2019 has been spectacular for the startup world in Southeast Asia. The year saw massive fundraise by some companies, besides several shutdowns/scale-downs and controversies. It is the year a prominent startup figure started new innings in an unfamiliar domain and a global company collapsed.
Here in this article, we list top six newsmakers in the region.
WeWork
WeWork has been one of the most talked-about companies in 2019. The Softbank-backed company’s collapse — or rather fall from grace– was spectacular and sent shockwaves across the world.
Started in 2010 with a single office in New York City, WeWork grew to more than 500 locations in 29 countries by 2019, attracting fat investment cheques from global investors. The firm was valued US$47 billion in its most recent investment round.
The company’s collapse came after it was forced to shelve plans for IPO amid investor scepticism about its huge debts, corporate governance under the leadership of its co-founder-CEO Adam Neumann.
The controversies forced Neumann to resign, pushing its valuation down south. SoftBank, its major investor, took a nearly US$4.6 billion hit from its investment. As a result, WeWork handed pink slips to thousands of employees worldwide. As per reports, after the controversy erupted, WeWork’s valuation sunk to between US$10 billion and US$12 billion.
The news made headlines not just in the US, its headquarters but across Asia, a region in which it has significant operations.
Nadiem Makarim
Nadiem Makarim
Nadiem Makarim’s plunge into Indonesia’s national politics has been the other widely-discussed event in Southeast Asia in 2019. The co-founder and former CEO of gojek took a break from the startup world to join the government following an invite from President Joko Widodo. Makarim is now the Minister of Education and Culture of Indonesia.
His first big move to transform the country’s education sector came last week when he announced the termination of the national examination (UN) starting in 2021.”The implementation of national exam in 2021 will be changed to the Assessment of Minimum Competency and Survey of Character, which consists of the ability of language (literacy), the ability of math (numeracy), and the strengthening of character education,” said Nadiem.
While politics is a totally different domain for him, who took gojek from being a local startup to one of the most valuable Unicorns in Southeast Asia, Makarim will hopefully be able to live to people’s expectation.
honestbee
honestbee has been in the news for all the wrong reasons. A heavily-funded grocery delivery startup with operations in multiple markets in Southeast Asia, honestbee started running out of money and held early conversations with a number of suitors in Asia, including ride-hailing giants Grab and Go-Jek, over the potential acquisition of part.
As the crisis unfolded, Co-founder and CEO Joel Sng resigned in May and it shut down its operations in the Philippines, Indonesia and Hong Kong. It had also suspended food-delivery in Thailand. The company also fired employees.
In October, the startup announced a series of management changes, with Varian Lim taking over as COO. As per a news report in September, honestbee owes 217 employees a total of almost US$1 million in unpaid salary.
To add to its woes, the startup was fined S$8,000 for storing the data of about 8,000 individuals in the cloud without access restrictions.
OVO
Indonesian e-wallet company OVO made headlines when Mochtar Riady, Founder of Lippo Group, the major shareholder of OVO, in November disclosed that it sold 70 per cent of the stake in OVO.
The reason? The fintech firm is burning about US$50 million per month and that it cannot afford to inject any more money.
“They continue to burn money, we cannot afford it,” he said in November. “How are we supposed to be strong?”
Ovo, one of the five Unicorns of Indonesia, was launched by Lippo Group, which also has stakes in ride-hailing firm Grab. Ovo is the second-largest digital wallet in Indonesia after Gopay, based on an iPrice Group ranking that looks at monthly active users.
Emirsyah Satar
In August, Indonesia’s Corruption Eradication Commission (KPK) detained Emirsyah Satar, former MatahariMall Chairman and former President Director of Garuda Indonesia, for alleged money laundering and bribery relating to the procurement of aircraft parts.
As per a The Jakarta Post report, he was initially suspected of having received a bribe from another suspect, Soetikno Soedarjo, the former president director of PT Mugi Rekso Abadi (MRA), consisting of 1.2 million euros and US$180,000.
The bribe is believed to be related to the procurement of Roll-Royce engine parts for Airbus aeroplanes during Emirsyah’s tenure with Garuda.
As per a Dec 5 report by The Jakarta Post, the Corruption Eradication Commission (KPK) completed its investigation, and the suspects were handed to prosecutors. The trial would soon take place in the Jakarta Corruption Court.
Ofo
Ofo’s rise and fall has been a classic example for many China-focused investors who placed big bets on cash-burning startups expected to get to a listing quickly, allowing them to cash out.
Founded in 2014, the Chinese bike-sharing startup bagged over US$2 billion over multiple rounds of funding and expanded to many parts of the world. It was popular in China until 2017-2018.
In an abrupt turn of events, in December 2018, hundreds of Ofo users queued up outside its Beijing headquarters to ask for their deposits back. In all, nearly 12 million of the company’s registered users requested deposit refunds, an amount totalling nearly US$170 million. In February 2019, a Chinese court ruled that Ofo had no ability to pay its massive debts to either suppliers and users.
The company laid off employees and either withdrew from or shut down operations in many parts of the world. In April, the company’s license was terminated in Singapore for failing to implement a QR code-based parking system that would allow its bicycles to be parked only within specific areas.
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Lead Image: 123rf Stockphotos
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