Singapore-based private companies raised at least $4.1 billion in funding in the third quarter of this year, well above the $3.7 billion raised in the whole of last year, finds the latest report by DealStreetAsia – DATA VANTAGE.
According to SE Asia Deal Review: Q3 2021, the market’s third-quarter performance brought the total funding secured by its startups in the first nine months of this year to $9.9 billion, topping the combined 2020 and 2019 tally.
Factors contributing to the surge in funding include the steady emergence of new startups, the growth of tech unicorns with regional and global aspirations, and the relatively easy access to capital in the city-state, which serves as Southeast Asia’s premier financial hub.
Buoyed by Singapore startups’ fundraising performance, Southeast Asia’s third-quarter deal tally touched $6 billion. The quarter capped a strong nine-month performance; the region’s startups secured at least $17.8 billion from January through September this year, more than twice the $8.6 billion raised in the whole of 2020.
Indonesian startups raised $5 billion from January through September this year, higher than the $2.6 billion raised in the first nine months of last year. Activities in other major markets in the region were mixed in the third quarter, but generally showed a stronger nine-month performance relative to the same period last year.
“The private market industry in Southeast Asia remains very immature by most benchmarks compared to other parts of the world, so an acceleration of deal volume and deal value is to be expected,” said Nicholas Bloy, co-managing partner at private equity firm Navis Capital Partners, at DealStreetAsia’s Asia PE-VC Summit 2021.
“The region is growing faster than most other parts of the world. So, that combination of growth and immaturity creates a logical need for more private capital,” he added.
On top of internal factors such as rising affluence and faster digitalisation during the pandemic, external developments have also contributed to the region’s lure as a global investment destination.
“Till a couple of years ago, we had seen a lot of Chinese activity in markets like India. Due to geopolitical reasons, a lot of that capital has slowed down significantly. As a region, Southeast Asia will benefit from a lot of these geopolitical events,” said Akshay Bhusan, a partner at Lightspeed Venture Partners, at the Asia PE-VC Summit 2021.
Unicorns emerge at a record clip
Seven Singapore-based companies joined the unicorn club in the third quarter, bringing the total number of new unicorns from Southeast Asia to 20 so far this year, more than those minted in the preceding six years.
During the quarter, Malaysia welcomed Carsome as the country’s first unicorn, while Thailand found its first fintech unicorn in Ascend Money.
We had earlier written about 19 Southeast Asian companies entering the unicorn club this year. We are updating the tally to include Malaysia’s AirAsia Digital, the operator of digital payments platform BigPay, which saw its valuation cross the billion-dollar mark after a $100 million funding round in August.
Based on the median value of venture investments in the first nine months, startup valuations in Southeast Asia appear to have surpassed pre-pandemic levels. Series B round saw the biggest jump as median deal value reached $35.6 million, nearly three times the value in the same period of 2019.
Singapore-based edtech firm Emeritus bagged the largest funding in the third quarter – a $650 million Series E round – that catapulted it into the league of the unicorns.
Edtech emerged as the third most active business vertical in terms of deal volume as well as value in the third quarter, a position typically occupied by logistics or healthtech.
As Bitcoin, the bellwether of all things crypto, strengthens its position as an investable asset, Southeast Asia has seen a flurry of deals flowing into decentralised finance (DeFi) startups this year. Repeating a feat achieved in the second quarter, DeFi startups clocked the most deal count relative to other sub-categories under fintech in the July-Sept period and produced the region’s first blockchain-enabled unicorn, crypto exchange platform Matrixport.
Our latest report, SE Asia Deal Review: Q3 2021, is available exclusively to DealStreetAsia – DATA VANTAGE subscribers.
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