<article>Investments in Southeast Asia&#8217;s startups declined for the third straight quarter this year as the impact of COVID-19 on dealmaking and investor sentiment became more apparent. </article>

Investments in Southeast Asia&#8217;s startups declined for the third straight quarter this year as the impact of COVID-19 on dealmaking and investor sentiment became more apparent. 
According to <a href="https://www.dealstreetasia.com/reports/q3-sea-deal-review">SE Asia Deal Review Q3 2020</a>, the latest report by DealStreetAsia &#8211; Research &amp; Analytics, startups based in the region raised at least $1.8 billion in funding in the third quarter, a drop of 34 per cent quarter-on-quarter and close to 40 per cent year-on-year.
The impact of the pandemic was also reflected in the deal count, which declined to 151 from 184 in the previous quarter. However, on a year-on-year basis, deal volume in the third quarter was an improvement over the same period last year.
Early-stage startups, particularly those focused on fintech and healthtech, continued to draw investor interest. That said, the median value of investments dropped across seed to Series C rounds as investors sought lower valuations.
Triggered by a dramatic change in how consumers access healthcare during the pandemic, healthtech replaced e-commerce as one of the two top sectors in terms of deal count in the third quarter. Fintech continued to lead the pack.
<h3>Indonesia buckles, Singapore shines</h3>
Sluggish dealmaking in Indonesia, the largest consumer market in Southeast Asia, affected the overall regional tally. Fundraising in the archipelago dropped more than 50 per cent relative to the second quarter as well as year-on-year. The absence of big-ticket investments also contributed to the slump.
<h4>Countries&#8217; share of deal value in Q3 2020</h4>
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-210613" src="https://media.dealstreetasia.com/uploads/2020/10/q3-countries.png?resize=640,356" alt="" srcset="https://media.dealstreetasia.com/uploads/2020/10/q3-countries.png?w=931 931w, https://media.dealstreetasia.com/uploads/2020/10/q3-countries.png?resize=300,167 300w, https://media.dealstreetasia.com/uploads/2020/10/q3-countries.png?resize=768,427 768w" sizes="(max-width: 931px) 100vw, 931px" data-recalc-dims="1" />
Singapore, the only market in Southeast Asia to witness a growth in both deal count and deal value growth, replaced Indonesia as the region’s top investment destination as local startups amassed 58 per cent of total funds raised in the region. On top of its role as the region’s financial hub, the city-state has benefitted from effective policies to curb the pandemic spread and strong financial support from the government.
Insignia Ventures Partners founding managing partner Yinglan Tan points to the relative operational stability of companies in the city-state due to the government&#8217;s handling of the crisis.
&#8220;Then there&#8217;s also the moves of global tech giants, especially from China, to set up or expand their Asia hubs and SEA colonies in the country drawing in more tech investment activity. Finally, with leading Singapore-based startups generally having operations diversified across the region, investors are likely seeing this as an advantage amidst the crisis,&#8221; he said.
With no end to the COVID-19 crisis in sight and due diligence for dealmaking hampered by travel restrictions, it is likely that the overall startup fundraising will remain muted in the near term. However, there remain pockets of opportunities, especially at the early stage.
&#8220;Overall capital across all stages will be more cautious and selective. Companies that are well-positioned to thrive in the new normal will still be able to obtain significant funding and there are still plenty of deals to be made, especially at an early stage. For example, we at Openspace look forward to executing at least three additional deals before the end of the year,&#8221; said Openspace Ventures founding partner Shane Chesson.
Access the <a href="https://www.dealstreetasia.com/reports/q3-sea-deal-review">SE Asia Deal Review Q3 2020</a> report to find out the country-wise scorecard, median deal value trends over the last few quarters, top sectors favoured by investors, and outlook for the months ahead from top venture capitalists.
This report is available exclusively to DealStreetAsia &#8211; Research &amp; Analytics subscribers.
<a href="https://mailchi.mp/dealstreetasia/seasiadealreviewq32020"><img loading="lazy" decoding="async" class="alignnone wp-image-208318 size-full" src="https://media.dealstreetasia.com/uploads/2020/09/Screenshot-2020-09-23-at-3.46.17-PM-e1600856217658.png?resize=640,71" alt="" srcset="https://media.dealstreetasia.com/uploads/2020/09/Screenshot-2020-09-23-at-3.46.17-PM-e1600856217658.png?w=657 657w, https://media.dealstreetasia.com/uploads/2020/09/Screenshot-2020-09-23-at-3.46.17-PM-e1600856217658.png?resize=300,33 300w" sizes="(max-width: 657px) 100vw, 657px" data-recalc-dims="1" /></a>

Investments in SE Asia's startups declined for the third straight quarter as the impact of COVID-19 on dealmaking became more apparent. 

Startup funding in SE Asia continues decline in Q3 as pandemic rages on

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Startup funding in SE Asia continues decline in Q3 as pandemic rages on

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