Deal focus: Clearing up Southeast Asia’s currency chaos

When a business model works in Europe, Southeast Asia isn’t exactly the first geography that comes to mind when investors start exploring potential replication markets. Maybe that needs to change.

While start-ups in Europe and Southeast Asia are working with very different levels of infrastructure and consumption power, they share similar experiences in areas such as international scaling, regulatory compliance, and branding. Cross-border travel and spending are common, but so are bureaucratic and cultural roadblocks.

These parallels were not lost on Hong Kong-based YouTrip, which operates a foreign exchange app in Singapore that focuses on Southeast Asia’s surging international travel industry. With its latest funding round, the company has leveraged enthusiasm for two similar European companies, Monzo and N26, which have both achieved unicorn status in the past few months.

Like YouTrip, Monzo and N26 started out as pre-paid MasterCard businesses connected to mobile wallets. In less than three years, this model proved amenable to exponential growth in Europe through the addition of related products and banking services. Now, in a region where currency fragmentation is even more severe, expectations of similarly rapid uptake are on the rise.    

“In Europe, they focus on competitive foreign exchange rates as well, but it’s usually the pound and the US dollar,” explains Caecilia Chu, co-founder and CEO of YouTrip. “In Southeast Asia, we’ve found that that pain point is much deeper and much more interesting because people are using a lot more currencies. We don’t have anything like the euro.”

YouTrip has raised an oversubscribed $25.5 million seed round that is being called the largest pre-Series A ever for a Hong Kong-founded start-up. Participants include Insignia Venture Partners and several Asian family offices. The new capital is expected to drive an expansion campaign around the region. It is hoped the family offices will give those forays deeper roots. “They are patient capital that’s truly investing in the growth of the region,” says Chu. “That vision is a good match for us because to launch what we’re launching is really a long-term game.”

Strong partnerships are already playing an important role. MasterCard manufactures the plastic touch-and-go cards that access YouTrip software and connects users to 30 million merchant locations globally. At the same time, EZ-Link, Singapore’s ubiquitous public transport payment services operator, is adding credibility to local co-branding moves.

More than 150 currencies are serviced with wholesale exchange rates and no transaction fees for individuals. Revenues are generated from merchant fees. More than 200,000 downloads and one million transactions have been processed in Singapore since launch in August last year.  

“Scaling in Southeast Asia is difficult, and that’s precisely why we chose to launch in this market. It’s the high entry barriers that make this business interesting,” says Chu. “We have been in the market for 10 months with really strong traction, yet we are still the only mover because of those entry barriers.  That was attractive not only to us, but also to investors.” 

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• Topics
• Southeast Asia
• Consumer
• Financials
• Early-stage
• Europe
• Singapore
• Hong Kong (China)
• Financial Services
• seed
• TMT