SE Asia Deals Barometer Report: Startup fundraising plunges 40% MoM to $663m in Oct

Startups in Southeast Asia continued to stare at a challenging fundraising environment in October as macroeconomic headwinds prompted investors to pull their purse strings and go slow on fresh investments.

According to proprietary data collated by DealStreetAsia, fundraising in the region hit below the coveted $1 billion mark for the seventh time this year in October as startups raised a mere $663 million from 53 deals during the month.

In terms of value, this is a 40% drop from the $1.1 billion funding that startups amassed in September, the data further shows. The number of deals, meanwhile, for both the months remained almost the same.

On a year-on-year basis, fundraising dipped 42% as startups in the region had raised $1.13 billion from 72 deals in October 2022.

For this year so far, monthly fundraising surpassed the $1 billion mark just three times – in May ($1.05 billion), July ($1.78 billion), and September ($1.1 billion).

The data compiled by DealStreetAsia in October included venture capital deals and debt financing. As many as 8 transactions did not disclose the funding they raised last month.

The deals sealed in October bring the total amount raised by startups in the January-October period to about $8.2 billion from 635 transactions.  For the entire 2022, total funding in the region stood at $15.8 billion, which is a 32% drop from 2021’s record highs of $23.17 billion. 

What’s pertinent to note is no startups in Southeast Asia made it to the coveted unicorn list in October – so far, this year, only eFishery, a startup headquartered in Indonesia, garnered a valuation of over $1 billion after it raised $108 million in May.

In 2022, eight startups earned the much sought-after unicorn tag, while in 2021, the number stood at 23.

In terms of volume, startups in Southeast Asia sealed 151 deals in the third quarter of this year, down 27% from the previous three months, marking the lowest quarterly deal volume in nearly three years.

Dry spell for megadeals

Compared with three megadeals worth over $1 billion in September, Southeast Asia managed to produce only two big-ticket transactions last month that raised a combined amount of $331 million, making up for about 50% of the total money raised during the period.

The two megadeals – raised by Indonesian and Singapore startups – bring the total number of such transactions so far this year to 24.

Megadeals of October 2023

The biggest deal in October was sealed by Indonesian fintech lending platform Investree. The company raised about $231 million in its Series D round, anchored by Qatar’s JTA International Holdings, with the participation of SBI Holdings.

Following the investment, JTA International Holding and Investree have completed the setup of a joint venture company called JTA Investree Doha Consultancy, serving as the Middle East hub for Investree to offer its SME digital lending technology solutions.

Separately, Singapore-based lunar technology startup Qosmosys also sealed a deal not regularly seen in the region – a $100 million seed funding. The company did not mention the investors behind the seed round but a company executive told DealStreetAsia that a pool of Western and Asian private wealth firms joined its cap table.

In September, there were three megadeals that raised a combined $621.5 million, making up 56% of the total money raised that month. The month of May posted the most number of megadeals so far this year at five, but the total amount raised was only about $649 million that month.

Singapore startups get most funding

Startups in Singapore continued to lead the region’s fundraising activity in October, cornering about 59% of the total amount raised. Privately held companies in the city-state raised about $388 million from 32 transactions, DealStreetAsia’s compilations showed.

While Qosmosys scored the biggest funding last month, the average deal size in the country was $15 million. Six transactions did not disclose the amount they raised.

In September, meanwhile, startups based in the city-state bagged $878.5 million from 33 transactions, with an average deal size of $31.4 million.

In Indonesia, in seven transactions, startups raised a combined amount of $257.5 million last month, up from the $147 million raised in September from 14 deals. The top deal in the country was the $231 million raised by Investree in its Series D funding round.

The deal was followed by the $15 million funding that peer-to-peer lending player Hijra (also known as ALAMI Group) secured in a round led by venture capital firm Intudo Ventures and backed by existing investors East Ventures, AC Ventures. Quona Capital, and Golden Gate Ventures.

The Philippines rose to the third spot in terms of fundraising as startups in the country secured $11.3 million from four deals, led by the $5.7 million raised by Squads Labs, the main developer of Solana-based multisig protocol Squads. In September, startups headquartered in the Philippines managed to raise only $30 million from two deals.

Malaysia saw five deals in October but the amount raised was only about $2.5 million, while Vietnam and Thailand raised a combined $4 million from three and two deals, respectively.

Investors favour fintech startups

The financial technology (fintech) sector continued to draw most of the investors’ money in October. According to DealStreetAsia’s compilation, the sector witnessed 10 deals in total that raised a combined amount of $319 million. In September, too, the sector had topped the list with 10 deals that scored nearly $495 million.

Investree’s $231-million Series D was the top deal in the sector, followed by the $35 million investment in Multichainz, a Singapore-based lending protocol.

Meanwhile, healthtech startups also secured six deals that raised $74 million in total. Singapore’s Holmusk, a provider of healthcare data and technology solutions, scored the highest amount at $30 million, followed by Engine Bioscience’s $27 million Series A funding, which was anchored by SEEDS and Coronet Ventures.

The property technology (proptech) sector witnessed five deals that raised $12.5 million in total, while software & IT, marketingtech, logistics & supply chain, greentech, and data analytics firms secured three deals each.

Early-stage saw traction

The scarcity of big-ticket transactions in October further highlighted investors’ preference for smaller deals in the region. In fact, of the 53 deals last month, 15 were seed stage rounds while 13 were Series A.

Seed-stage deals raised a combined $126 million in funding, led by Singapore’s Qosmosys, which sealed a $100 million deal. This was followed by the $7.6-million investment in Circular, a Y Combinator-backed Singaporean subscription service focused on high-end consumer electronics.

Series A rounds also raised a total of $150 million. Singapore-based biotech company Engine Biosciences topped the stage with $27 million in its Series A extension round.

There were 8 pre-Series A and 4 pre-seed rounds in October. Pre-Series B, Series B, Series C, and Series D saw one transaction each. The month also witnessed a debt financing deal. Eight transactions did not disclose funding stages.