FinTech Investment Declines 20%

Southeast Asia FinTech Investment Declines 20% in First Half of 2024

According to a report by the global SaaS market intelligence platform Tracxn, Southeast Asia’s fintech funding fell 20% year-on-year in the first half of 2024, dropping to 851 million. This represents a notable decline from the 1.2 billion raised in the same period last year and a 31% drop compared to the $1.3 billion raised in the second half of 2023.

Southeast Asia has been one of the most resilient markets for fintech funding, but the recent downturn may signal a turning point. Investment in the second quarter of 2024 fell 85% year-on-year to $477 million. The Tracxn report highlights that the highest half-year funding was recorded in the second half of 2021, but it has been declining since then.

Reasons for the Decline

The drop is mainly due to a reduction in seed and late-stage investments.

Late-stage investment in the first half of 2024 declined 47% to 338 million from 632 million in the same period last year, while seed-stage investment fell 53% from 90 million to 42.5 million.

Despite the overall decline in funding, early-stage funding showed some resilience, rising 17% from 443 million in the first half of 2023 to 519 million in the first half of 2024.

However, the number of funding rounds decreased. Only two funding rounds of over 100 million were reported in the first half of 2024, compared to four in each half of 2023. Notable rounds included a 148 million Series D funding for ANEXT Bank and a $140 million Series A for GuildFi.

Investments in the technology sector are divided into two categories.

Investment tech saw significant growth, with funding rising 666% from 28.2 million in the first half of 2023 to 216 million in the first half of 2024.

On the other hand, the alternative lending sector declined 59%, raising 206 million compared to 502 million in the previous year. Banking tech companies raised 186 million, a 59% increase from the 117 million raised in the first half of 2023.

Despite the overall decline in funding, merger and acquisition activity increased, with 16 deals completed in the first half of 2024, up from 11 in the same period last year and 13 in the second half of 2023. However, no fintech companies went public during this period. Singapore led the region with 518 million in funding, followed by Bangkok with 140 million and Jakarta with $128 million.

Prominent investors continue to influence the Southeast Asian fintech landscape. East Ventures, Y Combinator, and 500 Global remained the top overall investors, while Antler, Hashed, and AppWorks led in seed-stage investments.

MassMutual Ventures, Illuminate Financial, and Nyca Partners were the leading investors in early-stage rounds, while MUFG Innovation Partners and NewView Capital topped the late-stage investment rankings.

Despite current challenges, the region remains optimistic about long-term growth due to its young population, large consumer base, reliance on informal financial systems, and supportive government initiatives.