Where are the profitable tech firms in Southeast Asia?

Last week, a founder asked me over coffee: “How many profitable tech companies are there in Southeast Asia? [Read from your browser]( Editor's Letter Dear {NAME} Last week, a founder asked me over coffee: “How many profitable tech companies are there in Southeast Asia?” I replied: “You could probably count them with your fingers.” I’m exaggerating, of course, but the truth is that many of the headline-hogging, well-funded tech startups in the region are losing money. This shouldn’t be surprising, however, as venture-backed startups are supposed to sacrifice short-term profit for long-term gain. The ecosystem is also young, so give it time, I say. Recent events, though, could change things. We’re at the part of the economic cycle where venture capitalists aren’t preaching “growth at all costs” and boasting about investing in a stable of unicorns anymore. Instead, they’re pushing for sustainable growth and gathering a herd of [rhinos](. Profitability is an advantage when VC funding is scarce: It gives startups more financing options, such as securing loans or reinvesting profits. In times like these, it helps to keep stock of who’s already there, and who’s on the way. Ficus, a Vietnamese “new retail” company, looks to be close. Last week, [it received US$50 million from Alibaba-backed fund eWTP Capital](. The ecommerce logistics and retail firm logged US$176 million in revenue and US$25 million in net losses in 2019, with a gross margin of 32%. With credible founders and investors, Ficus could become a force to be reckoned with. Other firms are already there. Here’s a couple we’ve written about last week: Inmagine Group is the bootstrapping company behind popular stock asset site 123RF. It’s now fundraising to [take on an industry Goliath: Adobe](. Biofourmis is a near-unicorn that has made AI and software that can detect the onset of heart failure symptoms. It can also customize treatments and prescriptions based on patient data. Its founder says the company is [EBITDA-profitable, and its revenue in the first half of 2020 was already 10x more]( than what it had made the whole of 2019. Here’s more that we’ve covered in the past (let me know if I missed any): - [Secretlab]( which makes gaming chairs, has been profitable since its early days. - [M-Daq]( a Singapore-based fintech startup, has been in the black for two straight years. It has a key investor in Ant Financial and recently raised money from an [investment arm of Samsung](. - VNLife, which is the dominant operator of banking apps in Vietnam, [has been “meaningfully” profitable](. It’s now diversifying into a broader range of services. - Waresix, a logistics platform in Indonesia that recently raised [US$100 million]( said during the recent Tech in Asia conference that it has stayed profitable despite the pandemic. - Carro, a used car marketplace, tells Tech in Asia that it has been profitable for the past nine months. - PropertyGuru, Singapore’s leading property marketplace, says it had a [positive EBITDA in 2019](. Looking at publicly listed companies, there’s Nanofilm, an advanced materials firm that just listed on the Singapore Exchange and joined the [billion-dollar club](. Gaming-related companies are booming, and both [Razer]( and [Sea]( have done well in their recent earnings. VNG, Vietnam’s leading gaming and entertainment firm, [has also been self-sustaining](. Of course, many internet companies are not there yet, but they have a good shot. One such company is Seedly, a TripAdvisor for financial products and utilities, which has [just launched its monetization gambit](. Finally, gaming companies can be high-margin and scalable businesses, but it’s hard to defend them against clones. That said, we’ve heard that Chinese investors are [on the hunt]( for promising indie game developers to invest in. As Southeast Asia’s ecosystem matures, more profitable internet firms will emerge. And while there’s been disquiet about how the likes of Grab, Gojek, and Shopee have been unprofitable, I don’t think the question is one of profitability, but of valuation. These companies have valuations that match the scope of their ambition. It’s a burden of expectation that may pay off, but not without some casualties along the way. That’s it for my musings for this week. Please [subscribe]( if you’d like to read about more self-sustaining companies on Tech in Asia (and doing so will help us stay profitable, too). Cheers, Terence Lee Editor-in-Chief [ADVERTISE]( | [PREMIUM]( | [JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Was this forwarded to you? You can read this everyday when you sign up [here](. Love us or hate us? [Drop us a feedback]( and let us know. Don't want to receive these emails anymore? [Unsubscribe](. --------------------------------------------------------------- Tech in Asia’s newsletters are handcrafted daily with love - and sometimes powered by good kopi. Today's edition is edited by Eileen C. Ang. Copyright © 2020 Tech in Asia, All rights reserved. 51 Bras Basah Rd, #05-5061, Singapore 189554