Private funding for Southeast Asia’s climate tech startups experienced a notable slowdown this year, heavily influenced by macroeconomic uncertainties and elevated borrowing costs.
According to the latest report by DealStreetAsia – DATA VANTAGE, deal volume in the sector contracted for the first time in nine years, dropping 12.7% to 89 transactions in the first 11 months of 2024.
Total private funding, including equity and debt financing, declined 22.1% year over year to $649.8 million, per The State of Climate Tech in SE Asia 2024 report.
“With just one month remaining in the year, the sector is unlikely to exceed 2023’s total of 109 deals, signalling a notable slowdown in funding activity,” the report noted.
Annual deal volume and value in Southeast Asia’s climate tech sector
Early-stage deals sustain climate funding
Total funding for early-stage climate tech startups grew a modest 3.8% to $467.5 million in the first 11 months of this year. This marks a recovery from the 44.4% drop recorded last year due to inflated valuations.
In contrast, no equity financing deal was recorded by late-stage firms (Series C and beyond), reflecting investors’ cooling appetite for larger deals. Late-stage fundraising accounted for 31% of total equity fundraising in 2023 and 16% in 2022.
In an interview for the report, Tien Nguyen, Founding Partner at Earth Venture Capital, observed that the slower rate of technology adoption in Southeast Asia poses a significant challenge to early-stage climate tech startups. While only 15-20% of businesses in the region embrace early adoption, this figure stands at 35% in more advanced markets. Nguyen said even well-established solutions such as renewable energy and waste-to-energy systems encounter pushback, hindering scalability and constraining revenue growth.
“Additionally, the region’s underdeveloped secondary market, with Southeast Asian IPOs accounting for less than 5% of global activity, creates hesitation among investors. Without clear exit pathways, securing follow-on funding for startups becomes increasingly difficult,” he added.
It is not all doom and gloom, though. Climate tech startups’ share of the total equity funding in the region has continued to grow—rising from 2.3% in 2021 to 11.1% in the first 11 months of 2024.
Climate tech funding’s share of total private funding in SE Asia
Renewable energy dominates funding
According to the report that tracked dealmaking across climate change mitigation and adaptation segments, renewable energy continues to dominate mitigation investments.
In the first 11 months of 2024, venture-backed renewable energy companies closed 25 deals, raising $276.4 million, surpassing the full-year 2023 tally. This growth highlights the segment’s maturity, increasing commercial viability, and sustained investor confidence.
Venture funding for renewable energy in SE Asia (left) and share of funding by market
Meanwhile, climate adaptation startups closed 31 deals, only slightly behind the 35 recorded in the same period of last year. However, smaller ticket sizes and fewer large rounds led to a 32.5% drop in funding.
Singapore leads despite slowdown
Singapore continues to dominate climate tech funding in the region. Startups in the city-state secured 59 deals in the first 11 months of 2021, up from 41 deals in the same period last year. However, their total funding fell 14.3% year on year.
Indonesia, Southeast Asia’s largest market, witnessed relatively stable dealmaking this year. Its 22 deals this year were at par with 2023’s levels but slightly below the 23 deals recorded in 2022. However, startups in the archipelago witnessed a bigger funding decline of 51.8%.
Vietnam received a boost from local agritech startup Techcoop’s massive $70 million Series A round, the largest funding round recorded in the climate tech sector this year.
Tougher times ahead for sustainability funds
Southeast Asia’s sustainability-focused funds, which target climate and impact investments, recorded their first fundraising decline in 2024. Only five fundraising milestones—interim or final closes—had been recorded by November, down sharply from 13 in 2023. With $255 million raised so far, the region’s sustainability funds secured less than half of last year’s $462 million, marking the second-lowest total in six years.
The 2025 outlook remains subdued due to a reduced appetite for climate tech funds in the US, a key bellwether market. However, investors in the region see plenty of reason to stay hopeful.
“Southeast Asia’s rapidly growing consumer class, coupled with expanding digital access, continues to offer a compelling and fast-growing addressable market. This dynamic makes Southeast Asia an attractive destination for investors seeking scalable, impactful opportunities,” said Nakul Zaveri, co-head of climate investment strategy at LeapFrog Investments.
The State of Climate Tech in SE Asia 2024 covers:
- Equity and debt funding for SE Asian climate tech startups
- Funding by stages, markets and segments
- Fundraising by sustainability vehicles with primary/secondary focus on SE Asia
- Investor perspectives
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