SE Asia Deals Barometer Report: Startup fundraising falls 66% YoY to $751m in April

Fundraising in Southeast Asia stayed below the psychologically-important $1 billion mark for the fourth straight month in April as startups in the region raised just $751 million from 78 deals.

The April fundraising was 3.8% below the $781 million that Southeast Asian startups raised in March from 76 deals, show proprietary data compiled by DealStreetAsia.

Megadeals were also scarce in the month, with only two deals surpassing the $100 million mark. One of the two megadeals—Alibaba’s investment in Lazada—was also a capital infusion from a parent company.

On a year-on-year basis, the funding drop was a stark 66% as startups in the region had raised $2.2 billion, the highest last year, from 95 transactions in April 2022.

At least 19 deals in April did not disclose financial details. Aside from venture capital and private equity transactions, the deals included corporate rounds, debt financing, convertible notes, and equity crowdfunding transactions.

The April fundraising brings the total funds raised by startups in the region so far this year to at least $2.67 billion from 267 deals. February posted the lowest figures so far in terms of volume and value, at 55 and $410 million, respectively.

For the entire 2022, total funding in the region had dropped 32% to $15.8 billion from 2021’s record highs. Annual deal volume, however, defied the trend, closing 9.6% higher at 1,062, signalling a shift away from big-ticket deals.

The preference for smaller deals still continues in April. Vietnamese dairy producer International Dairy Products and Singapore-based e-commerce major Lazada were the only companies that sealed deals worth over $100 million.

International Dairy Products secured a $100-million investment from Singapore-based private equity firm Growtheum Capital Partners in the lone PE deal in the region last month.

Lazada, on the other hand, received another $352.9 million in capital infusion from its parent company Alibaba. Last year, the Chinese e-commerce giant injected a total of $1.6 billion into its Southeast Asian unit.

The two megadeals of April 2023

No startup in Southeast Asia has made it to the unicorn club this year so far. In 2022, eight privately-held startups in the region earned the much sought-after unicorn tag. In 2021, there were a record 23 startups in the region that crossed the $1 billion valuation.

Singapore corners 65% of total funding in April

Startups in Singapore continued to lead the region’s fundraising activity last month, cornering about 65% of the total amount raised. DealStreetAsia’s compilations showed that privately-held companies in the city-state raised about $491 million from 45 transactions in the month.

The deal value, however, was lower than the $614 million that startups in Singapore amassed in March from at least 46 transactions.

Alibaba’s capital infusion to Lazada Group was the biggest transaction in Singapore last month at $352.9 million. That was, however, the only megadeal that took place in the city-state during that period as other deals involved funding of less than $11 million.

Vietnamese startups held on to the second spot in terms of value and volume after they raised about $130 million from 11 transactions. In March, startups in Vietnam raised $52 million from just three transactions.

International Dairy Products’ $100-million investment from Growtheum Capital Partners was the country’s biggest in April. Sources close to the transaction added that other investors, including private equity majors with operations in Southeast Asia, and corporations from neighbouring countries, had also been keen to back the company.

Malaysian startups cornered $37.8 million from eight deals while Indonesia raised $34 million from nine transactions.

Malaysia-based fintech company Soft Space raised $31.5 million in Series B funding from Singapore-based Southern Capital to become the largest deal in the country in April. The round was joined by returning investor transcosmos Inc., strategic investor JCB, and venture capital firm Hibiscus Fund, jointly managed by RHL Ventures and South Korea’s KB Investment.

In Indonesia, cloud kitchen startup Legit Group led the funding pack after raising $13.7 million in a Series A funding round anchored by MDI Ventures and participated in by Sinar Mas Digital Ventures, East Ventures, and Winter Capital. The deal was the largest in the country last month.

In the Philippines, two startups, grab-and-go coffee chain PICKUP COFFEE and HR tech startup Sprout Solutions, raised $50.7 million in funding while Cambodia had one deal that raised $7.5 million. Thailand posted two transactions, neither of which disclosed financial details.

Investors favour fintech startups

While Alibaba’s capital infusion to Lazada was the biggest in terms of value, fintech startups were the busiest in April, having signed 16 deals that raised $87 million.

E-payment firm Alchemy Pay, crypto exchange Bitget, and blockchain startup CryptoGPT, all based in Singapore, raised $10 million each to lead the fintech list. In March, there were 21 fintech deals that raised about $459 million.

Fintechs continued lead did not come as a surprise as the sector accounted for a third of all private funding last year, up from a quarter in 2021, according to DealStreetAsia DATA VANTAGE’s SE Asia Deal Review: Q4 2022 report.

Fintech startups also accounted for 22% of the deal volume last year, down from 31% in 2021 as the easing of COVID-19 restrictions spurred investments in other verticals.

Healthtech / healthcare startups were involved in nine deals that raised $34 million in total while those in the data analytics / AI verticals signed eight deals that generated $10 million in total funding.

Early-stage deals continue to dominate

In terms of deal volume, early-stage deals continued to dominate in Southeast Asia last month. Based on DealStreetAsia’s compilations, there were 16 seed-stage transactions that raised about $43 million in total in April. In March, 27 seed rounds had secured $69 million in total.

Cortical Labs, a Singapore-based AI healthtech startup raised the largest Seed funding in the month at $10 million, led by Horizons Ventures, a Hong Kong-based VC firm owned by billionaire Li Ka-shing.

Startups in their pre-seed stage were involved in 15 transactions that raised $3.2 million in total. Mito Health, a Singapore-based preventive care startup, raised $1.3 million from Forge Ventures in this round.

The month also saw nine Series B, eight Series A, four pre-Series A, three Series C, three corporate rounds, three convertible notes, two debt financing, one private equity, and one equity crowdfunding round.

Active investors

Accelerators were active last month, taking the lead in most funding rounds in the region. Y Combinator, ScaleUp Malaysia, and ProVeg Incubator were involved in a total of at least 10 deals while investors Heliconia Capital, Better Bite Ventures, DFW Labs, and Cercano Management took part in at least two deals each.