China is Making 2018 a Great Year for Southeast Asian Tech

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It’s been a busy year for Southeast Asia’s dealmakers. The region has seen a vast uptick in big funding rounds, in companies such as Malaysian ride-hail app Grab and Indonesia’s e-commerce platform Tokopedia. Go-Jek, an Uber-like company also based in Indonesia, is set to win a $1.2 billon round, while Singaporean shopping site Lazada got its hands on a near-$1bn injection in late June.

Southeast Asian startup funding smashed previous records last year: firms raked in $2.6bn, up over 60% from 2015’s $1.6bn, according to Tech in Asia. This year’s haul will likely surpass both of those combined. Finally, the region’s much-touted demographics, connectedness and infrastructure is enticing investment in a Silicon Valley level.

That should be little surprise: Southeast Asia is full of statistics to get VC board members licking their lips. Indonesia, the region’s biggest market, is home to 261m people, with a median age of 30.5 years old. Filipinos spend more time on social media than any other nationality on earth. Singapore’s Internet speeds are the world’s fastest. By 2020, according to a Google report, Southeast Asia will have a web population of 480m.

China has stepped up. Its biggest players–Alibaba, Tencent, DiDi Chuxing and others–are ploughing cash into Southeast Asian tech at an unprecedented rate. Alibaba in particular has been keen to flex its muscles in the region, paying over $2bn to local ventures. Tencent has made smaller investments, to media companies like Sanook and Joox, for example.

But the message is clear: Chinese companies are spreading their influence into Southeast Asia in a big way. And, as Hong Kong-based investor Mitch Presnick told Red Herring last week, it’s time for Silicon Valley’s entrepreneurs to look to work with China’s tech industry–not against it. “The Chinese want to establish markets outside, to start their own businesses,” he said. (They want to) use the revenue they generate in their own country and use it to open up business elsewhere.”

This year’s deals prove that. And, as Red Herring gears up for its Top 100 Asia event, which showcases some of the region’s best startup talent, there is a buzz that, should entrepreneurs get it right, China will come calling. And its companies have the cash to change a business overnight.