 !

• We are just getting started

Let’s look at Singapore, last year

• JobStreet / Seek - A$545 • Viki / Rakuten - $200m • Travelmob / HomeAway - N/A • Zopim / ZenDesk - ~$30m • SGCarMart / SPH - $48m • TransferTo / Ingenico - $38m • JobCentral / CareerBuilder - N/A • SoundBuzz / Motorola - $27.65m • Detik / Para Group - $60m • Tarad / Rakuten - N/A

!• Reebonz and RedMart worth $100m+ already

No Unicorns in SEA, but solid acquisitions

• Australia • Atlassian • Freelancer • iSelect • Xero • 3P Learning • OZForex • SEEK • Carsales

We have already had IPOs

• Malaysia • Jobstreet • iProperty • MyEg • iCar • iBuy

• Singapore • AsiaTravel

!

!• Property Guru coming -

~$500m+

You can get an exit, they just aren’t as big as the

US (yet)

Asians aren’t entrepreneurs

#6

There are still big cultural issues• A lot of people still want to work for ‘Samsung’ • But saying you are a founder is now an acceptable response at a

dinner table when asked “What do you do”

But twice as many Philippinos than Israeli’s recon they have the skills to startup!

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Perceived Capabilities!Percentage of 18-64 population who believe to have the required skills and knowledge to start a business

Indonesian’s are twice more likely to be founders than in America

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Total early-stage Entrepreneurial Activity (TEA)!Percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business

They aren’t as afraid of failing as you think

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Fear of Failure Rate!Percentage of 18-64 population with positive perceived opportunities who indicate that fear of failure would prevent them from setting up a business

Asians are representing abroad… how much?

…half the US startup jobs

AND… Asian founders in America raise more money than white founders, by the way

Founding team racial composition vs. median funding received ($m)

$0.00

$1.00

$2.00

$3.00

$4.00

All Asian Pacific All white Mixed All Black

$1.3

$2.2$2.3

$4.0

Source: CBInsights, 2010. National seed and Series-A - Jan to June 2010

They see good opportunities locally (As much as the US

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Perceived Opportunities!Percentage of 18-64 who see good opportunities to start a firm in the area where they live

More of their friends have set up companies

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Know Startup Entrepreneur Rate!Percentage of 18-64 population who personally know someone who started a business in the past two years

More media attention than developed markets

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Media Attention for Entrepreneurship!Percentage of 18-64 population who agree with the statement that in their country, you will often see stories in the public media about successful new businesses

Far more intend starting up in next 3 years than in US and UK

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Entrepreneurial Intention!Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who intend to start a business within three years

Asians are entrepreneurs, they are

half of the US ecosystem!

There’s too much seed funding in Asia

#7

• In 2006, $48 million seed went into 116 deals !

• In 2013, $83 million was deployed across 257 transactions !

• Average seed rounds have decreased from $413k to $323k !

• In 2012 in America, there were 1,749 seed deals !

• There are 133 accelerators globally, SEA has 1-2 per country

Sure, ‘more’ money has come in

Source: Asia Venture Capital Journal Research. Seed defined as deals under $1 million in size

“FFF” investments still half of that in America

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Informal Investors Rate!Percentage of 18-64 population who have personally provided funds for a new business, started by someone else, in the past three years

There isn’t that much seed money

There is no smart money in Asia

#8

Look around the room!