SE Asia Deals Barometer Report: Funding stays subdued at $388m in Feb amid megadeal drought

Southeast Asian startups did not see any letup in the subdued funding environment in February as total funding remained suppressed at $388 million, according to proprietary data collated by DealStreetAsia.

The amount raised from 63 transactions last month represents a 56% increase from January, when privately-held companies raised $246 million from 61 deals. But it was still far below the psychologically-important $1 billion mark.

On a year-on-year basis, the amount raised last month was about 5% lower than the money raised in February 2023, even as the number of transactions was higher compared to 55 a year ago.

The funding transactions collated in February include venture capital deals, debt financing, and convertible notes. Eighteen transactions did not disclose their funding size.

The average deal size, based on the transactions with disclosed funding sizes, stood at $8.6 million in February 2024, up from $5 million in the previous month.

The subdued funding last month continued to underscore a cooling off in investor sentiment, indicated by an unwillingness to sign large cheques. The largest funding raised in February was $45 million by Singapore-based refrigerated truck startup SingAuto in its Series A funding round anchored by an unnamed investor based in the UAE.

In January, too, the region had failed to witness any transaction worth north of $100 million.

Top deals in SE Asia in February 2024

For the entire 2023, startups in Southeast Asia had raised about $7.72 billion in funding from 716 equity deals, with Lazada alone raising $1.9 billion last year from its parent Alibaba Group. There were also 41 debt deals in 2023 that raised a combined $836 million.

This compares with $15.82 billion and $1.97 billion raised from equity and debt deals respectively in 2022. The total number of deals that year had reached 1,061.

Singapore continues to lead startup funding in SE Asia

In February, Singapore continued to reinforce its position as a regional hub for startups and investments as it accounted for about 74% of the total money raised during the month.

Data compiled by DealStreetAsia showed that startups based in the city-state bagged about $287 million from 44 transactions, leading the pack in terms of deal volume and value, in February. Twelve of these deals did not disclose financial details.

The average deal size in Singapore, based on the transactions with disclosed funding sizes, was about $9 million.

In January, too, the city-state had been the top destination for investments in the region, with 26 deals that raised $155.1 million, or about 63% of the total amount raised that month.

Notably, last month’s overall fundraising only involved startups in Singapore, Indonesia, the Philippines, Vietnam, and Malaysia. There were no reported deals in Thailand and Myanmar during the month.

SingAuto, a Singapore-based tech company that specialises in the development of new energy intelligence refrigerated vehicles, topped the deals in Southeast Asia last month after raising $45 million in its Series A funding round from an unnamed UAE-based investment firm.

The company said it will use the fresh funds to construct its production line, develop software as well as trial vehicles, and refine its products.

In Indonesia, six transactions raised a combined $42.7 million, accounting for mere 1.1% of the total amount poured by investors into Southeast Asian startups. It was only $38.8 million in January from 16 deals.

Solar energy firm SunEnergy bagged $32 million in debt financing from PermataBank to become the largest transaction in the archipelago last month. The green financing facility will be used for the development of solar energy projects in Indonesia.

The Philippines saw five transactions that raised a total of $40.2 million. That compares to the two deals in the country that raised a mere $1.8 million in January. The deals were led by UNO Digital Bank, whose parent company UNOAsia, raised $32.1 million in a pre-Series B funding round that will used to further expand the digital bank in the Philippines.

Malaysia and Vietnam, meanwhile, saw four deals each that reached a combined $12.5 million and $5.5 million, respectively.

Fintech continues to lead the investment race

The financial technology (fintech) sector continued its perch on top as the region’s top dealmaking sector, attracting $102.6 million across 15 deals last month. In January, fintech also topped the list of sectors with $71.55 million raised from 11 transactions.

The fintech deals were led by UNOAsia, which raised $32.1 million in its pre-Series B funding round for UNO Digital Bank in the Philippines. UNO Digital Bank is one of six digital bank licence holders in the Philippines. Recently, the bank launched a few variations of personal loan products that help bridge the formal credit gap across the salaried, professionals, and MSME segments, with a focus on expanding the reach.

Software & IT followed in terms of the number of deals signed at 10 but it only raised $36.8 million in total. Greentech saw only seven deals but the total amount raised was about $82.8 million.

Altlayer, a Singapore-based decentralised Rollups-as-a-Service provider for Web3 applications, secured $14.4 million from Binance Lab, making it the largest deal in the Software & IT vertical.

Meanwhile, Climate Impact X, a global marketplace and exchange for quality carbon credits, led the Greentech funding after raising $44.8 million in a round anchored by Mizuho Financial.

Seed funding dominates with 26 deals

Investors continue to prefer smaller deals in the region, as evident in the scarcity of big-ticket transactions in February. In fact, of the 63 deals last month, 26 were Seed rounds and 7 were pre-Seed transactions.

The largest Seed funding went to Amperesand, a Singapore-based startup providing power grid infrastructure solutions. The firm secured $12.45 million in a Seed round co-anchored by Temasek’s deep tech early-stage investment platform Xora Innovation and US-based Material Impact.

February also saw 6 Series A rounds, 3 pre-Series A rounds, 3 debt financing rounds, 2 Series B rounds, and 1 pre-Series B round. There was also one convertible notes round, and an angel round. Thirteen deals did not disclose their funding stages.