SE Asia Deals Barometer Report: Startup fundraising falls 11% in June as investors sign smaller cheques

Startup funding in Southeast Asia dipped in June, after hitting a five-month high in May, in another reminder of the stubborn challenges that persist in private capital fundraising in the region.

There were 52 venture deals last month, the lowest this year, that raised a total of $781 million, down 11% month-on-month but 77% higher than the $445 million that startups in the region secured in the same period last year, according to proprietary data collated by DealStreetAsia.

Last month’s transactions included venture capital deals, debt rounds, convertible notes, and bridge rounds. At least 17 deals did not disclose the amount raised.

The amount raised by startups in June is the second-highest monthly deal value, so far, this year—behind May’s $878 million.

The rebound in May was largely on account of three megadeals—transactions worth at least $100 million—that cumulatively raised $615 million. While there were three megadeals in June as well, their combined value stood at a mere $395 million leading to an overall dip in startup funding in the month.

The average deal size in June, based on transactions with disclosed funding sizes, dropped to $22 million from $24 million in May, in a sign that investors are writing smaller cheques.

Funding in each month of 2024 has been significantly short of the psychologically-important $1 billion mark (see chart below), with April being the weakest month for fundraising at about $230 million from 56 deals. Startup fundraising last crossed the 10-figure dollar mark in December 2023.

Southeast Asia was the only region to post a month-on-month decline in fundraising in June. Greater China startups saw a notable increase of 14.8%, raising nearly $2.8 billion, while India reported an 18% growth, bringing its fundraising efforts to $2.2 billion, the first time in two years that private funding in the country crossed the $2 billion mark.

The biggest deal in Southeast Asia in June was the $195 million that Mitsubishi UFJ Financial Group committed to invest in Thai mobile payments operator Ascend Money.

Fintech firm Longbridge Group Singapore also secured over $100 million in additional funding from various institutions in its Series A round backed by investment institutions, including Singaporean consortia.

Another megadeal last month was Atome Financial’s $100-million three-year debt facility from EvolutionX Debt Capital. The digital financial technology platform said the financing will be used to support its expansion across Singapore, Malaysia, the Philippines, and Indonesia.

The three megadeals in June bring this year’s megadeals tally to seven.

Mega deals of June 2024

In the full year 2023, Southeast Asian startups raised about $7.72 billion in funding from 716 equity deals, with Lazada alone raising $1.9 billion from parent Alibaba Group. The annual deal value was down 53% from 2022, while the equity deal volume fell 30%. There were also 41 debt deals that raised a combined $836 million during the year.

Singapore accounts for the bulk of SE Asia funding

Singapore accounted for the bulk of funding in Southeast Asia last month, both in value and volume. Startups in the city-state raised $494.6 million in total, accounting for about 63% of the entire funding in the region, DealStreetAsia’s compilation showed.

The city-state’s startups—Longbridge and Atome—also bagged two of the three megadeals of June that raised a total of $200 million.

In another major deal Singaporean car marketplace and lender Carro secured a S$75-million (about $55.4 million) multi-currency loan from HSBC to fund its fintech arm Genie Financial Services.

The average deal size in Singapore, based on disclosed funding sizes, stood at $22.5 million in June, down from $34.1 million in May. Eleven deals did not disclose the amount they raised.

In May, too, Singapore had been the destination of choice for investors in the region, with 33 deals that raised $784 million in total.

In Malaysia, startups were involved in five transactions that secured a total of $33.5 million. The biggest deal in the country was the $30 million that earned wage access startup Paywatch raised in a mix of credit and equity funding.

Startups in Thailand raised a combined $195 million from just two deals, thanks to Ascend Money’s funding. The other transaction did not disclose the amount raised.

Startups in Indonesia, the Philippines, and Vietnam, meanwhile, saw four deals each in June, raising $26.5 million, $19 million, and $12.4 million, respectively.

Fintech remains the most funded sector

Financial technology (fintech) startups were the busiest in June, signing 16 deals that raised $545 million in total, accounting for nearly 70% of the total money raised in the month.

The largest fintech deal was the $195 million that Ascend Money secured from Mitsubishi UFJ Financial Group. The two other mega deals in June were also fintech transactions.

Software & IT raised $36 million from six deals, topped by the $15 million that blockchain firm Particle Network raised in its Series A funding round anchored by gumi Cryptos Capital (gCC) and The Spartan Group.

Meanwhile, e-commerce startups raised $66.3 million from three deals. The largest e-commerce deal last month was the $55-million loan that Carro secured from HSBC.

Startups in the cybersecurity and consumer products sectors also raised $45 million and $44.4 million, respectively. While Logistics & Supply Chain players raised about $11 million in total.

Investors favour early-stage funding

Series A and seed funding rounds continue to dominate Southeast Asia’s fundraising scene in June, with a combined 19 deals under these stages, DealStreetAsia’s compilations show. Nine transactions did not disclose funding stages.

There were seven debt financing deals, six pre-seed rounds, four Series B rounds, four pre-Series A deals, one Series E round, one convertible note deal, and one bridge funding round.