The Southeast Asia (SEA) Tech sector received a total funding of $4.3 billion in 2023 year to date (till December 5, 2023), a 65 percent plunge from $12.4 billion raised in the same period last year, Tracxn said Tuesday.

The global software as a service (SaaS)-based market intelligence platform said in its “Geo Annual Report: SEA Tech 2023”, the SEA Tech startup ecosystem continues to face the effects of the funding winter, in line with other major countries.

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

Meanwhile, early-stage funding stood at $1.9 billion in 2023 year to date, 67 percent lower than $6 billion raised in the same period in 2022.

Seed-stage investments, too, fell 52 percent to $546 million from $1.14 billion raised in the same period in 2022.

FinTech, enterprise applications, and retail were the top-performing segments in the SEA Tech startup ecosystem in 2023.

The FinTech sector received $2 billion in funding in 2023 till date, 65 percent lower when compared with the same period in the previous year.

According to Tracxn, the SEA region has a huge underbanked population making FinTech firms very important to provide financial services in the region and since the COVID-19 pandemic, governments across the region have been promoting digital transactions.

According to the report, the enterprise applications segment attracted investments worth $1 billion in 2023 till date, a 78 percent plunge from the same period in 2022.

The retail segment received a total of $700 million in funding in 2023 to date, a sharp decline of 85 percent from the same period in 2022.

In 2023, only ten funding rounds were worth $100 million and above, as against 28 such rounds in 2022.

In 2023, the number of acquisitions fell 30 percent to 61, as against 88 in 2022.

There was a slight uptick in the number of initial public offerings (IPOs), with ten companies from this space going public in 2023 as against five in 2022.

It is noted that 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.

It is also noted that East Ventures, 500 Global, and Wavemaker Partners were the most active investors in the region in 2023.

East Ventures, Wavemaker Partners and Saison Capital were the top investors in the seed stage in 2023 to date, while SEEDS, Peak XV Partners, and Gobi Partners were the top investors in the early stage.

EDBI, Avataar Ventures, and Prosperity7 Ventures are the top investors in terms of late-stage funding during the same period.

According to Tracxn, the market for investments remains volatile globally and similar trends can be seen in the SEA region as well.

“Increased inflation poses a challenge for the SEA 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,” it said.

Tracxn : SEA tech startups witness lowest quarterly funding in five years