SE Asia Deals Barometer Report: As mega deals become scarce, startup funding falls 44% in Feb

Startup fundraising in Southeast Asia continued to move south in 2023 as total funding in February plunged to $409 million, down 44% from January’s $727 million, according to proprietary data compiled by DealStreetAsia.

There were 55 funding deals in February, down from January’s 58 transactions. The deals included venture capital, private equity, debt financing, and corporate rounds.

The subdued investor sentiment was starker on a year-on-year basis as deal value plunged 80%  from February 2022, when privately-held companies had raised $2 billion from 91 deals.

Of the total deals recorded last month, the values of 17 transactions were not disclosed.

During the entire 2022, total funding in the venture capital space had 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, signalling a shift away from big-ticket deals.

This trend was again evident last month when the startup ecosystem in Southeast Asia witnessed only one mega deal, or funding worth at least $100 million, with the next biggest deal being valued at only $33.5 million.

February’s biggest deal was Singapore-based neobank Aspire’s $100 million Series C round co-led by global venture capital firm Lightspeed Venture Partners and Sequoia Southeast Asia. Other investors in the round included Tencent, Paypal Ventures, LGT Capital Partners, and existing backers.

Founded in 2018, Aspire offers businesses a unified suite of financial services, including international payments, corporate cards, and payable and receivable management, accessible via a single, user-friendly account.

In January, too, there was only one mega deal — by Thailand-based express delivery startup Flash Express — but that had raised $447 million accounting for about 61% of January’s overall fundraising. In December 2022, there were three mega deals that raked in $842.5 million.

The solo megadeal of February 2023

The second-biggest deal in February was way smaller. It involved Singapore-registered healthtech company Buymed’s $33.5-million Series B fundraising led by UOB Venture Management.

No startup in Southeast Asia has made it to the unicorn club this year so far. In 2022, eight privately-held startups in the region earned the much sought-after unicorn tag. In 2021, there were a record 23 startups in the region that crossed the $1 billion valuation.

Deals rise in Singapore

While Southeast Asia as a whole saw startup funding value and volume plunge in February, Singapore bucked the trend as startups in the city-state were involved in 32 deals that raised about $273 million, up 73% in value and 33% in volume from January.

Indonesian startups took the second spot, raising just $61 million from seven deals. That compares to the $76.3 million they raised in January from 14 transactions.

Vietnamese startups were involved in four funding transactions that raised $38.5 million while Thailand saw two deals valued at $20 million in total. Startups in Malaysia raised $14 million from six deals while their counterparts in the Philippines secured just $3 million from four transactions.

The largest deal in Singapore last month was the $100 million raised by Aspire. This was followed by the $20-million funding in cybersecurity company Beosin and the $18.7-million Series A funding in mobility tech firm Ion Mobility.

In Indonesia, Sirclo, which helps businesses sell online, was reported to have finalised a $30-million round of funding from existing investors, making it the largest deal in the country last month.

Vietnam’s largest deal was the $33.5-million Series B funding in Buymed, which operates a B2B marketplace for pharmaceuticals in the country.

Fintech corners most funds

Startups in the fintech vertical grabbed significant investor interest last month, with 12 transactions that raised a total of about $160 million, accounting for about 39% of the total money raised.

Aspire’s $100-million funding topped the sector, followed by the $20 million that Thailand-based fintech firm Monix raised in its Series C funding round.

According to a DealStreetAsia DATA VANTAGE report in January, fintech accounted for a third of all private funding last year, up from a quarter in 2021. This was largely due to a lack of mega funding rounds in other areas, primarily super apps, e-commerce and logistics, in 2022.

Fintech startups were also responsible for 22% of deal volume last year, down from 31% in 2021 as the easing of COVID-19 restrictions spurred investments in other verticals.

In January, the logistics sector had taken the top spot on the account of the $477 million raised by Thailand’s Flash Express. Last month, however, there were only two deals in the logistics and supply chain space that raised just about $12 million.

Startups in the e-commerce space grabbed about $75 million of the total funding last month from six deals. Buymed’s $33.5 million Series B was the largest in this space, followed by Sirclo’s $30-million funding round.

Greentech raised $13 million from three transactions while cybersecurity bagged $20 million from two deals in February. Software and healthtech saw four deals each that cumulatively raised $6 million and $13.5 million, respectively.

Seed rounds continue to thrive

Early-stage funding continued to dominate Southeast Asia’s dealmaking scene in February in terms of deal volume. Seed rounds took the lead at 21 deals, followed by Series A at eight transactions and Pre-Seed at three.

There were three Series C rounds that raised $125 million in total while debt financing saw two transactions. There were also 12 deals whose venture series were not disclosed.

In January, Asia Partners reported that the Series C and D funding gap with China briefly closed in 2021-2022, when everything in the world was over-supplied with capital. However, the dramatic pullback in capital supply brings the Series C/D gap back as a prominent feature.

Funding between $20 million and $100 million is the typical size of Series C and Series D rounds. Also called growth capital, it is crucial for companies looking to scale and reach the next level of their business.