Total funding into Southeast Asian tech startups dropped 65 per cent to $4.3 billion in 2023, compared with $12.4 billion in 2022.

Tracxn, a leading global SaaS-based market intelligence platform, released its Geo Annual Report: SEA Tech 2023 on December 12. The report, based on Tracxn’s extensive database, provides insights into the Southeast Asia Tech space.

Southeast Asia’s tech startups ecosystem continues to face the effects of the funding winter, in line with other major countries. Southeast Asia’s tech sector received total funding of $4.3 billion in 2023 to date, a 65 per cent plunge from the $12.4 billion raised in the same period last year.

Companies in this space attracted late-stage funding worth $1.9 billion in 2023 year to date, a sharp decline of 65 per cent from $5.4 billion raised in the same period in 2022.

Early-stage funding stood at $1.9 billion in 2023 year to date, 67 per cent lower than $6 billion raised in the same period in 2022. Seed-stage investments, too, fell 52 per cent to $546 million from $1.14 billion raised in the same period in 2022.

Among cities in the region, Singapore, Jakarta, and Bandung took the lead in terms of funding in 2023 to date. Tech startups based in Singapore raised $2.3 billion in 2023, while those based in Indonesia secured funding worth $1.44 billion and $304 million, respectively. Meanwhile, tech startups in Ho Chi Minh City and Hanoi bagged $97 million and $45 million, respectively.

Fintech, enterprise applications, and retail were the top-performing segments in Southeast Asia’s tech sector ecosystem in 2023. The FinTech sector received $2 billion in funding in 2023 so far, 65 per cent lower than when compared with the same period in the previous year.

Southeast Asia has a huge underbanked population, making fintech firms critical in providing financial services in the region and since the pandemic, governments across the region have been promoting digital transactions.

The enterprise applications segment attracted investments worth $1 billion in 2023 so far, a 78 per cent plunge from the same period in 2022. The retail segment received a total of $0.7 billion in funding in 2023 to date, a sharp decline of 85 per cent from the same period in 2022.

In 2023, only 10 funding rounds were worth $100 million and above, as against 28 such rounds in 2022. In 2023, the number of acquisitions fell 30 per cent to 61, as against 88 in 2022. There was a slight uptick in the number of IPOs, with 10 companies from this space going public in 2023 as against five in 2022.

The market for investments remains volatile globally, and similar trends can be seen in the Southeast Asian region as well.

Increased inflation poses a challenge for the Southeast Asian region, still there is considerable optimism regarding its long-term growth, as the region has a large consumer base made up largely of young people as well as a dependence on informal financial and commercial systems, which presents a large untapped market for investors and entrepreneurs.

Vietnam Investment Review