The Southeast Asian (SEA) tech sector faced a challenging year in 2024, with startup funding plummeting to US$2.84 billion—a 59.14 per cent decrease from US$6.95 billion in 2023, according to the Tracxn Geo Annual Report: SEA Tech 2024.
This sharp decline marks an 80 per cent drop compared to the funding levels seen in 2022, underscoring the sector’s struggles amid a broader global downturn in tech investments.
The decline in SEA was observed across all funding stages. Seed funding fell by 52.4 per cent, while early-stage funding contracted by 28.6 per cent.
Late-stage startups were hit hardest, experiencing a staggering 76.9 per cent drop in funding.
The fourth quarter of 2024 proved particularly weak, with funding totalling just US$494.8 million—the lowest quarterly figure for the region in five years. This represented a 12.65 per cent decline from the third quarter and a 62.9 per cent year-over-year reduction.
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Adding to the bleak picture, the report highlighted declines across key indicators of startup activity. The number of funding rounds dropped by 22 per cent, while first-time funded companies decreased by 28 per cent.
Initial Public Offerings (IPOs) declined by 53.85 per cent compared to 2023. Mergers and acquisitions were also subdued, with a 17.11 per cent year-on-year decrease in 2024.
The report offered limited insights into the reasons behind these declines, although it noted that SEA tech accounted for just one per cent of global tech funding in 2024. Broader trends in the global funding landscape likely contributed to the downturn as similar declines were observed in other major markets, including the US, Europe, India, and China, reflecting a widespread pullback by investors.
While Southeast Asia’s tech ecosystem remains a vibrant hub for innovation, the funding slowdown in 2024 highlights the challenges startups face in an increasingly cautious investment climate. The region’s long-term growth potential remains intact, but navigating this downturn will require resilience and strategic adaptation from startups and investors alike.
Singapore leads the pack
Singapore emerged as a standout performer in SEA’s tech landscape in 2024, securing 67.86 per cent of the region’s total tech funding, according to the report. Despite an overall regional decline, Singapore attracted US$1.9 billion in funding.
The city outpaced its regional peers, with Jakarta securing US$276 million and Bangkok receiving US$261 million in funding, placing them second and third, respectively. Singapore’s dominance in the funding landscape is attributed to its stable economic environment, supportive government policies, and a well-developed talent pool.
Also Read: SEA startups raised US$371M across 42 rounds in March: Tracxn report
Key sectors driving investment across the region were fintech, high tech, and enterprise applications, which collectively accounted for a significant portion of the US$2.84 billion raised by SEA tech firms in 2024.
Of these different verticals:
– Fintech led the pack, attracting US$1.4 billion, though this represented a 29 per cent decrease compared to 2023
– High tech followed with US$966 million, reflecting a 25 per cent decline from the previous year
– Enterprise applications secured $764 million, marking a 32 per cent drop from 2023
Despite these declines, investor interest in these sectors remains strong, highlighting their potential for long-term growth in the region.
The report does not offer projections for 2025, but it notes trends that may shape the coming year. While the global funding downturn could continue to impact SEA, Singapore’s resilience suggests a potential bright spot for regional investment, particularly if the city-state sustains its momentum.
Investor confidence in specific sectors, such as fintech, high tech, and enterprise applications, also signals potential areas for growth. While challenges persist, these industries continue to attract significant attention, positioning them as key drivers for the region’s recovery.
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