Southeast Asia’s tech startups attracted 71 per cent less funding in the first half (January-June) of 2023 compared to the same period last year, as per the latest report released by market intelligence platform Tracxn.
The decline was primarily driven by a 72 per cent drop in late-stage investments, Tracxn said in its SEA Tech Semi-Annual Funding Report.
Funding into the tech space in H1 2023 dropped to US$2.3 billion from US$8 billion in H1 2022 (US$1.15 in Q1 2023 and US$1.17 billion in Q2). The US$100 million+ funding rounds also dropped to six in H1 2023 from 18 in the same period last year.
H1 2023 is the least funded half-year since 2020. After a peak in 2021, there has been a steady decline; investments fell by 39 per cent in 2022 from 2021, primarily due to the rising interest rates and the current macroeconomic environment.
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Fintech, enterprise applications, and retail were the top-performing segments in H1 2023. However, these segments witnessed a drop in funding in 2023 compared to H2 2022.
The fintech sector raised US$926 million in H1 2023, contributing almost 40 per cent of the funds raised by the SEA tech startup ecosystem during this period.
Two segments which observed upticks in funding are auto-tech and insurtech. Auto-tech funding grew from US$23.6 million in H2 2022 to US$317 million in H1 2023, while insurtech rose from US$98.7 million to US$262 million.
Only one company, eFishery, entered the unicorn club in H1 2023, compared with six new unicorns in H1 2022.
As for acquisitions, H1 2023 saw 29 deals compared to 43 in H2 2022 and 69 in H1 2022. Five companies from this space went public in H1 2023 as against just one in H1 2022.
In the SEA region, Singapore, Jakarta, and Petaling Jaya were the top-funded cities in H1 2023. Companies in Singapore attracted investments worth US$1.2 billion, while those in Jakarta and Petaling Jaya raised US$378 million and US$202 million, respectively.
East Ventures, SEEDS Capital, and Y Combinator were the most active investors in the SEA tech space in H1 2023. Y Combinator, East Ventures, and 500 Global were the top seed investors, while Gobi Partners, SMDV, and Peak XV Partners were the top early-stage investors.
In terms of late-stage investments, SoftBank, Avataar Ventures, and Prosperity7 Ventures were the top late-stage investors.
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