SE Asia’s startups report robust Q1 fundraising performance despite global headwinds

Jakarta, Indonesia. Photo by Agung Prasetyo, Unsplash.

Amid macroeconomic headwinds such as rising inflation, liquidity tightening and growing geopolitical risks, private investments in Southeast Asian companies remained relatively robust in the first quarter of this year.

Homegrown startups collected $4.19 billion in total equity funding in the quarter, according to DealStreetAsia – DATA VANTAGE‘s latest report. Although lower than the record performance in the previous quarter, the funding is 5.2% higher than the investments recorded in the same period last year.

The first-quarter performance was also supported by strong deal volume, which surged to 310 – the highest on record.

Seed investments grew 75% year-on-year in terms of volume to 119, indicating a strong appetite for early-stage startups in Southeast Asia. This appetite, however, has pushed valuations to levels not seen before, suggesting market overcrowding.

New unicorns on the block

Southeast Asia welcomed two tech unicorns in the first quarter. Indonesian fintech lending firm Akulaku became the first to surpass $1 billion in valuation this year after securing $100 million from Thailand-based Siam Commercial Bank in a Series E round in February.

Later in the same month, Singapore-based marketing tech firm Insider raised $121 million in a Series D funding led by Qatar’s sovereign wealth fund, Qatar Investment Authority. The company’s valuation reached $1.25 billion after the funding round, per DealStreetAsia calculations.

Fintech remained the top business vertical both in terms of total deal count and value. One in every four dollars invested in Q1 went to fintech startups. While the region’s financial hub Singapore had in the past dominated fintech investments, it was outranked by Indonesia in the first quarter.

The appetite for emerging business categories, particularly decentralised finance (DeFi) and play-to-earn games, also helped boost valuations.

Caution ahead

Regardless of the strong first-quarter performance, fundraising may become more challenging in the future for startups in the region.

“As late-stage companies are facing pressure on valuations in the capital markets, investors are generally less generous to growth-stage companies in terms of valuation multiples,” said Alwyn Rusli, an investor at Trihill Capital.

Dave Richards, the co-founder and managing partner of Capria Ventures, said fund managers are facing more challenges in raising capital this year, especially from new limited partners, potentially affecting deployments in 2023.

“We’re starting to see more delays [or] pauses with non-fund proprietary capital such as family offices and corporates as they wait to see how macro issues play out,” he said.

With challenges abounding in the global economic climate, Pinn Lawjindakul, a partner at Lightspeed Venture Partners, argues that the strong first-quarter funding performance in Southeast Asia presents a positive outlook for the remainder of the year as regional economies recover from the pandemic.

Rapid digitalisation throughout the pandemic has also presented an opportunity for well-equipped, resourced, and risk-taking entrepreneurs to begin their own ventures,” she said.

The SE Asia Deal Review: Q1 2022 report covers fundraising by startups in the first quarter of 2022 and their historical performance, including data on:

  • fundraising performance across countries and sectors
  • deal-making data across funding stages 
  • valuations and sectoral trends 
  • industry experts’ views on what to expect during the rest of 2022

The report is available exclusively to DealStreetAsia – DATA VANTAGE subscribers. Subscribe/upgrade your subscription now to access our entire set of reports.

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