Southeast Asia’s tech startup ecosystem continues to face the effects of the funding winter in line with other major countries, according to the latest report by Tracxn.
The region’s startup sector received a total funding of US$4.3 billion in 2023 year-to-date (till December 5, 2023), a 65 per cent plunge from US$12.4 billion raised in the same period last year.
Also Read: Fintech investments in SEA see record drop in Q3: Tracxn
Companies attracted late-stage funding worth US$1.9 billion in 2023 YTD, a sharp decline of 65 per cent from US$5.4 billion raised in the same period in 2022. Early-stage funding stood at US$1.9 billion in 2023 YTD, a 67 per cent drop from the same period in 2022. Seed-stage investments also fell 52 per cent to US$546 million.
Fintech, enterprise applications, and retail were the top-performing segments. The fintech sector, however, received US$2 billion, which is 65 per cent lower compared to the previous year. The region has a vast underbanked population, making fintech firms very important in providing financial services.
The enterprise applications segment attracted investments worth US$1 billion in 2023, a 78 per cent plunge from the same period in 2022, while retail funding declined 85 per cent to US$0.7 billion.
As per Tracxn’s Geo Annual Report: SEA Tech 2023, only ten funding rounds were worth US$100 million and above in 2023, as opposed to 28 such rounds in 2022. In 2023, the number of acquisitions fell 30 per cent to 61, as against 88 in 2022. There was a slight uptick in IPOs, with ten companies from this space going public in 2023 as against five in 2022.
Among cities in the region, Singapore, Jakarta, and Bandung took the lead in terms of funding in 2023 to date.
East Ventures, 500 Global, and Wavemaker Partners were the most active investors in the region in 2023. East Ventures, Wavemaker, and Saison Capital were the top investors in the seed stage in 2023, while SEEDS Capital, Peak XV Partners, and Gobi Partners were the top investors in the early-stage segment.
According to the report, EDBI, Avataar Ventures, and Prosperity7 Ventures are the top investors regarding late-stage funding during the same period.
Also Read: Startup investments in SEA see 69% monthly drop in November: Tracxn
The investment market remains volatile globally, and similar trends can also be seen in the SEA region. Increased inflation poses a challenge for the SEA region. Still, there is considerable optimism regarding its long-term growth, as the region has a large consumer base mainly of young people and a dependence on informal financial and commercial systems, which presents a largely untapped market for investors and entrepreneurs.
Vietnam Startup Ecosystem in 2023
Separately, Tracxn released another report about the Vietnamese startup ecosystem. Startups in the country raised a total of US$142 million in 2023, a drop of 73 per cent from 2022. The top-performing sectors are healthtech, fintech, and enterprise applications. Ho Chi Minh City emerged as the highest-funded city in 2023, followed by Hanoi. Nextrans, Vietnam Silicon Valley, and VSV Capital have been the top investors.
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