Capital is still available for companies that have sound business models and a clear path to profitability—despite uncertainties in global markets and recent high profile flops that resemble the dot-com bubble, say investors at a panel at the Singapore Fintech Festival and SWITCH event held earlier this week in the city-state.
“If your company is seeking to raise capital in this new environment, I would say capture any window available to you to raise that capital. Don’t postpone the timing because there is a lot of volatility ahead, especially as the US election campaign heats up,” said Jing Ulrich, vice chairman of global banking and Asia Pacific at JP Morgan Chase, and an adviser for Chinese and Asian technology companies as they seek to raise more capital in private and public markets.
However, despite ongoing trade tensions, the executive from JP Morgan Chase predicted that short-term market sentiment will improve as the American and Chinese presidents are expected to seal up the first phase of a trade deal before the end of the year.
The capital market is still open to companies in the technology space to seek capital as venture and PE funds have continued raising money, which means there’s still a great deal of appetite to invest in fast-growing companies that can survive future downturns, she added.
However, companies need to show that they can offer more than just “storytelling.” This was also the sentiment shared recently by Softbank CEO Masayoshi Son as his USD 100 billion Vision Fund will be more cautious and focus on companies that are closer to profitability.
Investors, however, remain optimistic about Southeast Asia. The lack of a tech powerhouse and a pool of talent in the region create tremendous opportunities for Southeast Asia in the supply chain and advance manufacturing sectors, said Aymerik Renard, general partner at US-based Hardware Club, a community-based venture capital firm for hardware startups.
With Southeast Asia being part of Chinese companies’ growth strategies, and with the region being home to a large and young population, its internet economy is expected to grow to USD 300 billion by 2025, with many investment opportunities across the technology and fintech spaces.
Ulrich from JP Morgan Chase noted the links between Chinese investments and unicorns in Southeast Asia. As reported by South China Morning Post, citing statistics from fintech firm Refinitiv, Chinese investment in Southeast Asian startups ballooned to USD 1.78 billion in the first seven months of 2019, an eightfold increase from the same period in 2018.
According to Ulrich, such excitement from China is expected to be sustained for years to come.
“Southeast Asia is part of China’s Belt and Road strategy. In addition to building hard infrastructure in terms of road and bridges, Chinese are keen to help Southeast Asia build digital infrastructure,” she said. “Southeast Asia’s economy is still relatively small compared to China’s. That indicates the growth prospects will be substantial.”
Disclaimer: This is part of KrASIA’s coverage as one of the supporting media partners for Singapore Fintech Festival and SWITCH.