ASEAN fintech startups bullish about future fundraising prospects

As the fintech industry in Southeast Asia hits the maturity phase, regional startups are optimistic about fundraising prospects and expect their next funding round to be in excess of $10 million, according to a recent report released by Singapore-based United Overseas Bank.

About half of the surveyed companies in the report are seed-to-Series A firms who have been in business for two to five years. The survey covered fintech startups in Singapore, Indonesia, Vietnam, Thailand, Malaysia and the Philippines.

Meanwhile, the average investment size in the region’s fintech sector stood at $5.5 million in 2018, according to data available with Tracxn.

Interestingly, similar research by EY in early 2018 indicated that the majority of fintech startups were hoping their subsequent funding to be greater than $1 million.

Fintech companies are bullish about fundraising prospects largely on account of their regional expansion plans, the UOB report said. Nearly 62 per cent of ASEAN-domiciled fintech firms intend to scale within the region.

“To enter a new market, it is ideal to tap your existing network of customers who are also keen to break into that market. The strength of this combined network makes it is easier to secure local partners that are willing to work with you to promote your solutions,” Piyachart Ratanaprasartporn, CEO of Thai payment company 2C2P which has recently raised $52 million fresh capital, said in the report.

In 2019, the fintech sector has also seen significant growth-stage funding with Vietnam’s VNPAY securing $300 million, Singapore Life raising $110.3 million and e-wallet MoMo grabbing over $100 million. Other startups that raised tens of million USD in the year include GoBear, Advance.AI, Deskera and Akulaku, among others.

However, the report points out that over-valuation of fintech startups could lead to potential down rounds.

“Fintech firms should also phase their valuations to attract ongoing funding from investors. In terms of the best timing to start a new round of fundraising, interviewees advised that a fintech firm should start the process of engaging investors at least six months prior to running out of funds,” the report suggested.

How the fintech market is evolving

Asean’s fintech landscape is increasingly seeing different business models and services, as opposed to just payment services, gain dominance. As payments firms expand their base, they are looking to diversify into other areas such as lending, insurance, asset and wealth management solutions.

Such trends can be seen in Indonesia, where investor money has shifted from payments to alternative lending firms, and Singapore, where the number of insurtech, investment tech and personal finance solutions firms has increased by 163 per cent since 2014.

In terms of investment value, fintech businesses in the region attracted a total of $1.14 billion funding in the first three quarters of 2019, representing a 101 per cent compound annual growth rate since 2014, on account of later-stage rounds, according to UOB.

Top fintech deals by Q3/2019 in ASEAN-6 countries.

In 2018, funding for later stage fintech firms in ASEAN jumped 211 per cent to $370 million.

In the first nine months of this year, a total of nine companies raised Series-C or beyond, the report added. The companies are 2C2P, Advance.AI, Akulaku, BluePay, CXA Group, MoMo, Nium, OVO and Singapore Life. Several deal values were not disclosed, but the aggregate amount of these nine investments could be no less than $500 million.

In addition to the increase in funding, the number of fintech startups headquartered in the region also jumped to 2,590 companies compared to 749 firms in 2014.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.