SE Asia Deals Barometer Report: Startups raise a modest $230m in Sept as deal volume plunges

Startup fundraising in Southeast Asia remained subdued in September, as large-ticket investments remained scarce and the number of equity deals dropped to a 12-month low.

There were only 31 equity deals in September 2024, the lowest in 12 months, marking a 33% decline from August, which saw 46 transactions.

The total amount raised from equity transactions also dipped to the third lowest so far this year at $230.4 million, a 27% drop from about $314 million in August, show proprietary data compiled by DealStreetAsia.

The absence of megadeals—defined as funding rounds worth $100 million or more—continued to suppress the total capital raised in September, with the biggest deal in the month raising a mere $57.6 million.

On a year-on-year basis, the funding decline was even more pronounced, falling by about 51% from September 2023, when startups secured approximately $470 million from 44 equity transactions.

The funding transactions collated in September included venture capital deals, private equity investments, and corporate funding rounds. Six transactions did not disclose their funding size.

Debt deals have not been included since DealStreetAsia has limited visibility into Southeast Asian startups’ debt financing rounds.

Equity funding in each of the first nine months of 2024 has fallen significantly short of the psychologically important $1 billion mark (see chart below).

The last time fundraising in the region crossed the $1-billion threshold was in December 2023, buoyed by e-commerce giant Lazada’s $634-million fundraising from its parent company Alibaba, pushing overall fundraising to $1.2 billion.

In September, the average deal size, based on transactions with disclosed funding amounts, stood at $12.1 million, higher than the $9.81 million in the previous month. There were 12 deals that did not disclose their funding sizes in September.

September’s funding value was the third lowest so far this year. The lowest was in April, when startups raised a mere $160 million from 55 transactions.

Megadeals remain elusive

September’s subdued funding reflects the prolonged slowdown in the region amid a funding winter. This trend has been evident since the end of the COVID-19 pandemic. So far this year, only seven megadeals have been registered.

Last month, the biggest funding round was the $57.6 million that Malaysia-based coffee chain ZUS Coffee raised in a private equity round backed by a consortium of investors. The round was anchored by Singapore-based PE firm KV Asia Capital Ltd and backed by Malaysian pension fund KWAP, and Kapal Api Group, an Indonesian coffee industry player.

Two $50-million deals were also sealed in September, including the corporate round for Singapore fintech firm Credlix and the Series B funding for SDAX, a wealthtech startup in the city-state.

The top deals of September 2024

In 2023, Southeast Asian startups raised approximately $7.72 billion in funding from 716 equity deals, with Lazada alone raising $1.9 billion from its 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 last year.

Singapore remains funding leader

DealStreetAsia’s compilation further showed that Singapore remained the dominant hub for startup funding in September, accounting for about 63.5% of the region’s total after securing $146 million from 21 transactions.

The biggest funding deals in the city-state last month were the $50 million Series B round for digital assets exchange SDAX and the $50 million investment raised by supply chain financing firm Credlix from its parent B2B marketplace unicorn Moglix. SDAX’s Series B round was anchored by Oman-based Muscat Precious Metals Refining Company, which refines, mints, and trades precious metals like gold, silver, and platinum.

Malaysia followed with three deals totaling $66.5 million, led by the $57.6 million that coffee chain ZUS Coffee raised in a private equity round anchored by Singapore-based PE firm KV Asia Capital Ltd.

Startups in the Philippines also raised $12 million across five deals. These deals included the $10 million investment by Singapore-based fund manager Clime Capital in Upgrade Energy Philippines, which focuses on solar leasing projects for commercial and industrial customers in the Philippines.

Indonesia secured $5.6 million from two deals last month while Thailand recorded a single deal whose value was undisclosed.

A top industry executive had earlier said that Southeast Asia’s emerging markets continue to offer investment opportunities at reasonable valuations, amid a persistent global funding downturn. “The number of deals hasn’t dropped significantly, but we’re seeing smaller ticket sizes. This is a great time for investors to find opportunities at more reasonable valuations,” Vy Le, co-founder and general partner of Do Ventures said at the Asia PE-VC Summit 2024 in Singapore in September.

Investors still favour fintech

Financial technology (fintech) continued to be the leading industry in Southeast Asia with $107 million invested in September, accounting for about 46% of the total money raised in the month.

The largest fintech deals in September were the $50 million each raised by SDAX and Credlix.

F&B secured $57.6 million from one transaction while startups in the software and IT sectors raised $14 million in total from 3 deals. Green tech companies also secured investments worth $12.1 million while those in data analytics / AI raised $11.5 million in total.

General services managed to raise $7.4 million while cybersecurity startups ended up with $6.7 million in fresh funding in September.

Seed rounds dominate

In terms of funding stages, seed rounds continued to be the most active, comprising 11 deals. Pre-Seed and Series A stages each saw three transactions, whereas private equity and Series B rounds included two deals each.

Series C funding was limited to a single deal while six deals did not disclose funding stages.

The largest seed funding in September went to Rey, an Indonesian insurtech startup. The company raised an additional $3.5 million in Seed funding led by CyberAgent Capital, Arthazen Capital, and PT Gametraco Tunggal.

Singapore-based decentralised lending exchange Ammalgam also announced the close of a $2.5 million seed round in September, co-led by Lightspeed Faction and Framework Ventures.