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In 2013, Simon Loong launched Hong Kong fintech WeLab using a small loan — just four years later the business was profitable. As one of the leaders of the second FT Asia-Pacific High Growth Companies ranking, WeLab’s story is testament to the favourable business conditions that start-ups in Asia can enjoy.

WeLab, an online platform that offers users a range of services including loans, already had a presence in Hong Kong and mainland China. In 2018 it entered Indonesia via a joint venture with a local conglomerate.

The resultant Maucash platform acquired more than 600,000 registered users in its first year of operations — a faster user growth rate than when it entered mainland China in 2014.

Its momentum to this point reflects how the Apac region’s youthful population — which in places like India and Indonesia is chronically “underbanked” or lacks access to financial services entirely — is moving online, boosting companies like WeLab that are eager to meet their needs.

Little wonder, then, that once again technology businesses along with fintech and ecommerce overwhelmingly dominate this year’s list, together accounting for more than 30 per cent of the 500.

The 2020 list, compiled with Statista, a research company, includes businesses from the Apac region’s most developed markets, ranking them by their compound annual growth rate (CAGR) in revenues between 2015 and 2018. (As with the 2018 ranking, China has been omitted due to difficulties in verifying data.)

While the data highlights the many bright spots in the region, it does not, however, reflect the impact of the coronavirus outbreak, which undoubtedly will hit many companies’ revenues hard. The IMF forecast this month that the global economy would shrink 3 per cent in 2020, the biggest contraction since the Great Depression.

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Yet the strongest businesses that survive the fallout from the pandemic can at least look forward to opportunities to expand their presence in their respective markets.

For the second time, the company topping the list is Australian. Cover Genius, founded in 2014, is an insurance platform that serves ecommerce companies in sectors from electronics to travel. With 2018 revenues of $64m, it has enjoyed a CAGR of 493 per cent since 2015.

In terms of countries, India was the biggest contributor to the ranking with 140 companies, four of which are in the top 10. These include payments company Paytm, online education start-up Byju’s and food delivery group Zomato.

A Zomato delivery boy moves through New Delhi India on 21 September 2019 (Photo by Nasir Kachroo/NurPhoto) | No third party sales.
© picture alliance / NurPhoto

India’s dominance is not surprising given its population of nearly 1.4bn, points out Neha Singh, co-founder of Indian data provider Tracxn. The challenge, however, is making money.

“Globally it is the third-largest geography in terms of [venture capital investment] after the US and China . . . but there are different views on how resilient [Indian start-ups] are,” Ms Singh says, adding that few of the top Indian companies on the ranking are profitable. “It is such a large growth story, though, that deep-pocketed investors are still interested,” she adds.

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Indonesia, meanwhile, contributed just two companies to the list, yet both of them — Fabelio, an online furniture retailer, and Bukalapak, a digital marketplace — rank in the top 20.

In terms of cities, Singapore overtook Tokyo this year for having the largest number of high-growth companies (74), followed by the Japanese capital (69) and Sydney (34).

Singapore’s “good ingredients” have made it a favoured destination for both domestic entrepreneurs and those from the wider region, says Patrick Yeo, a partner at PwC who advises businesses locating in the city state. “Singapore is the headquarters for these companies but the operations from which they derive their revenue are not necessarily all from there,” he adds.

One such example is ride-hailing company Grab, which moved its headquarters from Malaysia to Singapore in 2014. The city now acts as a base from which it serves other markets in south-east Asia.

Grab ranks 20th, with a 2015-18 CAGR of 233 per cent. The business, which is backed by SoftBank and was valued at $14bn before the pandemic, is also a company that its western counterparts are looking to for ideas.

The company launched its original ride-hailing app in 2012, with the aim of becoming the Uber of south-east Asia. It has since widened its offering beyond simply getting people “from A to B”, says Ming Maa, Grab president. It now offers loans, and grocery and laundry delivery. “The more services a customer uses, the more revenues we are able to generate.”

Now, it seems, US rival Uber is imitating the “super app” strategies of Grab and Indonesia-based Gojek. Uber chief executive Dara Khosrowshahi last year declared he wanted “Uber to be the operating system for your everyday life”.

Gojek, as with some other Asian companies valued above $1bn such as Indonesian ecommerce player Tokopedia, declined to be featured on the list. Some companies did not want to make their figures public or chose not participate for other reasons.

Pandemic fallout

Even before this crisis, growth had begun to show signs of slowing for some companies since 2018. Bukalapak’s app download figures on Apple and Android devices halved between January and December 2019, from about 1.4m to 692,000, according to data from Sensor Tower.

Asia has historically been effective at building online marketplaces such as Grab’s “superapp” model and such ventures will face less pressure than smaller start-ups during the coronavirus-led downturn, says Jonathan Woetzel, Asia-based director of the McKinsey Global Institute.

“There will be volatility. Does that translate into massive bankruptcies? I do not see that, certainly not for larger ones at this stage,” he says.

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WeLab’s online lending platform in Hong Kong, WeLend, has seen an increase of about 36 per cent in application volumes in March compared with the same month in 2019.

Yet Mr Loong cautions that WeLab is bracing for a hit to China and Hong Kong’s economies, which could affect customers’ ability to repay those loans. WeLab said it was being “prudent” with the increase in applications, which were coming from a wide range of age groups and industries.

Many entrepreneurs in India and south-east Asia are facing their first real recession and test of their business models, notes Michael Joseph, managing partner of Asia-based asset manager Ion Pacific, which invests in the venture capital secondary market.

“Many of the start-ups in south-east Asia are run by teams that . . . have not experienced, first-hand, what it is to have your forward estimates go up in smoke in the way that the dotcom bubble bursting and the [global financial crisis] caused pain for start-ups earlier in the millennium,” he says.

Experts say it will help that corporate governance in the region has improved in the past 18 months, especially after the failed WeWork initial public offering in late 2019 put the spotlight on profitability and stretched valuations.

“We have been getting a lot of inquiries from venture capital and private equity groups to do audits,” says PwC’s Mr Yeo. “In the past they didn’t often come to us but the risk environment has changed.”

The question now is who can take advantage of the situation and outlast competitors, as any crisis produces winners, he adds.

“If you draw a comparison to the dotcom bust, the last one standing often becomes one of the biggest players.”

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