Statistics from US-based research body CB Insights show that non-US unicorn startups commanded a 50% share of total global unicorns as of the end of August 2017, sharply up from only 37% as of the end of 2014, indicating the US is no longer a dominant country in nurturing startups. It also suggests that against Asian enterprises, particularly those in China, unrelentingly pursuing development and growth, the Silicon Valley seems stuck in the status quo.
Among Asian countries, China now takes the lead with 56 unicorns and India comes next with 10, with both countries being top targets for multinational investment funds. Korea ranks third with three unicorns, and Singapore and Indonesia have two each; but those unicorns in the two Southeast Asian countries all involve financial support from China tech giants.
China's web population broke the 700 million mark to hit 731 million as of the end of 2016 after experiencing an annual growth of 6.2%, according to statistics released by the China Internet Network Information Center. The growth, however, has fallen under 10% for the first time in five years, indicating China's web population growth has entered a plateau period.
Creating new miracles in new sectors
Despite the relatively stable web population, it will be increasingly difficult to create unicorn companies in the future. But in the emerging sectors such as Internet of Vehicles (IoV), FinTech and related services, China still stands a chance of creating new miracles, given the fact that in 2016 alone, the user numbers of ride-hailing services shot up 38% on year to 168 million in the country.
Eyeing huge business opportunities associated with Internet investment, Beijing authorities officially launched the China Internet Investment Fund at a scale of CNY100 billion (US$15.14 billion) in late January 2017, with China Mobile, China Unicom and China Telecom all among strategic fund providers. China has become the world's largest e-commerce market, with its trading scale estimated by iResearch to hit CNY400 trillion by 2020. But, beyond capturing the huge business opportunities in the domestic market, China Internet investment funds and venture capital funds will surely extend their tentacles to emerging markets surrounding the Indian Ocean by taking advantage of their powerful financial resources and abundant experiences.
China to be world's No. 1 venture fund source in two years
At the moment, one fourth of global venture capitals come from Silicon Valley. But as China contributed US$72 billion or 21.4% of total global venture capital funds in 2016, the country is expected to unseat the US as the world's largest source of such funds within two years. In fact, China tech giants such as Alibaba, Tencent, and Baidu have been actively injecting funds to support startups, with Tencent, particularly, having invested in 19 unicorns, surpassing the corresponding figure of 13 recorded by Sequoia Capital in Silicon Valley.
In May 2016, Google and Singapore-based Temasek Holdings jointly published a report on the digital economy of the Association of Southeast Asian Nations (ASEAN), showing that total digital economy investments by the ASEAN member states already amounted to over US$200 billion. And startups in the ASEAN garnered financings of US$3.1 billion in 2016 and absorbed much more new funds of nearly US$5 billion in the first seven months of 2017. Among them, the Singapore-based ride-hailing platform operator Grab has absorbed US$3.44 billion in financing, and the Indonesian motorbike on-demand startup Go-Jek has obtained US$1.75 billion in funds, with both firms already on the name list of global unicorns.
Who are the major fund providers behind ASEAN startups? Besides Japan's SoftBank, China's four Internet giants BATJ (Baidu, Alibaba, Tencent and JD.com) have contributed the most of the funds for those startups. Among them, Alibaba and Tencent are the most aggressive, with Alibaba having almost completed Alipay service deployments in main ASEAN member countries via investments by its financial service platform Ant Financial.
Alibaba, Tencent aggressively expanding presence in ASEAN
Taiwan's New Southbound Policy - which aims at bettering trade ties with ASEAN and South India - still highlights the concept of hardware production. It seems that while Taiwan is still warming up for the race, Alibaba and Tencent are already miles ahead. As the main investor in Singapore's e-commerce platform Lazada, Alibaba has twice injected funds into the company, whose market value has now reached US$3.15 billion. In the ASEAN countries, Alibaba has demonstrated its determination to integrate and consolidate local payment flows by rendering Alipay services through its subsidiary Ant Financial.
In fact, Taiwan's startups are not far away from the global stage, but they tend to confine themselves to only a small scale when soliciting venture capital funds. In facing the development of startups involving high risks and high investment returns, Taiwan has two questions to answer: Should the funnel's opening be widened to allow all nationals to join startups or let selected elites do the job? Should the country develop B2C startups or cultivate many mini-unicorns in the B2B or focus markets?
(The comments are from a Chinese-language book "Borrowing East Wind: China-US Tech Wrestling and Taiwan" written by Colley Hwang, president of Digitimes.)
