Garena, Southeast Asia’s most valuable tech startup, lands additional funding

Garena, the games firm that is Southeast Asia’s most valuable tech startup, has closed additional funding from three new investors. They are SeaTown Holdings International, an affiliate of Singapore sovereign wealth fund Temasek, Indonesia’s GDP Venture, and Mistletoe, a Japan-based fund from Taizo Son, the younger brother of SoftBank CEO Masayoshi Son.

The amount raised was not disclosed, and Singapore-headquartered Garena did not reveal a post-money valuation.

That last valuation was $3.75 billion following a $170 million funding round in March from Khazanah Nasional Berhad, the Malaysian government’s strategic investment fund, and Chinese tech giant Tencent, a long-term, existing investor. The company has raised over $500 million to date. Its other investors include General Atlantic, the Ontario Teachers’ Pension Plan, Keytone Ventures, and Skype co-founder Toivo Annus.

Garena is best known for the gaming business it started in 2009, which accounts for most of its revenue, but today it also operates a payment service called AirPay and social commerce app called Shopee. Garena said in a statement that its annual revenue surpassed $300 million last year, a figure that it claimed represents “compound annual revenue growth of more than 95 percent over the past five years.” It didn’t reveal its profit/loss for 2015.

While Garena didn’t say a whole lot in this announcement, it did reveal some notable figures for its two newest ventures.

Shopee, an e-commerce app that latches on to the popularity of social media to enable social commerce, has reached 1.4 million sellers and “annualised” GMV of $1.3 billion. That sounds impressive — Rocket Internet’s Lazada crossed $1 billion GMV before being acquired by Alibaba in a multi-billion dollar deal earlier this year — but Shopee’s GMV figure is being calculated using monthly figures rather than an entire year of sales, as Garena president Nick Nash told me when I interviewed him at a tech event in Bangkok in July. In other words, if you scale one of your best months of business, you can get stellar “annualized” sales. (Although, to be fair to Garena, Shopee has been running less than a year — but the effect is the same.)

In addition, for now Shopee isn’t charging merchants for its service. Subsidization is normal, but it does distort some figures. Ultimately, Shopee’s progress is promising, but the figure are a stretch.

The same applies to AirPay, which Garena said “now has an annualized gross transaction value exceeding US$510 million.” Impressive, again, but important to bear in mind that it is an “annualized” figure.

Nonetheless, it is impossible to avoid the fact that Garena is putting its significant weight into social commerce and payments, two areas in Southeast Asia that many companies, including Alibaba and Facebook, are making a big play for. With over 600 million consumers and growing smartphone sales, the region is often touted as a market with the potential to be hugely lucrative for internet companies.

“We are proud to welcome three of Asia’s most respected investment firms to Garena,” Garena founder, chairman and group CEO Forrest Li said in a statement. “Their insights and connectivity across the region will support and accelerate our mission to ‘connect the dots’ for our customers.”

Son, who made his name with Yahoo Japan by founding gaming giant Gungho, added: “It’s crucial to for the world to have companies which create large positive impacts in diverse fields to brighten the prospect of our future. I am very proud of the work Garena is doing and look forward to many years of partnership.”

The deal will see Son and SeaTown’s Archana Parekh join Garena’s advisory board.