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Chasing the unicorn dream: Lessons for Southeast Asia’s SMEs

Published on 26 November 2020

For many business founders, becoming a billion-dollar company, worthy of unicorn status, is the ultimate dream – to follow in the famous footsteps of Apple, Google, Microsoft or Facebook.

It’s a dream that has until recently, felt a little further from reality for Southeast Asia’s entrepreneurs. The region lags the U.S., China and India, in giving rise to uber-scaling start-ups. At the same time, it has staggering potential, especially for digital businesses because of the way technology works as a ‘leveler’: the barrier to entry for tech companies is far lower than it is for infrastructure or commodity companies, for example, that need massive up-front investment.

Before the COVID-19 pandemic threw doubt over every global economic forecast, Southeast Asia’s digital economy was expected to triple in size over the next seven years to reach US$240 bn*. (*Source: Google: Digital Economy, 2018)

The region’s first unicorns include Grab and Gojek. Founders of both start-ups were friends at Harvard Business School, but today, they’re rivals of ride-sharing companies who also offer an assortment of retail add-ons from food delivery to digital payments.

These two are among the 10 unicorns that have emerged in the region since 2012 and the combined market value of this group stands at US$34 bn according to Bain & Company. The management consultancy expects Southeast Asia to give rise to another 10 unicorns by 2024.

“ASEAN’s progress in creating a single trade bloc combined with its efforts to deepen integration is giving the region’s start-ups a far larger market to tap into easily, quickly and cost effectively. With a good business model, a ready customer base and sound financials the only barriers to scale are investment and working capital, which is where we can help” says Marc Leong, Head of SME Banking at Maybank Singapore.

Grab’s co-founders Anthony Tan and Hooi Ling Tan launched their company in Malaysia, but moved headquarters to Singapore in 2014 and today, they operate in eight countries across the region. With market capitalisation of US$14 bn, Grab is the region’s biggest success story.

For the 7,000+ digital start-ups navigating early stage growth in Southeast Asia*, it’s also a source of aspiration and – and academic study: many entrepreneurs would like to decode Grab’s winning formula in the hope of emulating it elsewhere. (*Source: Google & Temasek’s “E-conomy SEA” Report, 2016)

Maybank highlights four key insights from Grab’s success:

First, Anthony Tan credits Grab’s success to its ‘home court advantage’.

In 2016, it announced a global partnership between China’s Didi, India’s Ola and U.S.-based Lyft. Tan told CNBC that year that the partnerships were done with a view to covering a broader market but with a local’s expertise that Uber would struggle to match.

For Tan, it wasn’t just about relying on a local player to better understand local customers. Each also had experience dealing with the regulatory regimes in their home markets, which in theory meant they would be able to navigate red tape with greater ease. 

The competition was too much for Uber. In 2018, Uber announced it would sell its Southeast Asian operations to Grab.

Second, localisation alone isn’t enough. Business analysts suggest that start-ups are most successful when they have geographical expansion in their strategies from the outset. In the Southeast Asia context, this means expanding across multiple countries quickly to achieve efficiencies of scale. This only works, however, when the companies have relationships with regulators, partner networks and agile product development. Without which, rapid international expansion can come unstuck.

Third, innovate to stay ahead of the game. Grab started out as a ride-sharing app but it has tapped on its strong user base to innovate and invest in food, payments and other ‘everyday services that matter’.

Fast Company named Grab the world’s second most innovative company this year, for leveraging transportation as the platform to create a super app by adding services such as Grab Financial for the unbanked.

And finally, putting people first. Grab doesn’t just focus on keeping its customers happy but it also goes the extra mile to ensure their drivers are happy too. According to, the company runs a range of driver-focused programs from carnivals to insurance for drivers.

From the get go, Grab took the ‘fast regional expansion’ approach. It wanted to launch into multiple countries as well as across different product lines and service areas.

“Maybank has had the privilege of witnessing and working with like-minded entrepreneurs over the years,” says Mr Leong. “When corporates come to us to support their cross border expansion it’s usually with financing in mind but once the relationship is established, they often realise that the bank’s vast ASEAN network is a valuable resource for their regional expansion objectives.”

For start-ups, cross-border expansion can seem daunting in the early years but Maybank encourages its clients to use its 60 years of experience and to benefit from its depth across the region in order to benefit from the efficiencies that come from taking a regional approach early in one’s business life-cycle.

Key take-outs:

  • Southeast Asia has produced 10 unicorns since 2012 and the momentum is expected to continue, with another 10 expected to come online by 2024.
  • Local knowledge is one of the keys to start-up success and working with the right partner ensures you have an experienced guide to navigate the regulatory as well as business landscape.
  • Working with a trusted banking partner like Maybank is crucial, not just for financing but also to successfully tap into their network across the region.

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