Funding raised by fintech startups in Southeast Asia in the third quarter of this year plunged 74 per cent to US$229 million from US$887 million in the same period last year, making it the lowest-funded quarter since 2020, according to a Tracxn report.
On a quarter-on-quarter basis, fintech investments declined 48 per cent.
The drop is largely due to the absence of late-stage rounds in Q3 2023, Tracxn said in the Geo Quarterly Report: FinTech SEA – Q3 2023. This can be attributed to several factors that have affected the SEA economy, including the rising interest rates, macroeconomic factors and fear of reduction in startup valuations, declining global demands for manufactured goods, and the early onset of El Niño impacting agriculture.
The region’s fintech startup ecosystem received its highest funding in Q4 2021, and it started witnessing a steady decline after Q2 2022.
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The fintech vertical secured US$203 million in early-stage funding in Q3 2023, a 55 per cent decline from US$452 million in Q3 2022 and a 37 per cent drop compared to Q2 2023.
Seed-stage investments in Q3 2023 stood at US$26.3 million, a plunge of 73 per cent from US$98 million raised in Q3 2022 and a 27 per cent drop over Q2 2023.
Cryptocurrencies, insurance IT and investment tech were the top-funded sectors in the third quarter of 2023. Cryptocurrencies received funding of US$71.5 million in Q3 2023, a fall of 4 per cent compared to US$74.4 million in Q2 2023 and a drop of 8 per cent from Q3 2022.
Internet-first insurance platforms, payments and alternative lending were the most affected segments in Q3 2023 in this space, with a plunge of 100 per cent, 69 per cent and 87 per cent compared with the funds raised in Q2 2023.
No new fintech unicorns emerged in Q3 2023, no US$100 million+ rounds were reported, and no new companies went public. Six acquisitions took place in Q3 2023, a growth of 20 per cent from five acquisitions in Q3 2022.
East Ventures, Y Combinator, and 500 Global are the most active investors in this space. Y Combinator, Hashed and Binance Labs were the top investors in seed-stage rounds for Q3 2023. Patamar Capital, Lightspeed Venture Partners and Peak XV Partners were the most active investors in early-stage rounds in Q3 2023.
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