Seed capital deployment in India and Southeast Asia (SEA) has stabilised at around US$1.5 billion per year, reveals a Jungle Ventures report released on Thursday.
This follows a period of significant growth, with deployment reaching US$1.9 billion per year previously and a peak of US$3.2B in 2022.
This stabilisation is occurring despite a drop in deal count to 1,200 annually. This is down from 1,700 deals in the previous year and a peak of 2,600 in 2021.
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Jungle Ventures’s First Cheque Report 2024 further reveals that seed investment amounts and deal counts in India have been decreasing since 2022 but are showing early signs of stabilising. The decline in both deal count and funding amount has slowed considerably in the first half of 2024 compared to previous years.
Notably, deal counts continue to decrease while investment amounts are nearing stabilisation. Median round sizes have increased significantly, reaching US$0.78 million in 2024 year to date, surpassing 2021 and 2022 levels. The median round size has seen a 56 per cent increase from 2023 to 2024 YTD.
In Southeast Asia, the overall deal count is stabilising at levels similar to 2020. Invested capital remains high, with 2023 levels significantly exceeding pre-exponential growth periods.
Funding decline is slowing, with a considerable reduction in the rate of decline between H1 2023 and H1 2024. The decline in funding amount slowed from 60 per cent between H1 2022 and H1 2023 to just 6 per cent between H1 2023 and H1 2024. This suggests that Seed investment deployment is stabilising, though deal counts may continue to decrease.
Median round sizes have reached a new high of US$2.2 million in 2024, exceeding the levels of 2021 and 2022.
Capital flowing to new markets:
In India, the deal count remains highly concentrated in Tier 1 cities. However, there is a slight decrease in the concentration since 2023, as more deals flow into Tier 2 and Tier 3 cities.
In SEA, Singapore continues to dominate, accounting for 54.4 per cent of seed deals. Indonesia holds the second largest share but is being challenged by other SEA markets, particularly Vietnam.
Also Read: Shifting tides: Vietnam and Philippines challenge Singapore and Indonesia in startup investment
H1 2024 has been especially exciting, with other SEA countries collectively surpassing Indonesia in capital deployed for the first time. This is attributed to ongoing efforts to support Seed funding in a traditionally underserved ecosystem.
Rishab Malik, Partner at Jungle Ventures, attributes the increase in median round sizes to investors deploying capital more selectively, choosing to “double down” on strong business models.
The report suggests a maturing seed investment landscape in India and Southeast Asia. While overall investment levels are stabilising, capital is increasingly spreading to new markets, which broadens opportunities for startups across the region.
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Image Credit: 123RF.
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