Emerging Asia Pacific giants labeled potential unicorns

The Asia Pacific (APAC) region continues to welcome more unicorns as technology enables businesses to expand, with emerging giants in the region driving the process, according to KPMG and HSBC.

As the world’s growth engine, technology-focused APAC start-ups are leveraging innovations and new sector verticals to blaze a digital trail forward, the “Emerging Giants in Asia Pacific” report by KPMG and HSBC showed.

The report examined new ventures across the region with strong potential to impact the global business landscape over the next decade. Over 6,472 technology-focused start-ups with valuations of up to $500 million were studied across 12 markets, with 10 emerging giants identified in each area.

The report further named 100 leading emerging giants cross the entire region.

Maturing technology-focused ecosystems in APAC are producing billion-dollar companies at a rapid rate. With the International Monetary Fund predicting that the region’s emerging markets and developing economies would grow 20% faster than the global average, this year, emerging giants – fast-growing, influential and innovative start-ups with unicorn ambitions – are a leading indicator of the region’s growth trajectory.

The report also showed the emergence of new sector verticals is attracting record-breaking investments, leading to a proliferation of larger, more valuable start-ups in the region.

Beyond the traditional sectors associated with new economy businesses like fintech or software-as-a-service, the study identified around 120 technology-related industry subsectors among these businesses, with blockchain, smart city, and sustainability and ESG (environmental, social, and governance) verticals the most prominent. Additionally, six out of the 12 markets studied had average valuations of $300 million or more among their leading emerging giants.

“Fast-growing technology start-ups are the new wave of SMEs contributing to economic growth and more,” said Honson To, chairman KPMG Asia Pacific and KPMG China.

“The global push towards carbon-neutrality will be a major driver of innovation as traditional sectors go green, and emerging giants will likely play a key role in developing technologies that can reduce carbon emissions and promote more responsible stewardship of the environment.

“Asia will be a crucial battleground in the fight for a more sustainable future,” he added.

In a finding, the report said while a repeat of the record-breaking private investment levels in 2021 is unlikely, Q1-2022 figures suggest 2022 is on target to exceed both 2020 and 2019 funding levels in the Asia Pacific. Australia, Malaysia and South Korea have already seen deal values pass or nearly pass 2020 totals.

Another finding is that APAC has experienced a boom in financial services transformation within the last two years as fintech applications progress in tandem with user uptake. Considerable interest in cryptocurrencies has also led to a surge in crypto financial service providers and blockchain players.

The study added that growing pressure for an ESG focus in business and investment strategies in order to meet climate targets will likely drive an explosive demand for green technologies and services across every industry, creating significant opportunities for emerging giants.

“Top challenges faced by emerging giants include navigating regulatory complexity and securing technology talent,” the KPMG and HSBC report noted.

Darren Yong, head of technology, media and telecommunications, KPMG Asia Pacific, said in the release: “Asia Pacific’s emerging giants are bold, ambitious, and cutting-edge in the types of products and services they are offering, who they choose to partner with, which markets they are targeting, and in how they shape their business models, company culture and mission statements.

“Perhaps most importantly, they are thinking about what the technology landscape will look like 10 or 20 or 30 years from now, in addition to what is useful to their customers now,” he elaborated.