Fintech investments in Southeast Asia declined 28 per cent in Q3 (July 01 to September 30) of 2024 to US$322 million from US$447.5 million raised in the previous quarter.
However, on a year-on-year basis, this marked an 8 per cent rise from US$299 million in Q3 2023.
The findings were released by global startup research platform Tracxn in its Geo Quarterly Report: SEA FinTech Q3 2024.
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The region’s fintech ecosystem experienced peak funding in Q3 2021 and steadily declined since, despite a brief recovery in Q4 2023.
However, Southeast Asia remains a prominent hub for fintech investments, accounting for 14.5 per cent of the total fintech funding across Asia. Notably, Singapore ranked third in the region for investments into this space.
Neha Singh, CEO and co-founder of Tracxn, said: “Southeast Asia’s landscape continues to be dynamic despite ongoing macroeconomic challenges. Although late-stage funding has taken a hit, it’s encouraging to see early-stage investments showing resilience. The region’s large consumer base and rapidly growing digital economy provide strong growth opportunities in the long term.”
Early-stage and seed funding remained bright spots in Q3 2024. Early-stage funding increased by 32 per cent to US$196 million from the previous quarter’s US$148 million, while seed-stage funding rose by 40 per cent to US$52 million from US$37.5 million in Q2 2024.
Late-stage funding, however, witnessed a steep 72 per cent decline, dropping to US$73 million in Q3 2024, down from US$263 million in Q2 2024. No US$100 million+ round were recorded in Q3, signalling challenges for more mature companies seeking large capital injections. Notable funding rounds in Q3 2024 included Superbank’s US$73.2 million Series C and Partior’s US$60 million Series B.
Despite the overall decline, payments, banking tech, and forex tech remained the top-performing segments in the space. The payments segment raised US$123 million in Q3 2024, although this was 44 per cent lower than the US$223 million raised in Q2 2024.
Banking tech saw a significant surge, raising US$80 million compared to just US$6 million in the previous quarter, while forex tech garnered US$60 million, marking a substantial improvement.
The number of acquisitions in this sector rose to seven in Q3 2024, up from five in Q2 2024.
Among cities, Singapore led with US$157.7 million in funding raised during Q3 2024, followed by Jakarta with US$103.2 million and Taguig with US$8.6 million.
Top investors in the space included 500 Global, East Ventures, and Y Combinator. Specifically, 500 Global, K300 Ventures and Antler dominated seed-stage investments, while Peak XV Partners, Temasek, and Valor Capital Group led early-stage funding rounds.
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“While the immediate outlook remains cautious, the overall optimism in Southeast Asia’s fintech sector continues to be bolstered by favourable long-term factors. Government initiatives, wide internet penetration, and a thriving digital economy will be crucial drivers of future growth,” Singh added.
Despite the current funding downturn, Tracxn remains optimistic about the region’s potential for long-term growth. SEA’s large consumer base, fast-growing digital economy, and favourable government policies make it a region to watch closely in the coming years.
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