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June 16, 2019
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A young entrepreneur is building the Amazon of Bangladesh

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At just 26, Waiz Rahim is supposed to be involved in the family business, having returned home in 2016 with an engineering degree from the University of Southern California. Instead, the young entrepreneur is plotting to build the Amazon of Bangladesh.

Deligram, Rahim’s vision of what e-commerce looks like in Bangladesh, a country of nearly 180 million, is making progress, having taken inspiration from a range of established tech giants worldwide, including Amazon, Alibaba and Go-Jek in Indonesia.

It’s a far cry from the family business. That’s Rahimafrooz, a 55-year-old conglomerate that is one of the largest companies in Bangladesh. It started out focused on garment retail, but over the years its businesses have branched out to span power and energy and automotive products while it operates a retail superstore called Agora.

During his time at school in the U.S., Rahim worked for the company as a tech consultant whilst figuring out what he wanted to do after graduation. Little could he have imagined that, fast-forward to 2019, he’d be in charge of his own startup that has scaled to two cities and raised $3 million from investors, one of which is Rahimafrooz.

Deligram CEO Waiz Rahim [Image via Deligram]

“My options after college were to stay in U.S. and do product management or analyst roles,” Rahim told TechCrunch in a recent interview. “But I visited rural areas while back in Bangladesh and realized that when you live in a city, it’s easy to exist in a bubble.”

So rather than stay in America or go to the family business, Rahim decided to pursue his vision to build “a technology company on the wave of rising economic growth, digitization and a vibrant young population.”

The youngster’s ambition was shaped by a stint working for Amazon at its Carlsbad warehouse in California as part of the final year of his degree. That proved to be eye-opening, but it was actually a Kickstarter project with a friend that truly opened his mind to the potential of building a new venture.

Rahim assisted fellow USC classmate Sam Mazumdar with Y Athletics, which raised more than $600,000 from the crowdsourcing site to develop “odor-resistant” sports attire that used silver within the fabric to repel the smell of sweat. The business has since expanded to cover underwear and socks, and it put Rahim’s mind to work on what he could do by himself.

“It blew my mind that you can build a brand from scratch,” he said. “If you are good at product design and branding, you could connect to a manufacturer, raise money from backers and get it to market.”

On his return to Bangladesh, he got Deligram off the ground in January 2017, although it didn’t open its doors to retailers and consumers until March 2018.

E-commerce through local stores

Deligram is an effort to emulate the achievements of Amazon in the U.S. and Alibaba in China. Both companies pioneered online commerce and turned the internet into a major channel for sales, but the young Bangladeshi startup’s early approach is very different from the way those now hundred-billion-dollar companies got started.

Offline retail is the norm in Bangladesh and, with that, it’s the long chain of mom and pop stores that account for the majority of spending.

That’s particularly true outside of urban areas, where such local stores almost become community gathering points, where neighbors, friends and families run into each other and socialize.

Instead of disruption, working with what is part of the social fabric is more logical. Thus, Deligram has taken a hybrid approach that marries its regular e-commerce website and app with offline retail through mom and pop stores, which are known as “mudir dokan” in Bangladesh’s Bengali language.

A customer can order their product through the Deligram app on their phone and have it delivered to their home or office, but a more popular — and oftentimes logical — option is to have it sent to the local mudir dokan store, where it can be collected at any time. But beyond simply taking deliveries, mudir dokans can also operate as Deligram retailers by selling through an agent model.

That’s to say that they enable their customers to order products through Deligram even if they don’t have the app, or even a smartphone — although the latter is increasingly unlikely with smartphone ownership booming. Deligram is proactively recruiting mudir dokan partners to act as agents. It provides them with a tablet and a physical catalog that their customers can use to order via the e-commerce service. Delivery is then taken at the store, making it easy to pick up, and maintaining the local network.

“We’ll tell them: ‘Right now, you offer a few hundred products, now you have access to 15,000,’ ” the Deligram CEO said.

Indeed, Rahim sees this new digital storefront as a key driver of revenue for mudir dokan owners. For Deligram, it is potentially also a major customer acquisition channel, particularly among those who are new to the internet and the world of smartphone apps.

This offline-online model — known by the often-buzzy industry term “omnichannel” — isn’t new, but in a world where apps and messaging is prevalent, reaching and retaining users is challenging, particularly in emerging markets.

“It’s not easy to direct people to a website today, and the app-first approach has made it hard,” Rahim said. “We looked at how companies in Indonesia and India overcame these challenges.”

In particular, he studied the work of Go-Jek in Indonesia, which uses an agent model to push its services to nascent internet users, and Amazon India, which leans heavily on India’s local “kirana” stores for orders and deliveries.

In Deligram’s case, the mudir dokan picks up sales commission as well as money for every delivery that is sent to their store. Home deliveries are possible, but the lack of local infrastructure — “turn right at the blue house, left at the white one, and my place is third from the left,” is a common type of direction — makes finding exact locations difficult and inefficient, so an additional cost is charged for such requests.

E-commerce startups often struggle with last-mile because they rely on a clutch of logistics companies to fulfill orders. In a rare move for an early-stage company, Deligram has opted to run its entire logistics process in-house. That obviously necessitates cost and likely provides significant growing pains and stress, but, in the long term, Rahim is betting that a focus on quality control will pay out through higher customer service and repeat buyers.

A prospective Deligram customer flips through a hard copy of the company’s product brochure in a local store [Image via Deligram]

Startups on the rise in Bangladesh

Rahim’s timing is impeccable. He returned to Bangladesh just as technology was beginning to show the potential to impact daily life. Bangladesh has posted a 7% rise in GDP annually every year since 2016, and with an estimated 80 million internet users, it has the fifth-largest online population on the planet.

“We are riding on a lot of macro trends; we’re among the top five based on GDP growth and have the world’s eighth-largest population,” Rahim told TechCrunch. “There are 11 million people in middle income — that’s growing — and our country has 90 million people aged under 30.”

“An index to track the growth of young people would be [capital city] Dhaka… you can just see the vibrancy with young people using smartphones,” he added.

That’s an ideal storm for startups, and the country has seen a mix of overseas entrants and local ventures pick up speed. Alibaba last year acquired Daraz, the Rocket Internet-founded e-commerce service that covers Pakistan, Bangladesh, Myanmar, Sri Lanka and Nepal, while the Chinese giant also snapped up 20% of bKash, a fintech venture started from Brac Bank as part of the regional expansion of its Ant Financial affiliate.

Uber, too, is present, but it is up against tough local opposition, as is the norm in Asian markets.

That’s because Bangladesh’s most prominent local startups are in ride-hailing. Pathao raised more than $10 million in a funding round that closed last year and was led by Go-Jek, the Indonesia-based ride-hailing firm valued at more than $9 billion that’s backed by the likes of Tencent and Google. Pathao is reportedly on track to raise a $50 million Series B this year, according to Deal Street Asia.

Pathao is one of two local companies that competes alongside Uber in Bangladesh [Image via Pathao]

Its chief rival is Shohoz, a startup that began in ticketing but expanded to rides and services on-demand. Shohoz raised $15 million in a round led by Singapore’s Golden Gate Ventures, which was announced last year.

Deligram has also pulled in impressive funding numbers, too.

The startup announced a $2.5 million Series A raise at the end of March, which Rahim wrote came from “a network of institutional and angel investors;” such is the challenge of finding a large check for a tech play in Bangladesh. The investors involved included Skycatcher, Everblue Management and Microsoft executive Sonia Bashir Kabir. A delighted Rahim also won a check from Rahimafrooz, the family business.

That’s not a given, he said, admitting that his family did initially want him to go to work with their business rather than pursuing his own startup. In that context, contributing to the round is a major endorsement, he said.

Rahimafrooz could be a crucial ally in future fundraising, too. Despite an improving climate for tech companies, Bangladesh’s top startups are still finding it tough to raise money, especially with overseas investors that can write the larger checks that are required to scale.

“I think the biggest challenge is branding. Every time I speak with new investors, I have to start by explaining where Bangladesh is, or the national metrics, not even our business,” Pathao CEO Hussain Elius told TechCrunch.

“There’s a legacy issue. Bangladesh seems like a country which floods all the time and the garment sector going down — that’s a part of the story but not the full story. It’s also an incredible country that’s growing despite those challenges,” he added.

Pathao is reportedly on track to raise a $50 million Series B this year, according to Deal Street Asia. Elius didn’t address that directly, but he did admit that raising growth funding is a bigger challenge than seed-based financing, where the Bangladesh government helps with its own fund and entrepreneurial programs.

“It’s hard for us as we’re the first ones out there, but it’ll be easier for the ones who’ll follow on,” he explained.

Still, there are some optimistic overseas watchers.

“We remain enthusiastic about the rapidly expanding set of opportunities in Bangladesh,” said Hian Goh, founding partner of Singapore-based VC firm Openspace — which invested in Pathao.

“The country continues to be one of the fastest-growing economies in the world, underpinned by additional growth in its garments manufacturing sector. This has blossomed into an expanding middle class with very active consumption behavior,” Goh added.

Growth plans

With the pain of fundraising put to the side for now, the new money is being put to work growing the Deligram business and its network into more parts of Bangladesh, and the more challenging urban areas.

Geographically, the service is expanding its agent reach into five more cities to give it a total of seven locations nationwide. That necessitates an increase in logistics and operations to keep up with, and prepare for, that new demand.

Deligram workers in one of the company’s warehouses [Image via Deligram]

Rahim said the company had handled 12,000 orders to date as of the end of March, but that has now grown past 20,000 indicating that order volumes are rising. He declined to provide financial figures, but said that the company is on track to increase its monthly GMV volume by six-fold by the end of this year. Electronics, phones and accessories are among its most popular items, but Deligram also sells apparel, daily items and more.

Interestingly, and perhaps counter to assumptions, Deligram started in rural areas, where Rahim saw there was less competition but also potentially more to learn through a more early-adopter customer base. That’s obviously one major challenge when it comes to growth, and now the company is looking at urban expansion points.

On the product side, Deligram is in the early stages of piloting consumer financing using its local store agents as the interface, while Rahim teased “exciting IOT R&D projects” that he said are in the planning stage.

Ultimately, however, he concedes that the road is likely to be a long one.

“Over the last 18-20 years, modern retail hasn’t made much progress here,” Rahim said. “It accounts for around 2.5% of total retail, e-commerce is below 1% and the long tail local stores are the rest.”

“People will eventually shift, but I think it’ll take five to eight years, which is why we provide the convenience via mom and pop shops,” he added.

Biofourmis raises $35M to develop smarter treatments for chronic diseases

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Biofourmis, a Singapore-based startup pioneering a distinctly tech-based approach to the treatment of chronic conditions, has raised a $35 million Series B round for expansion.

The round was led by Sequoia India and MassMutual Ventures, the VC fund from Massachusetts Mutual Life Insurance Company. Other investors who put in include EDBI, the corporate investment arm of Singapore’s Economic Development Board, China-based healthcare platform Jianke and existing investors Openspace Ventures, Aviva Ventures and SGInnovate, a Singapore government initiative for deep tech startups. The round takes Biofourmis to $41.6 million raised to date, according to Crunchbase.

This isn’t your typical TechCrunch funding story.

Biofourmis CEO Kuldeep Singh Rajput moved to Singapore to start a PhD, but he dropped out to start the business with co-founder Wendou Niu in 2015 because he saw the potential to “predict disease before it happens,” he told TechCrunch in an interview.

AI-powered specialist post-discharge care

There are a number of layers to Biofourmis’ work, but essentially it uses a combination of data collected from patients and an AI-based system to customize treatments for post-discharge patients. The company is focused on a range of therapeutics, but its most advanced is cardiac, so patients who have been discharged after heart failure or other heart-related conditions.

With that segment of patients, the Biofourmis platform uses a combination of data from sensors — medical sensors rather than consumer wearables, which are worn 24/7 — and its tech to monitor patient health, detect problems ahead of time and prescribe an optimum treatment course. That information is disseminated through companion mobile apps for patients and caregivers.

Bioformis uses a mobile app as a touch point to give patients tailored care and drug prescriptions after they are discharged from hospital

That’s to say that medicine works differently on different people, so by collecting and monitoring data and crunching numbers, Biofourmis can provide the best drug to help optimize a patient’s health through what it calls a ‘digital pill.’ That’s not Matrix-style futurology, it’s more like a digital prescription that evolves based on the needs of a patient in real-time. It plans to use a network of medical delivery platforms, including Amazon-owned PillPack, to get the drugs to patients within hours.

Yes, that’s future tense because Biofourmis is waiting on FDA approval to commercialize its service. That’s expected to come by the end of this year, Singh Rajput told TechCrunch. But he’s optimistic given clinical trials, which have covered some 5,000 patients across 20 different sites.

On the tech side, Singh Rajput said Biofourmis has seen impressive results with its predictions. He cited tests in the U.S. which enabled the company to “predict heart failure 14 days in advance” with around 90 percent sensitivity. That was achieved using standard medical wearables at the cost of hundreds of dollars, rather than thousands with advanced kit such as Heartlogic from Boston Scientific — although the latter has a longer window for predictions.

The type of disruption that Biofourmis might appear to upset the applecart for pharma companies, but Singh Rajput maintains that the industry is moving towards a more qualitative approach to healthcare because it has been hard to evaluate the performance of drugs and price them accordingly.

“Today, insurance companies are blinded not having transparency on how to price drugs,” he said. “But there are already 50 drugs in the market paying based on outcomes so the market is moving in that direction.”

Outcome-based payments mean insurance firms reimburse all outcomes based on the performance of the drugs, in other words how well patients recover. The rates vary, but a lack of reduction in remission rates can see insurers lower their payouts because drugs aren’t working as well as expected.

Singh Rajput believes Biofourmis can level the playing field and added more granular transparency in terms of drug performance. He believes pharma companies are keen to show their products perform better than others, so over the long-term that’s the model Biofourmis wants to encourage.

Indeed, the confidence is such that Biofourmis intends to initially go to market via pharma companies, who will sell the package into clinics bundled with their drugs, before moving to work with insurance firms once traction is gained. While the Biofourmis is likely to be bundled with initial medication, the company will take a commission of 5-10 percent on the recommended drugs sold through its digital pill.

Biofourmis CEO and co-founder Kuldeep Singh Rajput dropped out of his PhD course to start the company in 2015

Doubling down on the US

With its new money, Biofourmis is doubling down on that imminent commercialization by relocating its headquarters to Boston. It will retain its presence in Singapore, where it has 45 people who handle software and product development, but the new U.S. office is slated to grow from 14 staff right now to up to 120 by the end of the year.

“The U.S. has been a major market focus since day one,” Singh Rajput said. “Being closer to customers and attracting the clinical data science pool is critical.”

While he praised Singapore and said the company remains committed to the country — adding EDBI to its investors is certainly a sign — he admitted that Boston, where he once studied, is a key market for finding “data scientists with core clinical capabilities.”

That expansion is not only to bring the cardio product to market, but also to prepare products to cover other therapeutics. Right now, it has six trials in place that cover pain, orthopedics and oncology. There are also plans to expand in other markets outside of the U.S, and in particular Singapore and China, where Biofourmis plans to lead on Jianke.

Not lacking in confidence, Singh Rajput told TechCrunch that the company is on course to reach a $1 billion valuation when it next raises funding, that’s estimated as 18 months away and the company isn’t saying how much it is worth today.

Singh Rajput did confirm, however, that the round was heavily oversubscribed, and that the startup rebuffed investment offers from pharma companies in order to “avoid a conflict of interest and stay neutral.”

He is also eying a future IPO, which is tentatively set for 2023 — although by then, Singh Rajput said, Biofourmis would need at least two products in the market.

There’s a long way to go before then, but this round has certainly put Biofourmis and its digital pill approach on the map within the tech industry.

Jungle Ventures hits $175M first close on its third fund for Southeast Asia

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Southeast Asia’s startup ecosystem is set to get a massive injection of funds after Jungle Ventures reached a first close of $175 million for its newest fund, TechCrunch has come to learn.

Executives at the Singapore-based firm anticipate that the new fund, which is Jungle’s third to date, will reach a final close of $220 million over the coming few months, a source with knowledge of the fund and its plans told TechCrunch. If it were to reach that figure, the fund would become the largest for startup investments in Southeast Asia.

Jungle Ventures declined to comment.

An SEC filing posted in December suggested the firm was aiming to raise up to $200 million with the fund. Its last fund was $100 million and it closed in November 2016. Founding partners Anurag Srivastava and Amit Anand started the fund way back in 2012 when it raised a (much smaller) $10 million debut fund.

Digging a little deeper, our source revealed that the new Jungle fund includes returning LPs World Bank affiliate IFC and Cisco Investments — both of which invested in Jungle’s $18 million early-stage ‘SeedPlus’ fund — and Singapore sovereign fund Temasek. One new backer that we are aware of is German financier DEG although we understand that Jungle has spent considerable time fundraising in the U.S. market, hence the SEC filing. Beyond Europe and the U.S, the firm is also said to have pitched LPs in Asia — as you’d expect — and the Middle East.

Jungle is focused on Series A and Series B deals in Southeast Asia with the occasional investment in India or the rest of the world where it sees global potential. One such example of that is Engineer.ai, which raised $29.5 million last November in a round led by Jungle and Lakestar with participation from SoftBank’s AI unit DeepCore.

Jungle Ventures founding partners (left to right): Anurag Srivastava and Amit Anand

The meat and drink of the fund is Southeast Asia, and past investments there include cloud platform Deskera (most recent round $60 million), budget hotel network Reddoorz (raised $11 million last year), fintech startup Kredivo (raised $30 million last year) and digital fashion brand Pomelo, which has raised over $30 million from investors that also include JD.com.

In India, it has backed b2b sales platform Moglix and interior design startup Livspace among others. Past exits include Travelmob to HomeAway, Zipdial to Twitter, eBus to IMD and Voyagin to Rakuten.

We understand that the new fund has already completed five deals. Jungle’s pace of dealmaking is typically half a dozen investments per month, and we understand that will continue with fund three.

Executives at the fund are bullish on Southeast Asia, which is forecast to see strong growth economic growth thanks to increased internet access and digital spending. A much-cited report from Google and Temasek issued last year predicts that the region’s ‘digital economy’ will triple to reach $240 billion from 2025.

A 2018 report from Temasek and Google predicts significant growth in Southeast Asia’s digital economy

Other major VC funds in Southeast Asia include Vertex Ventures ($210 million fund), Golden Gate Ventures — $100 million and a $200 million growth fund — Openspace Ventures ($135 million), and EV’s $150 million growth fund.

There’s also B Capital from Facebook co-founder Eduardo Saverin which recently passed $400 million for the first close of its second fund, although that doesn’t invest exclusively in Southeast Asia, and Sequoia which has a $695 million fund for India and Southeast Asia. Other global names that you might see cutting deals in the region include Burda, which has a local presence and starts at Series B, TPG Global and KKR.

CXA, a health-focused digital insurance startup, raises $25M

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CXA Group, a Singapore-based startup that helps make insurance more accessible and affordable, has raised $25 million for expansion in Asia and later into Europe and North America.

The startup takes a unique route to insurance. Rather than going to consumers directly, it taps corporations to offer their employees health flexible options. That’s to say that instead of rigid plans that force employees to use a certain gym or particular healthcare, a collection over 1,000 programs and options can be tailored to let employees pick what’s relevant or appealing to them. The ultimate goal is to bring value to employees to keep them healthier and lower the overall premiums for their employers.

“Our purpose is to empower personalized choices for better living for employees,” CXA founder and CEO Rosaline Koo told TechCrunch in an interview. “We use data and tech to recommend better choices.”

The company is primarily focused on China, Hong Kong and Southeast Asia where it claims to works with 600 enterprises including Fortune 500 firms. The company has over 200 staff, and it has acquired two traditional insurance brokerages in China to help grow its footprint, gain requisite licenses and its logistics in areas such as health checkups.

We last wrote about CXA in 2017 when it raised a $25 million Series B, and this new Series C round takes it to $58 million from investors to date. Existing backers include B Capital, the BCG-backed fund from Facebook co-founder Eduardo Saverin, EDBI — the investment arm of the Singapore Economic Development Board — and early Go-Jek backer Openspace Ventures, and they are joined by a glut of big-name backers in this round.

Those new investors include a lot of corporates. There’s HSBC, Singtel Innov8 (of Singaporean telco Singtel), Telkom Indonesia MDI Ventures (of Indonesia telco Telkom), Sumitomo Corporation Equity Asia (Japanese trading firm) Muang Thai Fuchsia Ventures (Thailand-based insurance firm), Humanica (Thailand-based HR firm) and PE firm Heritas Venture Fund.

“There are additional insurance companies and strategic partners that we aren’t listing,” said Koo.

Rosaline Koo is founder and CEO of CXA Group

That’s a very deliberate selection of large corporates which is part of a new strategy to widen CXA audience.

The company had initially gone after massive firms — it claims to reach a collective 400,000 employees — but now the goal is to reach SMEs and non-Fortune 500 enterprises. To do that, it is using the reach and connections of larger service companies to reach their customers.

“We believe that banks and telcos can cross-sell insurance and banking services,” said Koo, who grew up in LA and counts benefits broker Mercer on her resume. “With demographic and work life event data, plus health data, we’re able to target the right banking and insurance services.

“We can help move them away from spamming,” she added. “Because we will have the right data to really target the right offering to the right person at the right time. No firm wants an agent sitting in their canteen bothering their staff, now it’s all digital and we’re moving insurance and banking into a new paradigm.”

The ultimate goal is to combat a health problem that Koo believes is only getting worse in the Asia Pacific region.

“Chronic disease comes here 10 years before anywhere else,” she said, citing an Emory research paper which concluded that chronic diseases in Asia are “rising at a rate that exceeds global increases.”

“There’s such a crying need for solutions, but companies can’t force the brokers to lower costs as employees are getting sick… double-digit increases are normal, but we think this approach can help drop them. We want to start changing the cost of healthcare in Asia, where it is an epidemic, using data and personalization at scale in a way to help the community,” Koo added.

Talking to Koo makes it very clear that she is focused on growing CXA’s reach in Asia this year, but further down the line, there are ambitions to expand to other parts of the world. Europe and North America, she said, may come in 2020.

TNB Aura closes $22.7M fund to bring PE-style investing to Southeast Asia’s startups

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TNB Aura, a recent arrival to Southeast Asia’s VC scene, announced today that it has closed a maiden fund at SG$31.1million, or around US$22.65 million, to bring a more private equity-like approach to investing in startups in the region.

The fund was launched in 2016 and it is a joint effort between Australia-based venture fund Aura and Singapore’s TNB Ventures, which has a history of corporate innovation work. It reached a final close today, having hit an early close in January. It is a part of the Enterprise Singapore ‘Advanced Manufacturing and Engineering’ scheme which, as you’d expect, means there is a focus on hardware, IO, AI and other future-looking tech like ‘industry 4.0.’

The fund is targeting Series A and B deals and it has the firepower to do 15-20 deals over likely the next two to three years, co-founder and managing partner Vicknesh R Pillay told TechCrunch in an interview. There’s around $500,000-$4 million per company, with the ideal scenario being an initial $1 million check with more saved for follow-on rounds. Already it has backed four companies including TradeGecko, which raised $10 million in a round that saw TNB Aura invest alongside Aura, and AI marketing platform Ematic.

The fund has a team of 10, including six partners and an operating staff of four. It pitches itself a little differently to most other VCs in the region given that manufacturing and engineering bent. That, Pillay said, means it is focused on “hardware plus software” startups.

“We are very strong fundamentals guys,” Pillay added. We ask what is the valuation and decide what we can get from a deal. It’s almost like PE-style investing in the VC world.”

A selection of the TNB Aura team [left to right]: Samuel Chong (investment manager), Calvin Ng, Vicknesh R Pillay, Charles Wong (partners), Liu Zhihao (investment manager)

Another differentiator, Pillay believes, is the firm’s history in the corporate innovation space. That leads it to be pretty well suited to working in the B2B and enterprise spaces thanks to its existing networks, he said.

“We particularly like B2B saas companies and we believe we can assist them through of our innovation platforms,” Pillay explained.

Outside of Singapore — which is a heavy focus thanks to the relationship with Enterprise Singapore — TNB Aura is focused on Indonesia, the Philippines, Thailand and Vietnam, four of the largest markets that form a large chunk of Southeast Asia’s cumulative 650 million population. With an internet population of over 330 million — higher than the entire U.S. population — the region is set to grow strongly as internet access increases. A recent report from Google and Temasek tipped the region’s digital economy will triple to reach $240 billion by 20205.

The report also found that VC funding in Southeast Asia is developing at a fast clip. Excluding unicorns, which distort the data somewhat, startups raised $2.6 billion in the first half of this year, beating the $2.4 billion tally for the whole of 2017.

There are plenty of other Series A-B funds in the region, including Jungle Ventures, Golden Gate Ventures, Openspace Ventures, Monks Hill Ventures, Qualgro and more.

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