Opening remarks by Ashok Lavasa, Vice President for Private Sector Operations and Public-Private Partnerships, at the DigitalxADB Forum, 28 October 2021
Thank you Teymoor. It is my pleasure to participate in today’s discussion.
Technology startups have emerged as important drivers of economic transformation.
While adjustments were not easy, many innovative and agile tech startups were able to adjust quickly and emerge stronger from the COVID-19 crisis. Venture capital took note and global investment soared 95% from the first half of 2020 to the first half of 2021. The number of unicorns valued at more than $1 billion rose 43% between October 2020 to June 2021.
Asia and the Pacific have shared these economic benefits. The People’s Republic of China enjoyed $37 billion of venture funding for the first five months of this year. India alone spawned 24 new unicorns from January to August. Large markets will allow successful ventures to scale quickly, but there are also regional success stories that have given the rise to startup unicorns like Gojek, Grab and Sea.
Digital transformation begets economic transformation. In addition to creating economic value and new jobs, digital platforms help traditional businesses, especially MSMEs, achieve efficiencies and access previously unreachable markets. Digital platforms simplify logistics and integrate value chains across borders – making them vehicles for regional integration and cooperation. Digital marketplaces give individuals and households greater convenience and wider choices.
However, digital transformation also comes with growing pains. An ever changing landscape of business models and technology requires governments to re-examine policy in areas including competition, data access, privacy, security and taxation. Changing labor markets challenge governments to reskill and upskill workers while updating labor and social protection policies. Central banks must find ways to engage with new financial technologies and accommodate increasing demand for safe and secure digital financial services.
The second challenge is infrastructure. For many, the affordability of devices and data plans, as well as access to electricity, still determine participation in the digital economy. ADB estimates that the region will need to invest $910 billion over the next five years in mobile and broadband services. Much of this investment will come from the private sector.
The third challenge is to foster the emergence and growth of startup ecosystems. I am joined on today’s panel by Startup Blink, which ranks the world’s startup ecosystems. Eight of ADB’s developing member countries currently sit in StartupBlink’s 50 Best Countries for Startups. These startup ecosystems involve complex interplay of public incentives, enabling institutions, mentors, private investors, corporations, and entrepreneurs. They are complex, nuanced, and take time to mature. Building them requires robust participation from the public sector, private sector, and academia. The approaches and pathways to success vary greatly and there seems to be no universal secret sauce, but rather a need for context-aware collaborative approaches.
Today’s panel discussion asks the question: What role is there – or ought there be – for development finance in the Asia Pacific region’s startup-led digital transformation?
The answers, I expect, will span the breadth of ADB’s operations. I look forward to the discussion.