Total investment in fintech startups in Southeast Asia (SEA) fell 25% to $899 million in the first half of 2024 from $1.2 billion a year earlier, Traxun said on Friday.
Funding volume also declined 31 percent from the $1.3 billion raised in the second half of 2023, the global SaaS (software-as-a-service) based market intelligence platform said in its “Geo Semi-Annual Report: SEA FinTech H1 2024.”
According to the firm, Southeast Asia’s fintech startup ecosystem recorded its highest ever half-yearly funding volume in the second half of 2021, but has since seen a significant decline in funding.
The current macroeconomic situation and geopolitical issues are further exacerbating the downward trend, making the first half of 2024 the most cash-strapped half in the last three years, it said.
The firm also noted that the decline was driven by a decline in seed and later-stage investments.
Late-stage investments fell 47% to $338 million in the first half of 2024 from $632 million in the first half of 2023.
Seed-stage investments will be $42.5 million in the first half of 2024, down 53% from $90 million in the first half of 2023.
However, early-stage funding increased 17% to $519 million in the first half of 2024, from $443 million in the first half of 2023.
In the first half of 2024, there were only two funding rounds of over $100 million, compared to four each in the first half of 2023 and the second half of 2023.
ANEXT Bank raised $148 million in a Series D round, while GuildFi secured $140 million in a Series A funding round.
Investment technology, alternative lending and banking technology are the best-performing segments based on fundraising in the Southeast Asian FinTech sector in 1H24.
There was a decline in funding across multiple segments.
However, the investment technology sector has secured a total of $216 million in funding in the first half of 2024, which is an increase of 666% compared to $28.2 million in the first half of 2023.
The alternative lending segment raised $206 million in the first half of 2024, a decrease of 59 percent compared to $502 million in the first half of 2023.
Banking tech companies raised $186 million in the first half of 2024, up 59% from the $117 million they raised in the first half of 2023.
None of the companies in this sector went public in the first six months of 2024.
However, the number of acquisitions is on the rise, from 11 in the first half of 2023 and 13 in the second half of 2023 to 16 in the first half of 2024.
Singapore led the way in terms of funding for the sector, accounting for more than half of the total investment.
Singapore-based fintech companies raised $518 million in the first half of 2024, while Bangkok and Jakarta-based companies raised $140 million and $128 million, respectively.
East Ventures, Y Combinator and 500 Global are the top investors of all time in this space.
Antler, Hashed and AppWorks were the top investors in the seed stage round in the first half of 2024, while MassMutual Ventures, Illuminate Financial and Nyca Partners were the top investors in the early stage.
MUFG Innovation Partners and New View Capital were the top investors in late-stage rounds during this period.
“Despite some challenges, there is great optimism for the region’s long-term growth.
“Factors such as a young population, a large consumer base, reliance on informal financial and commercial systems, and government initiatives are expected to fuel growth in the region,” Traxun said.
Tracxn: Total investment in Southeast Asian fintech startups to fall 65% to $2 billion in 2023
