telkomsel halo

Startup fundraising in Southeast Asia halved in 2023

03:00:00 | 29 Jan 2024
Startup fundraising in Southeast Asia halved in 2023
JAKARTA (IndoTelko) - DealStreetAsia released the Southeast Asia Deal Review 2023 report on January 25, 2023.

The report, prepared along with multi-stage investment company Rigel Capital, takes a comprehensive look at the intricacies of startup fundraising in Southeast Asia. It was unveiled during the fifth edition of DealStreetAsia’s annual Indonesia PE-VC Summit at Jakarta.

Capital raised by private startups in the region plummeted 51% year-on-year in 2023 to $7.96 billion as macroeconomic factors weighed heavily on investor sentiment. Southeast Asia-based startups sealed 718 venture deals last year, down 30% from 2022.

Notably, Lazada, the regional arm of Chinese e-commerce giant Alibaba, raised $1.89 billion in 2023, accounting for roughly 24% of the total equity fundraising by Southeast Asian startups last year. The outsized role played by Lazada in propping up overall deal value makes the decline in startup funding more pronounced, said the report.

The haul by other top fundraisers of 2023 was far behind that of Lazada—fintech firm Kredivo sealed a $270 million Series D deal, insurtech firm Bolttech raised a $246 million Series B round, Investree amassed $231 million in a Series D funding round, and aquaculture startup eFishery sealed a $200 million Series D round.

These were among the rare deals last year that were valued at over US$100 million, as sceptical investors withheld from writing large-sized cheques amid geopolitical uncertainties, high-interest rates, and persistent inflation.

Elusive unicorns
New unicorns, or startups valued at $1 billion or more, continued to be elusive last year. In May, Indonesian aquaculture company eFishery became the region’s first unicorn minted in 2023. The region waited until December to get its second unicorn—Singapore-based semiconductor integration services provider Silicon Box, which closed the first tranche of a $200-million Series B round.

In 2022, eight startups had earned the much sought-after unicorn tag. In 2021, there were a record 23 startups in the region that crossed $1 billion in valuation.
Singapore, Indonesia scoop up 90% of funds

Last year, Singapore and Indonesia scooped up nearly 90% of the total equity funding in Southeast Asia. The city-state cornered $5.5 billion from 415 deals, while Indonesia raised $1.51 billion from 131 transactions, the report showed.

Thailand and Malaysia witnessed the most extensive corrections in total private capital raised—Thailand clocking a steep 86% fall in deal value and Malaysia posting an 83% plunge. In Vietnam, startups appeared to be relatively resilient with just a 9.55% drop in deal value, the report found.
Vietnam managed to pocket $0.51 billion from 54 deals that its privately held companies signed in 2023. The Philippines raised $0.19 billion from 34 deals while Thailand scored $0.13 billion in total from 28 Deals. Malaysia saw 52 transactions that secured $0.11 billion in total.

Fintech startups seal the most deals
Fintech remained the most active business vertical in Southeast Asia, although the number of deals sealed by startups in the sector dropped 39% year-on-year to 142. Deal value for the fintech sector fell 67% to $1.82 billion—the second highest. E-commerce startups raised the most funds at $2.32 billion, thanks to Lazada.

Behind fintech, the healthtech sector witnessed the most deals at 60, up 20% year-on-year, bucking the downward trend affecting the region’s startup scene. The value, however, dropped by 34% to $582 million owing to smaller health tech deal sizes, according to the report.

Tough times for early-stage startups
The DealStreetAsia-Rigel report, which cited data from company announcements, regulatory filings, media reports, and DealStreetAsia’s research, noted that fundraising woes in 2023 extended beyond late-stage companies as early-stage deals dropped 29% year-on-year to 659 deals while total capital raised fell by 49% to $3.42 billion.

“Seed funding, considered a bellwether for early-stage investment trends, has exhibited a downward trajectory since the second quarter of 2022, signalling a pullback from the peak exuberance that characterised the market in 2021,” the report said.

Outlook for 2024
For this year, some sectors are poised for growth despite the current funding challenges and new themes are likely to attract venture capital investments. Sustainable sectors, including green tech, electric vehicles, climate tech, and health tech are gaining increased attractiveness, according to the report. The clean mobility ecosystem, artificial intelligence, and sustainability-related sectors are also expected to grow.

The report noted that there was a silver lining at the end of the year. “A closer examination of quarterly [deal making] trends reveals signs of stability emerging in the startup investment landscape,” noted the report. The fourth quarter (October-December) of 2023 witnessed 167 deals, up from 151 in the preceding quarter when deal volume was at a three-year low.

The fourth quarter was also stronger in terms of the investments secured as regional startups raised $2.28 billion, up 9% from the previous quarter.

As the year drew to a close, the region’s private landscape, however, saw emerging signs of stability, with the fourth quarter posting a 12% increase in deal volume following a concerning three-year low hit in the third quarter, a report from DealStreetAsia and multi-stage investment company Rigel Capital showed.

“I think there is more commitment from LPs to come to Southeast Asia [in 2024], as China is tied [due to geopolitical issues],” said Kabir Narang of B Capital Group. He added that there was a lot of capital raised in 2021 that is still waiting to be deployed, and 2024 seems ripe to benefit from that.”

We’re seeing more discipline in evaluations and business decisions, which will ultimately help the market correct and bounce back,” said Susli Lie of Monk’s Hill Ventures.

Asked what's unique about companies like eFishery, Aldi Haryopratomo said: "They were great when they were small." He added that successful companies focus on creating great business fundamentals in the early stages.

“As investors, we see a downturn as an opportunity,” said Sebastian Togelang of Rigel Capital. He said that the current downturn is a good time to pick up strong companies at reasonable valuations.(es)

Artikel Terkait
Rekomendasi
Berita Pilihan
IndoTelko Idul Fitri 2024
More Stories
Data Center Service Provider of the year