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How three billionaire founders built Singapore’s first tech unicorn—now valued at USD 65 billion

Written by Vulcan Post Published on 

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The gaming and e-commerce firm is a homegrown success, but how exactly did the co-founders grow the company and earn their riches?

Forbes recently unveiled its list of 2020 Forbes Singapore Rich List, which highlighted the top 50 richest in Singapore.

One interesting finding is that all three of Sea’s co-founders are included in the list.

Chairman and CEO Forrest Li added USD 5.53 billion to his wealth and entered the ranks of the top ten richest for the first time ever. He is currently the seventh richest in Singapore.

Meanwhile, Sea’s chief operating officer Gang Ye (No. 11, USD 4.3 billion) saw an impressive 356% jump in his net worth—this is the largest percentage gain of any fortune on the list.

Thanks to the exponential rise in Sea’s shares, the firm’s third co-founder David Chen became a billionaire as well and makes his debut at No. 25 with a net worth of USD 1.37 billion.

The gaming and e-commerce firm is a homegrown success story best known for its super-hit Free Fire online game, but how exactly did the co-founders grow the company and earn their riches?

From China to Singapore

(From left to right) Forrest Li, Gang Ye and David Chen / Image Credit: Sea via Vulcan Post

All three of the co-founders hail from China.

Chen and Ye first came to Singapore as teenagers under a government scheme to recruit foreign talent through scholarship programmes.

Chen studied computer engineering at the National University of Singapore while Ye went to Hwa Chong Institution and Raffles Junior College. He later attained bachelor degrees in computer science and economics from Carnegie Mellon University in Pittsburgh.

On the other hand, Li had earned an engineering degree from Shanghai Jiaotong University.

He then worked at Motorola Solutions Inc. and Corning Inc. in China, and later pursued an MBA at Stanford University.

His then-girlfriend (now wife) was also from Stanford. When he attended her graduation ceremony back in 2005, Steve Jobs was also present.

Jobs delivered a memorable commencement speech, urging the class to “stay hungry, stay foolish.” Those four words were ingrained in Li’s mind, and inspired him to chase his dreams.

Growing Garena into a gaming powerhouse

After Li completed his MBA, he followed his wife to Singapore.

He worked for nine months with MTV Network’s digital team before starting his first business, GG Game, which develops single-player gaming products.

Angel investors for GG Game included Skype co-founder Toivo Annus; Bryan, who is the son-in-law of billionaire Robert Kuok; and Kuok Khoon Hong, CEO of palm oil major Wilmar.

The venture was short-lived, but a fresh funding of about USD 1 million earned him another chance to redeem himself.

Garena World / Image Credit: Beartai via Vulcan Post

He started anew with Garena in 2009, roping in fellow co-founders Chen and Ye.

Short for Global Arena, it is a leading online games developer and publisher with a global footprint across more than 130 markets.

It developed Free Fire, a popular mobile battle royale game, which has hit 100 million peak daily users in the second quarter of 2020.

According to data from App Annie, it continues to be the highest grossing mobile game in Southeast Asia and Latin America.

In addition, Garena exclusively licenses and publishes games from global partners. It also hosts esports events, ranging from local tournaments to global esports competitions.

In a 2009 interview with TechinAsia, Li simply described Garena as a “community for gamers worldwide.”

Watch Now | Is Sea Group Southeast Asia’s answer to Tencent and Alibaba?

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At that time — the first year of its launch — it had 23 million registered gamers from 210 countries.

They ramped up their user base through their flagship product, which is a downloadable gaming platform (garena.com).

The most exciting thing about this platform is every time you log on, you will be immediately connected to another 400,000 gamers who are also on the platform at that moment. They are from every corner of the world, but share the same passion on games.

– Forrest Li, co-founder and CEO of Sea in a 2009 interview with Tech in Asia

Through the platform, gamers can chat, challenge opponents, and play their favourite games online with millions of other gamers.

According to Li, their big break only came in 2010 when they secured a distribution license in Southeast Asia with US game developer Riot Games, which had just released League of Legends at the time.

It helped Garena turn profitable within the next two years, and opened doors of opportunities for them to secure other game titles.

That was also how it gained the attention of Tencent, which is the majority owner of Riot Games.

In November 2018, Garena partnered Tencent, which allowed it to gain a five-year right of first refusal to publish Tencent’s mobile and PC games across Southeast Asia and Taiwan.

This helped to boost Garena’s already-strong portfolio of PC and mobile games, further solidifying the company as a Southeast Asia gaming powerhouse.

First foray into fintech: SeaMoney

Garena didn’t want to settle to be “just a single-country business” so it thought of ways on how it could expand its business further.

There was a real need to serve the underprivileged middle class of this region. There’s unfortunately a very low penetration of bank accounts across in Greater Southeast Asia. The majority of adults in places like Vietnam, Indonesia, and the Philippines don’t have a bank account, let alone credit cards, so our next platform was in payments.

– Nick Nash, Sea’s Group President in a 2017 Interbrand interview

Established in 2014, SeaMoney is a digital payments and financial services provider in Southeast Asia.

Its mission is to better the lives of individuals and businesses in our region with financial services through technology.

SeaMoney’s offerings include mobile wallet services, payment processing, credit, and related digital financial services and products. These services and products are offered under AirPay, ShopeePay, ShopeePayLater, and other brands in the region.

As it branched out, Garena quickly became Singapore’s first internet unicorn. It joined the unicorn club relatively early, already being valued at USD 1.2 billion in 2014.

Shopee dominates e-commerce in Southeast Asia

According to Financial Times, Li decided to launch e-commerce platform Shopee in 2015 after his daughter said she missed Taobao, Alibaba’s online shopping mall.

Shopee has since grown to be among the top two most-used e-commerce apps in Southeast Asia in 2019, based on monthly active users.

It was also the most visited e-commerce website, chalking up 2.1 billion visits against competitor Lazada’s 1.8 billion, according to research from iPrice.

Despite being a latecomer — Lazada and Tokopedia launched three and six years ahead respectively — Shopee has rapidly caught up with these Alibaba-backed incumbents.

Interestingly, the company has yet to turn a profit. While its gaming business has been profitable for years, Shopee has accounted for most of its net losses, which almost doubled year on year, to USD 961 million, in 2018.

Li simply viewed Shopee’s losses as a stepping stone to expand the platform.

Internally we don’t think this is a loss because this is not a mature business. For such a business with such a high growth rate … you do need to invest upfront, otherwise you are not going to make it. Scale matters so much for e-commerce.

– Forrest Li, co-founder and CEO of Sea in a 2019 interview with Financial Times

Image Credit: Medium via Vulcan Post

He added that Shopee could instantly become profitable if it cut down on sales and marketing expenses, and increased commission rates of merchants.

However, growing market share and the scale of the entire marketplace is their utmost priority compared to making money.

Shopee is now the third-most downloaded shopping app globally across iOS and Google Play in the first quarter of 2020.

Its revenue in the first quarter of 2020 stood at USD 266.5 million, up 104% year on year.

Southeast Asia’s most valuable tech startup

In 2017, Garena rebranded as Sea Ltd after it secured USD 550 million funding.

Image Credit: Vietnam Insider via Vulcan Post

The name draws inspiration from, as you might expect, their operating region of Southeast Asia, and also the very ocean that connects us, which symbolizes their motto of “connect the dots”.

Garena is a brand that is beloved across our game ecosystem, our Shopee brand has become synonymous with e-commerce in our region, and AirPay is quickly becoming a leader in digital financial services. We cherish these three brands, and are now embracing an overall identity for our entire company.

– Forrest Li, co-founder and CEO of Sea in a media statement

In October that year, Sea debuted a USD 884 million initial public offering (IPO) on the New York Stock Exchange.

Sea is apparently the first Singapore-based tech unicorn to go public in the United States.

The IPO valued the company at USD 4.58 billion, making it Southeast Asia’s most valuable tech company.

Today, Sea has become the world’s best-performing large-cap stock — its shares have increased by more than 880 percent in the past 18 months, beating Tesla and FAANGs.

This is the largest gain worldwide among companies with a starting market value of at least USD 1 billion.

Sea has already claimed the title of Singapore’s most valuable homegrown public company after its market value swelled to USD 65 billion, surpassing DBS Group Holdings Ltd. for the first time earlier this year.

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Revenue has also grown quickly, jumping 163% to USD 2.2 billion in 2019, though it’s still just a fraction of DBS’ USD 11 billion.

In a video interview, Li said that he has been working in the office seven days a week since April, leading his company through what may be its most pivotal year.

Demand for Sea’s mobile games and online-shopping platform has surged during the pandemic, and the company is bidding on a Singapore digital-banking license to accelerate its push into financial services.

Li is also looking for potential acquisitions in gaming, logistics and e-commerce.

He added that he is well aware that people has been calling his company a Southeast Asian mash-up of Tencent and Alibaba.

We learned a lot from those pioneers. But at the end of the day, we don’t need to be their mini versions. We can just be ourselves.

– Forrest Li, co-founder and CEO of Sea in a 2020 interview with The Business Times

This article was originally published by Vulcan Post.

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