Southeast Asia had a good start to the year as investments in the first quarter surged in both volume and value terms, driven by mega-rounds announced by Gojek and Grab. The performance is also in line with the seasonality in fundraising, which tends to pick up significantly in the first and third quarters, shows our historical data.
A closer look at the Q1 data, however, shows signs of weaknesses. Investors appear to be allocating fewer dollars across the board from seed to Series C funding rounds. The botched WeWork IPO and concerns over an impending global economic slowdown had already been weighing on investor sentiment. The economic disruption caused by the COVID-19 pandemic has further dampened risk appetites.
In light of this uncertainty, we expect the second quarter to challenge Southeast Asian startups in ways they have not been tested before as investors turn more risk-averse and businesses scale down expansion plans for the sake of survival.