SE Asia Deals Barometer Report:In ominous start to the year, startup funding plunges 78% in Jan

Southeast Asian startup funding plummeted to a 12-month low in January, marking a cautious start to the new year.

Privately-held companies in the region raised $246 million last month, down 78% from December 2023 when they had amassed $1.16 billion—a five-month high, albeit due to the $634 million that e-commerce giant Lazada pocketed from parent Alibaba.

On a year-on-year basis, deal value last month plunged 66% from $730 million in January 2023.

The fall in fundraising came despite January’s deal count rising to 61—the highest since July 2023, according to proprietary data collated by DealStreetAsia. (See chart below.)

The data includes venture capital deals and debt financing. Twelve transactions did not disclose their funding size.

The average deal size, based on the transactions with disclosed funding sizes, stood at $5 million in January 2024, down from $38.6 million in the previous month.

The dramatic fall in total funding in January underscores a cooling off in investor sentiment, indicated by an unwillingness to sign large cheques.

There were no mega deals—transactions valued at at least $100 million—in January. In comparison, there were two megadeals in December that cumulatively raised about $773.4 million.

The $40 million raised by Singapore- and Switzerland-based digital asset bank Sygnum topped the fundraising in January. Be Group, the Vietnamese tech company behind multiservice consumer platform Be, raised $30.3 million from VPBank Securities to become the second-largest deal in January.

Top five deals in January 2024

The dismal fundraising numbers in January are a sign that there is no let up from the slide witnessed in 2023.

For the entire 2023, startups in Southeast Asia 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 startups top in fundraising

Singapore continued to lead the country-wise chart in January, with 26 deals that raised $155.1 million, or about 63% of the total amount raised in the month, DealStreetAsia’s compilations showed.

In December, too, Singapore was the top destination for investments in the region, raising $950 million from 20 transactions, and accounting for about 82% of all the capital raised in the month.

Seven deals in Singapore did not disclose their financial details. The average deal size in Singapore was $8.1 million last month, compared with $67.9 million in December 2023.

Sygnum’s $40-million fundraise was the biggest funding in Singapore last month. The startup secured funding from global asset management firm Azimut Holding and existing and new investors.

In Indonesia, 16 transactions raised a total of $38.8 million, down from $109.5 million raised in December from 10 deals.

The top deal in the country was the $21-million debt financing in renewable energy company SUN Energy, which secured funding from DEG, the investment arm of German state-owned development bank KfW.

Startups in Vietnam raised $37.1 million from seven deals, led by Be Group’s $30-million fundraise while Thai startups secured $12.4 million from two transactions.

Malaysia had eight funding deals but startups in the country only managed to secure $877,747. The Philippines witnessed two deals that raised a mere $1.8 million in January.

Fintech tops industry verticals

A closer look at the industry verticals shows that fintech, which saw 11 transactions that raised $71.55 million topped the list of sectors attracting investment in January. In December, fintech firms secured $190 million in total funding from four deals.

The fintech deals were led by Sygnum’s $40 million funding. The industry’s average funding size was $7.2 million, per the compilation.

Validus, an SME financing platform, also secured $10 million in debt financing from debt finance provider Lendable to become the second-biggest fundraiser from the industry.

Meanwhile, e-commerce startups managed to secure about $16 million from five transactions in January, led by Bangkok-based online beauty retailer Konvy, which raised $11 million in its funding round. Konvy’s funding round was backed by New Day Ventures, an investment holding company owned by Philippines-listed Robinsons Retail; Alibaba International Digital Commerce (AIDC); and existing investor Insignia Ventures Partners.

Startups in the green tech space secured $52.1 million from five deals, led by CleanEdge Resources Pte Limited, a Singapore-headquartered startup, which secured $20 million from impact asset manager responsAbility Investments AG.

Mobility tech startups were involved in two transactions that secured $32.6 million in total funding.

Early-stage continues to see traction

The scarcity of big-ticket transactions in January further underscored investors’ preference for smaller deals in the region. In fact, of the 61 deals last month, 17 were pre-seed rounds and 13 were seed rounds.

There were nine Series A rounds that raised $56.6 million in total, while 13 seed rounds secured $33.4 million in funding. The 17 pre-seed rounds last month raised $5.8 million in total while pre-Series A secured $14.3 million from four deals.

There were also two Series B rounds, three debt financing, and 13 deals that did not disclose funding stages.