New verticals spawn tech-focused unicorns in APAC

The emergence of new sector verticals is attracting record-breaking investments, leading to a proliferation of larger, more valuable start-ups in the region, according to the latest Emerging Giants in Asia Pacific report from KMPG and HSBC.

Over 6,472 technology-focused start-ups with valuations of up to US$500 million were studied across 12 markets, with ten leading Emerging Giant companies identified in each market. 

These markets include Mainland China; India; Japan; Australia; Singapore; South Korea; Hong Kong; Malaysia; Indonesia; Vietnam; Taiwan and Thailand.

Beyond the traditional sectors associated with new economy businesses such as FinTech or software-as-a-service, the report identified around 120 technology-related industry subsectors among these businesses, with blockchain, smart city, and sustainability and ESG verticals being most prominent. 

Additionally, six out of the 12 markets studied had average valuations of US$300 million or more among their leading Emerging Giants.

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

“Looking ahead, 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 the technologies that can reduce carbon emissions and promote more responsible stewardship of the environment,” said To.

Ong Pang Thye, managing partner at KPMG in Singapore, said the country is home to more than 9,300 start-ups and 12 unicorns — the highest total of any country in Southeast Asia. 

“The challenge forward will be to continue attracting unicorns to reside here,” said Ong. “Strong ecosystem support will be needed, such as public and private programmes and incentives for ‘hot sectors’, an environment that attracts and grooms top talent, as well as a strong purpose across industries and the nation to solve priority problems and create measurable change for the world.”

The report also found that as the world’s biggest fintech adopter, the Asia-Pacific region 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 services providers and blockchain players.

Top challenges faced by Emerging Giants include navigating regulatory complexity and securing technology talent. 

Formulating effective ESG and tax strategies, as well as leveraging government incentives and implementing management processes for distributed workforces, will be cornerstones of future growth.