Even before the COVID-19 pandemic hits the global market and forced everyone to rethink how things are being run, digital transformation and its risks have already stolen the attention of many business players, as reported in this Wall Street Journal article.
But with the pandemic restricting movement in various countries, the Southeast Asian (SEA) startup ecosystem saw a surge in popularity of platforms that enable digital transformation for conventional businesses among investors. In August, e27 covered at least four of such funding rounds.
Each of these companies is covering the different aspect of digital transformation. Wahyoo and BukuKas are working with medium- and small-sized enterprises (MSMEs) in Indonesia while Intrepid Group’s reach also includes major consumer-facing brands.
In fact, from the VC side, MDI Ventures had announced a new US$500 million fund that aims to help the digitalisation of Indonesian state-owned firms.
Another trend that has been widely discussed among investors, including Paul Meyers and Jussi Salovaara in an e27 Webinar episode, is the rise of M&A and strategic acquisitions. In August, we saw the acquisition of TradeGecko by global SaaS giant Intuit, which proved that the SEA market remains a promising destination for global companies. In addition to them, there were also the acquisitions of EmpatKali by AfterPay and iMoney by JurisTech.
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Popular sectors
As with the previous months, there are sectors that continue to be popular among investors in SEA such as fintech (Clik raised US$3.7 million in seed funding while Incomlend raised US$20 million in Series A) as well as e-commerce and logistics (Anchanto raised US$12 million, KitaBeli raised an undisclosed seed, and SIRCLO raised US$6 million in Series B).
We also saw investments in edutech (Doyobi), gaming (Potato Play), and alternative protein (Lever VC’s first fund).
In the agritech sector, particularly in Indonesia, fishery became the centre of attention as eFishery and Aruna announced their funding rounds.
In Singapore particularly, the deep tech sector continued to see funding trickled in as Gero.ai, TADA, and See-Mode secured their funding rounds, both raising more than US$2 million.
For the unicorns, Grab was reported to be in the process of raising US$200 million from a South Korean private equity firm. The company has declined to comment on the report.
What this means for the ecosystem
August was the month where we saw most of the predictions about the SEA startup ecosystem coming true. In addition to the M&A activities and the popularity of platforms that enable digital transformation, we also continue to see investor favourite during the pandemic flourishing –from e-commerce to medtech to logistics.
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We predict that this trend will continue in September –perhaps even all the way to the end of 2020. As the dominating theme of the year, the pandemic will continue to affect investors’ appetite and setting up trends in the ecosystem.
What can startups do to seize this opportunity? There are many approaches to explore. While a startup should always be ready to make adjustment through a pivot, they can start by trying out new strategies such as collaboration with external parties or adjusting your financial prjections.
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Image Credit: Charles Deluvio on Unsplash
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