Despite a surge in early-stage investments, funding in Southeast Asia’s fintech sector saw a decline overall in the first quarter of this year. Funding to cryptocurrency firms also more than tripled compared to the fourth quarter of 2023.
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According to Tracxn Data, a technology-first platform that helps investors discover startups throughout the world and make better investment decisions, the sector raised US$530 million during this period, a 44% drop from the US$939 million reported in the fourth quarter of 2023.
This year’s figures also saw a 13% decrease from the US$607 million the industry raised a year ago.
Late-stage and seed-stage funding experienced declines
Late-stage funding plummeted by 64% to US$270 million in Q1, down from US$758 million in Q4 2023, marking a 40% decrease from a year ago. Seed-stage investments also fell by 27% to US$19.4 million in Q1 compared to Q4 2023, representing a 59% decrease from Q1 2023.
Conversely, early-stage investments more than doubled to $240 million in Q1, a 114% increase from Q1 2023, and a 56% rise from Q4 2023.
Tracxn noted that the SEA fintech startup ecosystem witnessed funding of over $1 billion each quarter from Q2 2021 to Q2 2022 but began to decline afterwards due to factors like slowing economic activity, reduced consumer spending and investor interest shifting towards sustainable and profitable businesses.
In the fourth quarter of 2024, no new fintech unicorns emerged, and only one funding round exceeded US$100 million — ANEXT Bank in Singapore raised US$148 million from Ant Group.
This is a decrease from four such rounds in Q4 2023 and two in Q1 2023.
Additionally, no fintech startups went public in Q1 2024, similar to the previous quarters, but the number of acquisitions increased to 10 from 6 in Q4 2023 and 5 in Q1 2023.
Industry favorites for funding
The banking tech, alternative lending, and cryptocurrency segments were the favorites for funding in Q1.
Banking tech companies raised $180 million, alternative lending secured $126 million, and cryptocurrency fintechs received $91.9 million.
Singapore-based fintech companies attracted 70% of the total funding in the region, raising $372 million. Jakarta in Indonesia and Taguig in the Philippines also garnered investor interest, with Jakarta-based fintechs raising US$103 million and those in Taguig raising US$32.1 million.
East Ventures, Y Combinator, and 500 Global were identified as the most active investors in the SEA FinTech space overall. Meanwhile, Mirana, Bixin Ventures, and Draper Dragon were the most active seed-stage investors in Q1.
MassMutual Ventures, Nyca Partners, and Illuminate Financial were the most active early-stage investors, and MUFG Innovation Partners led in late-stage funding in Q1.
About Tracxn Data
Tracxn Data was founded by Neha Singh and Abhishek Goyal, ex-investment professionals at Sequoia
Capital and Accel Partners, respectively.
During their time at these firms, they spent a disproportionate amount of time sourcing new startups and developing Competition Maps.
They realized that almost all investment firms were dealing with a similar challenge. These firms
were constrained by a lack of bandwidth and limitations of the firm’s network to source new and
exciting startups.
Despite startups leaving thousands of “digital” breadcrumbs over the Internet, no one had built a technology platform to collect and curate this information. Thus, Tracxn was born to solve a problem faced by investment professionals as well as across the world.
Aside from detailed information on startups, Tracxn Data also provides insights on market trends, investor activity, and new business models. Its clients include top venture capital firms, the corporate development departments of large companies, private equity firms, industry trade bodies and government entities. The company currently serves over 200 clients across the world.