SINGAPORE: Funding into financial technology (fintech) startups in South-east Asia has continued its decline since peaking in the second half of 2021, according to a report by data platform Tracxn.
Fintech funding fell 25% to US$899mil in the first half of 2024 from US$1.2bil in the first half of 2023.
This makes the first half of 2024 the least-funded half-yearly period in the past three years.
The bulk of funding, or US$556mil, was raised in the first quarter of the year, which comprises about 61.8 % of the funding for the first half of 2024.
Rising interest rates, ongoing conflicts, rising concerns over fintech start-up valuations and a decline in demand have made fund raising challenging.
The decline in fintech funding was led by both the seed-stage and late-stage segments of the ecosystem.
Seed-stage funding includes seed and angel rounds, while late-stage funding includes Series C rounds onwards, private equity and pre-initial public offering (IPO) rounds.
Seed-stage funding fell 53 % to US$42.5mil in the first half of 2024 from US$90mil in the first half of 2023.
Late-stage funding fell 47 % to US$338mil in the first half of 2024 from US$632mil in the same period in 2023.
The drop is even more pronounced compared with the previous half-year – down 61% from the US$858mil raised in the second half of 2023.
Early-stage funding bucked the trend and rose 17% to US$519mil in the first half of 2024 from US$443mil in the same period in 2023. Early-stage funding includes Series A and B rounds.
Geographically, Singapore garnered the most funding, amounting to US$518mil – more than half the total funding raised in the first half of 2024.
Fintech companies based in Bangkok raised US$140mil, while those based in Indonesia raised US$128mil.
East Ventures, Y Combinator, and 500 Global were the all-time top investors in the space.
Antler, Hashed, and AppWorks were the top investors in seed-stage rounds in the first half, while MassMutual Ventures, Illuminate Financial, and Nyca Partners were the top early-stage investors.
MUFG Innovation Partners and NewView Capital were the top investors in late-stage rounds during the period.
Investment tech, alternative lending, and banking tech were the top-performing segments based on funding in the fintech sector for the first half of the year.
Investment tech was the brightest spot in fintech funding, seeing a 666% increase to US$216mil in the first half of 2024 from US$28.2mil in the corresponding period in 2023.
Payments funding fell the most, dropping 51% to US$40.1mil in the first half of 2024 from US$82.6mil in the first half of 2023.
There were no recorded exits in terms of an IPO, while 16 acquisitions were made in the first six months of 2024. This was an increase from the 11 in the first half of 2023 and 13 in the second half of 2023. Among the deals in 2024 was the acquisition of Singlife by Sumitomo Life Insurance Company for US$1.2bil.
The number of first-time institutional investors in South-east Asia fintech fell to 37 in the first half of 2024 from 64 in the corresponding period in 2023. But the number has increased from 34 in the second half of 2023.
Tracxn said there still exists significant optimism for South-East Asia’s long-term growth.
A young population, a large consumer base and government initiatives are expected to accelerate growth in the region. — The Straits Times/ANN
