Alibaba is going to expand. But these VCs believe that startups in Southeast Asia don’t need to worry.

By now you know that Alibaba is big. Like, third biggest internet company in the world big. With the champagne bottles emptied following its historic IPO, expectations are high that Alibaba will move quickly and forcefully into a phase of global expansion. But what does that mean for startups in Southeast Asia?

Alibaba is no stranger to investing. According to The Wall Street Journal, Alibaba has been atypically active in 2014, joining in funding rounds totalling over US$1 billion.

To learn more about the potential impact of an active Alibaba, Tech in Asia reached out to Melissa Guzy, founder of Arbor Ventures and Vinnie Lauria, founder of Golden Gate Ventures, both of whom are very active in Southeast Asia. Here is what they had to say.

How will Alibaba’s IPO influence the startup scene in Asia?

MG: Success breeds success and of course the record-setting IPO valuation has made an impression on young entrepreneurs and has shown them the value of stock from years of hard work.

VL: Quite positively, as it brings more attention to the region, especially being the largest IPO in history, it’s going to make many more US and global investors look at this region.

There has been talk that Alibaba is going to aggressively expand outside of Asia. Will it be taking a partnership or independent approach to potential competitors in Asia?

MG: Alibaba is already investing aggressively outside of China and will likely continue to do so especially with a large war chest. It can afford to acquire leading edge technology and global engineering talent.

VL: I’d imagine in other parts of Southeast Asia it will take a mix of competitive approach, and also an M&A approach for land grabs – this is good opportunity for healthy exits for some startups. Outside of Asia, I think they’ll be able to continue an independent approach to create B2B value to allow Chinese merchants to connect with a global audience.

Which of Alibaba’s core industries (payment, ecommerce, etc.) is most likely to make a splash in Southeast Asia?

MG: At Arbor Ventures, we believe that Alibaba will expand into Southeast Asia across many areas. They recently invested with Singpost in the logistics sector and of course Alipay will expand regionally as well.

VL: I think the Alibaba.com B2B services have the most oppoturnity for fast growth against little competion. I think the hardest to enter Southeast Asia will be their messaging app Laiwang – which will face serious competition from WeChat, LINE, and FB messenger.

In which Southeast Asian market is Alibaba most likely to succeed? Least likely?

MG: It will depend upon which market segments in which local partners. There are few markets in SEA that are large enough to be stand alone and it requires significant effort. The largest single market is Indonesia and hard to ignore for a company like Alibaba.

VL: Indonesia, Thailand, and Vietnam all seem like great opportunities to succeed. Indonesia from a pure numbers perspective, Thailand for the ecommerce growth story that’s happening right now, and Vietnam as it has a really strong domestic market that’s hard for many foreign companies to enter, but I think Alibaba would be able to expand well into Vietnam.

Least likely – Myanmar and Cambodia, a bit too early for most of their properties.

Are there any relevant lessons from Rakuten’s attempted global expansion that Alibaba can learn?

MG: I think that Rakuten has learned that cultural differences matter and localization is important, which is the same lesson that the US Internet companies learned when they entered China.

VL: Work with local payments providers – don’t try to do it yourself. Buy larger global players that can help with distribution, partnerships, and customer access like Viber, Ebates, etc.

How urgent a need does Alibaba have to expand in the first place? Why cannot it not just stay in China?

MG: Alibaba can grow in China for many years as more and more people enter the middle class. It has global ambitions, which is no different to Google and Facebook and is very popular in Southeast Asia.

VL: I don’t think it’s urgent, but i think the public markets in the U.S. want to see continued aggressive growth. Alibaba can continue to do that in China for a while, but will need to make big steps in other markets to keep up with US investors hunger for aggressive year-over-year growth that is common for technology companies. This applies whether Alibaba expands into new verticals, new product lines, or new geographies.

Khailee’s take

Khailee Ng, venture partner at 500 Startups, also chimed in. He sees Alibaba’s IPO as a boon for the Southeast Asian tech ecosystem as a whole. He tells Tech in Asia:

“Jack Ma has reminded the world that the journey of building a global tech giant isn’t exclusive to Silicon Valley. And this reminder is especially timely as other markets outside of the US and China mature. Will we see multi-billion dollar giants emerge from Southeast Asia in years to come? Let’s let the Alibaba story stir up courage in emerging market founders to say ‘HELL YEAH.’”

Alibaba is going to expand. But these VCs believe that startups in Southeast Asia don’t need to worry.