SE Asia Deals Barometer Report: Startup funding rebounds to five-month high of $878m in May

Capital raised by startups based in Southeast Asia rebounded in May, mostly because of three big-ticket deals sealed in the month, even as the overall fundraising environment remains subdued compared with 2023 levels.

Startup fundraising last month reached $878 million, a nearly four-fold increase from April’s $227 million, as Princeton Digital Group, Lazada, and Atlan clinched megadeals, or transactions valued at over $100 million. The amount raised in May is the highest monthly deal value so far this year.

However, the deal value in May is 16% lower than the $1.05 billion that Southeast Asian startups raised from 73 deals a year earlier.

There were 55 transactions—venture capital, angel rounds, debt rounds, and corporate deals—recorded in the month, which is one deal lower than in April. At least 19 deals did not disclose the amount raised.

Funding in each month of 2024 has also been significantly short of the psychologically important $1 billion mark (see chart below). Startup fundraising last crossed the 10-figure dollar mark in December 2023.

The average deal size, based on transactions with disclosed funding sizes, stood at $24.4 million, up from $6.1 million in April.

The biggest deal in May was the $280 million green loan that Singapore-based data centre provider Princeton Digital Group secured for its 150MW, AI-ready JH1 campus in Sedenak Tech Park in Johor, Malaysia. The deal was Princeton Digital’s first green loan, which is a form of debt targeted at environment-friendly projects.

The deal value was further buoyed by the $230 million that e-commerce major Lazada received from its parent Alibaba. This was the Chinese tech behemoth’s first capital injection into Lazada this year, following a $1.8 billion infusion, across multiple tranches, in 2023.

Alibaba, which gained control of Lazada in 2016, injected $634 million in December last year. In 2022, it pumped more than $1.6 billion into its Southeast Asia entity in over three tranches.

Atlan, the Singapore-based next-generation platform for data and AI governance, also made it to the megadeal table as it announced a $105-million Series C funding round in May, led by Singapore sovereign wealth fund GIC alongside US-based Meritech Capital.

Mega deals of May 2024

The three deals brought to four the number of mega deals that have been registered so far this year. In March, Indonesian fintech company Akulaku had raised $100 million debt financing from London-based HSBC.

In 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.

In the first quarter of this year, deal volume in Southeast Asia recovered slightly, with at least 180 transactions, surpassing the previous quarter’s 164 deals. However, the total private capital raised plummeted to its lowest level in five years, according to the SE Asia Deal Review: Q1 2024 report. The report added that the decline reflects the ongoing global liquidity crunch, which has mainly dampened late-stage funding.

Singapore accounts for 90% of the funds raised in May

Singapore remained the top investment destination in May, with startups in the city-state cornering the lion’s share of funding. Singapore-based startups were involved in 33 transactions during the month, or 60% of the total number of deals. In terms of funding value, private companies in Singapore raised $784 million, or nearly 90% of the total amount raised.

The average deal size in Singapore, based on disclosed funding sizes, stood at $34.1 million, up from $7.1 million a month ago. Ten deals did not disclose the amount they raised.

In April, too, Singapore was the destination of choice for investors in the region, with 30 transactions that collectively raised over $170.7 million.

Indonesian startups managed to sign up nine transactions that raised $68.1 million in total, led by aquaculture company eFishery’s $30-million green and social loan from HSBC Indonesia. The loan is structured like a revolving facility, meaning the disbursement will be carried out as needed and rolled every 90 days.

Philippines-based startups secured $17.5 million last month from four transactions. The deals were led by Lhoopa, a proptech startup that secured $12.5 million in its Series B funding round anchored by Wavemaker Partners.

Malaysian startups raised $2.6 million from three transactions while Vietnam scored at least $720,000 from four deals. Cambodia appeared on the funding board last month after two startups in the country managed to secure $5 million in total funding.

Fintech leads deals, data centre secures most funding

A closer look at the industry verticals shows that fintech topped the list of sectors last month in terms of volume, although it was the data centre vertical that pulled in the most funds thanks to Princeton Digital’s $280 million haul.

Fintech saw six deals that raised $24.5 million in total while Software & IT startups signed five deals that secured $23.3 million.

The largest fintech deal was the $17 million Series B extension funding of Singapore-based, AI-powered startup Osome. The round was an extension of a $25 million series B funding first raised in December 2022, bringing the total to $42 million.

Dora Factory, a Singapore-based decentralised governance infrastructure, completed a $10 million strategic fundraising, the largest amount in the Software & IT space in May.

Meanwhile, Data Analytics / AI raised $110.4 million from five deals while agritech and health tech saw four deals each that raised $51.6 million and $15.5 million, respectively.

Startups in the gaming sector raised $35.6 million in total from three transactions while e-commerce saw three deals that raised $258.3 million, thanks to Lazada’s $ 230 million capital infusion. E-commerce was the second most funded sector in May.

Early-stage continues to see traction

Early-stage funding continued to dominate Southeast Asia’s dealmaking scene in May in terms of deal volume. Seed rounds took the lead at 21 deals, Series A accounted for eight transactions, while corporate rounds chipped in six deals.

There were four Series B rounds, two Pre-Seed rounds, two debt financing deals, and one each for Series C, Pre-Series A, and Angel rounds. Nine deals did not disclose funding stages.