Venture capital investments into the fintech space in Southeast Asia hit the lowest in 2023 compared to the last five years, according to a Tracxn report.
Fintech companies in the region raised just US$2 billion in 2023, a plunge of 65 per cent from US$5.9 billion in 2022. The space saw the highest funding (US$8.6 billion) in 2021.
The number of deals fell 50 per cent in 2023 — just 142 in 2023 compared to 288 in 2022, revealed the Tracxn Geo Annual Report: SEA FinTech 2023.
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In 2023, seed-stage investments declined 68 per cent to US$166 million from US$522 million in 2022. Early-stage funding plunged to US$836 million from US$2.6 billion in 2022. Late-stage funding also saw a 64 per cent drop to US$1 billion.
With US$689 million raised, Q4 was the highest funded quarter of the year, while Q3 was the lowest (US$282 million).
A downward trend was observed in the US$100 million+ rounds in 2023 to just six in 2023 from 16 in 2022. Kredivo, Investree, and Gojek were some of the companies that reported US$100 million+ rounds. No new unicorns emerged during the year, similar to 2022.
The number of acquisitions also fell to 19, a sharp contrast from 27 in 2022 and slightly higher than 17 in 2021. Further, only two regional fintech companies went public in the past three years, with one IPO each in 2023 and 2022.
The highest funding was observed in the alternative lending, payments and insurtech segments. The alternative lending space attracted US$700 million in 2023 — an 11 per cent growth over 2022. Insurtech investments stood at US$256 million in 2023, a sharp spike of 105 per cent compared with US$125 million raised in 2022.
In contrast, the payments saw an 87 per cent plummet over the previous year, securing just US$270 million in 2023.
Singapore dominated the fintech funding space by securing US$1.1 billion in the past year.
East Ventures, YCombinator, and 500 Global were the most active investors to date in the SEA fintech sector.
Antler, Saison Capital, and Tenity were the top seed-stage investors, while Gobi Partners, Peak XV Partners, and Openspace Ventures were the most active early-stage investors in 2023. EDBI, Prosperity7 Ventures and 01Fintech were the top late-stage investors in 2023.
How Indonesian fintechs fared in 2023
Indonesia, the second-largest economy and the second-highest-funded startup ecosystem in the region, witnessed a 51 per cent decline in fintech funding in 2023 to US$765 million.
Seed-stage funding saw a significant plunge (84 per cent) to US$9.5 million in 2023. Early-stage investments fell 79 per cent to $99.4 million, while late-stage financing saw a 40 drop to US$656 million.
Also Read: Startup funding in SEA falls 65% to US$4.3B in 2023: Tracxn
Alternative lending, payments, and banking tech were the top-performing segments.
The sector witnessed four acquisitions in 2023, similar to 2022.
500 Global, Hustle Fund, and Mandiri Capital Indonesia were the top investors in the seed stage in 2023, while Gobi Partners, Alpha Trio, and Openspace Ventures were the most active early-stage investors.
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