SE Asia Deals Barometer Report: Startup funding falls below $1b mark in Jan, 40% lower than Dec

Amid fears of a recession looming large, startup funding in Southeast Asia dropped below the important $1-billion mark in January 2023 as fund managers pulled their purse strings towards fresh investments.

Privately-held companies in the region amassed a mere $727 million last month, a 40% drop from the $1.22 billion they garnered in December 2022, show proprietary data compiled by DealStreetAsia.

In terms of volume, however, the numbers remained more or less flat with 58 deals being clocked in January vis-à-vis 61 in December. In January last year, the total amount raised by startups stood at $1.7 billion.

While investment sentiments had started looking up in 2021 on the back of a better-than-expected economic revival and successful vaccination drives, the scenario suddenly changed from the second quarter of 2022 with the Ukraine-Russia war, equity market correction, higher interest rates, higher inflation, and quantitative tightening — all occurring in unison.

During the entire 2022, total funding in the venture capital space 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, signaling smaller deals being looked at by fund managers.

Last month, the burgeoning startup ecosystem in Southeast Asia witnessed only one mega deal or funding worth over $100 million, when Thailand-headquartered express delivery startup Flash Express raised a whopping $447 million from an undisclosed investor, accounting for about 61% of January’s overall fundraising.

In December, three mega deals were clocked worth a total of $842.5 million.

Flash Express earned the status of Thailand’s first unicorn in June last year following its Series D+ and Series E funding rounds, in which it raised a combined amount of $150 million led by SCB10X, a tech-focused venture capital arm of Siam Commercial Bank, and Chinese venture capital company Buer Capital, respectively.

The second-biggest deal in January, however, was way smaller. It involved a $45 million funding wherein Holmusk, a Singapore- and New York-headquartered data analytics startup, raised its Series B round anchored by Nasdaq-listed health technology firm Veradigm.

The solo megadeal of January 2023

Singapore startups lead deal volume

Startups in Singapore were involved in 24 funding transactions last month, accounting for 41% of the total number of deals, raising over $158 million. However, Thailand took the lead in terms of deal value on the account of Flash Express’s $477 million Series F funding.

Aside from Holmusk’s $45 million Series B funding, other notable deals in Singapore included Lionsbot’s $17-million Series A round and BlackPanda’s $15-million Series A transaction. In yet another Series A round, Locad garnered $11 million from investors.

In the seed space, Motion G raised $15 million, while Intella X’s closed a $12 million round.

Data compiled by DealStreetAsia show that Indonesian startups were involved in 14 transactions that raised $72 million, way lower than 19 deals that together raised an aggregate of $272 million in December.

In terms of the top deals, Mandaya Medical International, the operator of Indonesia-based Mandaya Hospital Group, received $17 million in its Series B funding. Meanwhile, e-commerce startup EdenFarm secured $13.5 million in its Series B funding round anchored by Intudo Ventures last month.

In the Philippines, firms raised nearly $21 million from seven deals, while Malaysian startups secured a meagre $8.3 million from six transactions. Vietnam posted one deal that raised $4.6 million.

Logistics sector corners most funding

The $477 million raised by Flash Express propelled the logistics sector to the top of the leaderboard in terms of funding in January even as the sector witnessed only two transactions in the month.

In terms of volume, however, startups in the fintech and e-commerce verticals grabbed significant investor interest with 12 and 11 deals being clocked in the sectors that raised a combined amount of $73.2 million.

In December 2022, fintech and e-commerce startups raised a whopping $1.1 billion, with fintech getting involved in 15 deals, and e-commerce, nine deals.

Together, the top five sectors in terms of funding value – logistics, healthtech, e-commerce, fintech, and robotics – raked in $631.6 billion, or about 87% of the total deal value in January this year.

Early-stage deals continue to thrive

Early-stage funding continued to dominate Southeast Asia’s dealmaking scene in December in terms of deal volume. Seed rounds took the lead at 24 deals, followed by pre-seed transactions at 10, and Series A at eight transactions.

Series B had four deals while corporate rounds posted three transactions. Late stages – Series D and F saw two deals in total, in January.

The largest seed funding in January was clinched by intelligent engineering platform Motion G, which raised $15 million led by New Wheel Capital.