Following a dip in fundraising seen across ASEAN’s FinTech scene in 2020, funding has rebounded to reach a record high of $3.5 billion year to date, more than triple the amount seen over 2020, said an industry report.

This funding was driven by 13 mega-rounds (classified as funding rounds of at least $100 million), accounting for more than half of total FinTech funding in ASEAN, according to the report conducted by United Overseas Bank, PwC Singapore and the Singapore FinTech Association.

Meanwhile, the average deal size increased from $9 million in 2020 to $21 million in year to date.

The report also said Singapore continues to top FinTech funding numbers within ASEAN this year, accounting for 44 percent of the total amount.

It said Vietnam saw a sharp rebound in funding, attributable to two large deals, namely $250 million into VNPay and $100 million into MoMo’s Series D fundraising round.

Meanwhile, the number of funding deals grew by 32 percent to 167 deals in year to date, with almost half the deals going to Singapore-based FinTech firms.

Indonesia made up a quarter of deals, with Vietnam and Malaysia in joint third, said the report.

It said the growth of online shopping, food deliveries, and ride-hailing, as well as the move towards cashless payments at physical retail outlets, have led to a surge in digital payments solutions in ASEAN, particularly e-wallets.

“The COVID-19 pandemic accelerated digital adoption across Southeast Asia, and in tandem, the demand for pure play digital financial services and embedded financial solutions,” it said.

According to the report, the payments category across ASEAN received the highest funding at $1.9 billion, followed by investment tech at $457 million and cryptocurrency at $356 million.

Compared with 2020, funding into investment tech grew by six times from $77 million and cryptocurrency by five times from $68 million in 2020.

In Singapore and Indonesia, almost every FinTech category received funding, an indication of a vibrant and maturing industry with an active investment scene.

The report also sees greater investor interest in late-stage (Series C and above) FinTechs, with 75 percent of the firms in the top 10 funded list coming from the late-stage category.

Meanwhile, the top two funded early-stage FinTechs are backed by well-funded parent firms Grab and VNLife.

“This may suggest that investors are more cautious and risk-averse due to the economic concerns from the prolonged pandemic. As such, investors have altered their investing strategy towards more mature FinTechs as they are assumed to be more resilient and stand a higher chance of emerging stronger from the pandemic,” it said.

The report also noted, the highest funded FinTechs are from the payments space, as ASEAN’s adoption of digital payments continues apace.

It said, the increasing valuations and funding are growing ASEAN’s FinTech unicorn herd rapidly, as from the top 10 funded list this year, seven firms are in the unicorn club (startups valued at over US$1 billion): Grab Financial Group, VNPay, NIUM, GCash’s operator Mynt, Ascend Money, Xendit, and Matrixport.

Going forward, it said, Singapore and Indonesia remain the two markets that most investors and FinTechs are focused on within the region.

“The former for the maturity of its financial markets and regulator, and the latter for the market potential it offers,” it said.

This focus is reflected in the rankings of each country in terms of aggregate fundraising, the number of deals undertaken, and the aggregate number of FinTechs operating in each market, each of which has Singapore in first place with Indonesia second, it said.

“Should this trend continue into the near future, FinTech across ASEAN would likely still be centered around Singapore and Indonesia, with other ASEAN nations being of interest as they grow and develop,” it said, adding that Singapore’s role would be that of a fundraising center, leveraging its developed financial markets, whereas Indonesia’s market size would draw FinTechs and investors alike to it.

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