The narrative guiding Southeast Asia’s tech investment was profoundly revised during 2023-2024, according to a new Cento Ventures report. The narrative moved decisively away from broad, consumer-led growth models towards the dominant and resilient story of digital financial services (DFS).
Since Indonesia’s valuations peaked in early 2022, investors have cycled through various competing regional growth stories, most of which failed to materialise under closer scrutiny.
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Two prominent narratives were tested and found wanting:
- Vietnam as the “next China”: This theory lost significant momentum as political shifts throughout 2023 and 2024 dampened investor confidence.
- The Philippines as the “next Indonesia”: This thesis came under scrutiny after closer analysis of Indonesian middle-class economics cast doubt on the long-term sustainability of consumer-led investment strategies, especially following failed Initial Public Offerings (IPOs) of large consumer companies.
These proposed growth stories relied heavily on assumptions of robust consumer spending, which ultimately proved less resilient than investors had initially anticipated.
The retreat from Indonesia and rise of the Philippines
The narrative shift has significantly impacted capital allocation across Southeast Asia’s key markets. Notably, Indonesia, long seen as the region’s scale driver, has received less than its “fair share” of investment in the regional digital economy since the second half of 2023. Funds previously explicitly raised for “consumer story” ventures in the archipelago are now shifting away from tech investments and moving towards mid-cap private equity-style investments, such as F&B chains.
In stark contrast, the Philippines has re-emerged as a key investment destination, propelled by the new dominant story of digital financial services. The country’s environment–characterised by a unique combination of light-touch regulation and significant financial disparities–has acted as a catalyst, accelerating its financial sector forward.
This shift has been evidenced by major capital injections into digital banking competitors, with companies such as Salmon, UNO Digital Bank, Mynt, and PayMaya all securing substantial funding in 2024.
While receding in overall VC investment share, Indonesia continues to provide critical scale for digital lenders that are experimenting with different operational models, both with and without established bank charters.
The super-app thesis abandoned
A major strategic pivot across leading digital platforms in 2024 confirmed the death of another growth narrative: the “super-app” model. Most digital platforms have officially abandoned the multi-vertical “super-app” thesis to concentrate on originating and distributing financial services.
The era of non-digital financial services super-apps was officially deemed over by 2022. This strategic refinement means that digital finance has become the key driver of profitability announcements across the region’s leading platforms throughout 2024. The concept of multi-vertical (or diversified services) accounted for US$866 million of capital invested in 2023–2024, representing 13 per cent of the top five sectors.
Business automation and exit resilience
Beyond the DFS dominance, another sector showing a burst of activity is business automation. While financial services captured 48 per cent of total capital invested in the top five sectors in 2023-2024 (US$3.3 billion), business automation accounted for US$507 million, or 7 per cent.
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The spike in investment into business automation reflects a surge of experimentation with hybrid B2B marketplace plus SaaS business models across a variety of industries. However, the capital invested in business automation is back to its baseline after a brief B2B marketplace-driven spike.
Regarding exits, the ecosystem is still reeling from exposed instances of fraud and financial mismanagement across various companies. While the overall recovery remains a work in progress, more minor mergers and acquisitions (M&As) are still occurring. The market generally does not clear for significant acquisitions until founders and late-stage investors reach a point of desperation due to misaligned expectations.
A notable exception in early 2024 was the Tokopedia-ByteDance sale, which occurred under significant regulatory pressure. Despite these challenges, median exit valuations saw a substantial increase in 2024 compared to 2022, suggesting that strong, albeit smaller, exits are still being achieved.
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