Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Private Capital Markets

<div class="content-highlight"><h2>What You Need to Know</h2></div><ul>
<li>
<strong>Private equity returns have outperformed public equity in the last decade.</strong> From March 2010 to 2020, private equity has generated an average annual return of 13.2% per year as compared to public equity at 6.6%. To put this into perspective, the implied compounded returns of PE over the last 10-year period was 246% versus 89% for public equity. This is partially attributed to the increasing number of unicorn companies - privately held startups reaching a valuation of over US$1 billion - most of which experience their highest growth and return periods in the private market rather than in the IPO stage.</li>
<li>
<strong>COVID-19 has upheaved the business and operating landscape for unicorns.</strong> Lockdown measures, heightened hygiene awareness, and increased travel restrictions are the realities faced by unicorn companies in the new normal, on top of a global recession hampering consumption.</li>
<li>
<strong>Unicorns supercharged by the pandemic: e-Commerce, FinTech, and Remote Work/Study.</strong> Digital platforms have experienced massive adoption as consumers and businesses alike are realizing that they don’t need a physical space in order to interact and transact.</li>
<li>
<strong>Unicorns forced to pivot by the pandemic: Travel &amp; Hospitality, Ride-hailing.</strong> Fear of infection and travel restrictions have hampered the bread-and-butter businesses of many unicorns, forcing them to offer new products &amp; services in the interim. Super-app unicorns (or apps that house a range of sub-apps serving many different functions) have proven more resilient, as they are easily able to switch to other businesses like on-demand delivery and fintech.</li>
</ul><p></p><p><em>Note: This research is commissioned by iSTOX in collaboration with Zero One. iSTOX, a next-generation private capital markets platform, provides accredited investors with access to previously out-of-reach investment opportunities, including exposure to unicorn companies. Click <a href="https://istox.com/" target="_blank" rel="noopener">here</a> to learn more.</em></p>

What You Need to Know

Private equity returns have outperformed public equity in the last decade. From March 2010 to 2020, private equity has generated an average annual return of 13.2% per year as compared to public equity at 6.6%. To put this into perspective, the implied compounded returns of PE over the last 10-year period was 246% versus 89% for public equity. This is partially attributed to the increasing number of unicorn companies - privately held startups reaching a valuation of over US$1 billion - most of which experience their highest growth and return periods in the private market rather than in the IPO stage.

COVID-19 has upheaved the business and operating landscape for unicorns. Lockdown measures, heightened hygiene awareness, and increased travel restrictions are the realities faced by unicorn companies in the new normal, on top of a global recession hampering consumption.

Unicorns supercharged by the pandemic: e-Commerce, FinTech, and Remote Work/Study. Digital platforms have experienced massive adoption as consumers and businesses alike are realizing that they don’t need a physical space in order to interact and transact.

Unicorns forced to pivot by the pandemic: Travel &amp; Hospitality, Ride-hailing. Fear of infection and travel restrictions have hampered the bread-and-butter businesses of many unicorns, forcing them to offer new products &amp; services in the interim. Super-app unicorns (or apps that house a range of sub-apps serving many different functions) have proven more resilient, as they are easily able to switch to other businesses like on-demand delivery and fintech.
Note: This research is commissioned by iSTOX in collaboration with Zero One. iSTOX, a next-generation private capital markets platform, provides accredited investors with access to previously out-of-reach investment opportunities, including exposure to unicorn companies. Click here to learn more.

The Future of Private Market Unicorns in a Post-Pandemic World

<ul><li><strong>Grab has an entrenched leading position in SE Asia.</strong> The ride-hailing turned super-app company is positioned to capture much of SE Asia’s shift towards the digital economy owing to its early-mover advantages in multiple countries in areas such as transportation, food, and payments.</li><li><strong>The digital economy is still in its early stages.</strong> Despite the remarkable growth Grab and its peers have posted, penetration rates remain low across digital services. We estimate that ride hailing penetration in SE Asia was only 6% in 2019, while services like digital remittance are reportedly only at 13% penetration. This indicates a long runway for further growth.</li><li><strong>Main risks include competition and continued reliance on funding.</strong> Grab remains loss-making likely due to its usage of subsidies to gain market share. Increased competition either in the form of other super-apps, specialized players, or traditional firms can force increased subsidies – potentially delaying breakeven and keeping the firm reliant on continued external financing.</li></ul><hr><div class="content-highlight"><p style="text-align: center;"><strong>This Insight was published in conjunction with <a href="https://hg.exchange/" target="_blank" rel="noopener">Hg Exchange</a>, Southeast Asia's First Member-Driven Private Exchange</strong></p></div>

Grab has an entrenched leading position in SE Asia. The ride-hailing turned super-app company is positioned to capture much of SE Asia’s shift towards the digital economy owing to its early-mover advantages in multiple countries in areas such as transportation, food, and payments.The digital economy is still in its early stages. Despite the remarkable growth Grab and its peers have posted, penetration rates remain low across digital services. We estimate that ride hailing penetration in SE Asia was only 6% in 2019, while services like digital remittance are reportedly only at 13% penetration. This indicates a long runway for further growth.Main risks include competition and continued reliance on funding. Grab remains loss-making likely due to its usage of subsidies to gain market share. Increased competition either in the form of other super-apps, specialized players, or traditional firms can force increased subsidies – potentially delaying breakeven and keeping the firm reliant on continued external financing.This Insight was published in conjunction with Hg Exchange, Southeast Asia's First Member-Driven Private Exchange

Grab: Entrenched Super-App Positioned for Next Stage of Growth

Indonesia

GoTo is an Indonesian technology company that operates the largest digital ecosystem in the country. It provides integrated services including on-demand mobility (Gojek), e-commerce (Tokopedia), payments, and financial technology. The company is headquartered in Jakarta, Indonesia, and was formed in 2021 through the merger of Gojek and Tokopedia.

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GoTo (GOTO IJ)

The Future of Private Market Unicorns in a Post-Pandemic World

As a result of COVID-19, some unicorn companies have had to re-engineer their business model entirely, while other unicorn companies reap the...

Vincent Fernando, CFA

Grab: Entrenched Super-App Positioned for Next Stage of Growth

Grab has an entrenched leading position in SE Asia. The ride-hailing turned super-app company is positioned to capture much of SE Asia’s shift...

Vincent Fernando, CFA

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