Unicorns Become “Cockroaches” As Tech Funding Dries Up

Unicorns become

As venture capital funding dries up, another creature is on everyone’s lips: the cockroach.

Becoming a unicorn has been the main goal of startups for years. Now that venture capital funding has dried up and the survival of many fledgling companies is in doubt, another creature is on everyone’s lips: the cockroach.

Venture capitalists and tech chiefs have converged in Singapore in recent weeks to hop over a series of high-profile annual conferences that marked the city-state’s big coming-out-of-Covid party. But the glamor and talk of blitzscaling was over, and attendees instead focused on the dire need to save money and a bleak future.

“It’s cockroach time — do whatever it takes to survive,” said Tessa Wijaya, co-founder of Xendit, a $1 billion digital payments company, during a panel moderated by Square Peg Capital partner Piruze Sabuncu became. “It’s a bit gross, but it kind of works. If you can survive the next two or three years, chances are you will be successful.”

In recent years, Southeast Asia has attracted ample capital from investors looking to capitalize on one of the fastest growing internet economies. Ever-expanding teams were the norm in well-financed companies, and for many young leaders and employees, this was the only environment they have ever known.

Now the startup ecosystem is facing headwinds. According to CB Insights, global venture capital funding has collapsed to $74.5 billion in the last three months, its lowest level in nine quarters. That represents a 34% quarterly decline, the largest in a decade.

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“Cash isn’t just king, it’s king, queen and everything else,” said Raj Ganguly, who founded B Capital Group with Facebook co-founder Eduardo Saverin, at SuperReturn Asia, a conference that drew a record 1,500 executives. “A lot of what we’ve done pushes companies to have more realistic cash runway discussions.”

This sentiment was shared by Jenny Lee, a managing partner of GGV Capital and one of the most in-demand personalities speaking at five conferences including the Forbes Global CEO Conference and the Milken Institute Asia Summit.

“In my 22 years as an investor, this is probably the most complex environment in the world,” Lee said at the Tech in Asia conference on Sept. 21, held six floors below SuperReturn Asia at the Marina Bay Sands. The most important thing to remember in a downturn, she said, is never valuation but “your ability to have a cash runway.”

Her venture capital firm advises her portfolio companies to have enough cash to stay afloat for 36 months without having to raise additional funds. About 80% of them are in that bucket now, said Lee, who opened the first GGV office in China in 2005 and now leads the company’s US fundraising efforts.


After reaching sky-high valuations, tech companies around the world have experienced the worst year of their lives amid soaring inflation and interest rate hikes. Many are shedding jobs and closing parts of their businesses to shore up their balance sheets ahead of a possible recession.

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In Southeast Asia, Sea Ltd. and Grab Holdings Ltd., Singapore’s largest tech companies, exemplify this new reality: Their US-traded shares have lost more than half their value this year, and Sea warned that this would fail to raise funds in the market .

Grab’s first investor day coincided with Singapore’s Formula 1 race week at the turn of the month, and among the 90,000 delegates in the city were former Google chief executive officer Eric Schmidt and General Atlantic vice chairman Ajay Banga. Grab’s top executives tried to reassure shareholders that it’s adjusting to a downturn and accelerating efforts to reverse years of losses.

Shailendra Singh, Managing Director of Sequoia Capital India, said founders should not fear raising funds at a lower valuation.

“Down rounds are like your 10th grade math test: It may increase your anxiety at that point, but it doesn’t matter in the long run,” Singh said. “If and when you list, you will constantly face market fluctuations.”

Founders who have gone through previous cycles remained optimistic about the prospects for companies with proven business models.

Julian Tan, the founder of a startup whose FastGig app matches employers with part-time job seekers, said he’s had no trouble raising funds this year and has had calls from investors looking for sustainable businesses while trying to address social issues. He said Southeast Asia has so far had few services for workers and semi-skilled workers, who make up the vast majority of the working population.

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“Not so good startups were filtered out. Now is the time for real startups to shine, get out there and make money from value investors,” said Aung Kyaw Moe, who sold part of his 19-year-old payments company 2C2P to Ant Group Co. earlier this year. “We can’t buy $1 revenue with $2 subsidy with investor money. That has to stop.”

As in previous downturns, efficiency is emerging as a key issue.

“It was a word that hadn’t been used for years,” said B Capital’s Ganguly. “It was always about growth, growth, growth. Now we talk a lot about efficiency.”

Patrick Cao, president of Indonesia’s largest internet company GoTo, said his company will focus on reducing subsidies and streamlining operating costs while offering services that trading partners can further monetize. “We’ve accelerated our break-even targets,” he said, “but there’s still work to be done.”

GoTo’s arch-rival Grab played down its long-held tagline of being “Southeast Asia’s leading superapp,” the powerful tagline that helped the company raise billions of dollars from investors like SoftBank Group Corp.

Its redefined goal, revealed in the Investor Day presentation slides, underscores its intention to become more focused after burning cash since its inception: “Southeast Asia’s largest and most efficient on-demand platform, enabling local commerce and mobility.”

(Except for the headline, this story was not edited by NDTV staff and was published by a syndicated feed.)


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