Singapore captures lion’s share of reduced South-east Asia fintech funding: Report

SINGAPORE – Funding for fintech start-ups in South-east Asia has continued its decline since peaking in the second half of 2021, according to a report by data platform Tracxn.

Fintech funding fell 25 per cent to US$899 million (S$1.2 billion) in the first half of 2024 from US$1.2 billion in the first half of 2023. This makes the first half of 2024 the least-funded half-yearly period in the past three years.

The bulk of funding, or US$556 million, was raised in the first quarter of the year, which comprises 61.8 per cent of the funding for the first half of 2024.

Rising interest rates, ongoing conflicts, rising concerns over fintech start-up valuations and a decline in demand have made fund raising challenging.

The decline in fintech funding was led by both the seed-stage and late-stage segments of the ecosystem. Seed-stage funding includes seed and angel rounds, while late-stage funding includes Series C rounds onwards, private equity and pre-initial public offering (IPO) rounds.

Seed-stage funding fell 53 per cent to US$42.5 million in the first half of 2024 from US$90 million in the first half of 2023.

Late-stage funding fell 47 per cent to US$338 million in the first half of 2024 from US$632 million in the same period in 2023. The drop is even more pronounced compared with the previous half-year – down 61 per cent from the US$858 million raised in the second half of 2023.

Early-stage funding bucked the trend and rose 17 per cent to US$519 million in the first half of 2024 from US$443 in the same period in 2023. Early-stage funding includes Series A and B rounds.

Geographically, Singapore garnered the most funding, amounting to US$518 million – more than half the total funds raised in the first half of 2024. Fintech companies based in Bangkok raised US$140 million, while those based in Indonesia raised US$128 million.

Investment tech was the brightest spot in fintech funding, seeing a 666 per cent increase to US$216 million in the first half of 2024 from US$28.2 million in the corresponding period in 2023. Payments funding fell the most, dropping 51 per cent to US$40.1 million in the first half of 2024 from US$82.6 million in the first half of 2023.

There were no recorded exits in terms of an IPO, while 16 acquisitions were made in the first six months of 2024. This was an increase from the 11 in the first half of 2023 and 13 in the second half of 2023. Among the deals in 2024 was the acquisition of Singlife by Sumitomo Life Insurance Company for US$1.2 billion.

The number of first-time institutional investors in South-east Asia fintech fell to 37 in the first half of 2024 from 64 in the corresponding period in 2023. But the number has increased from 34 in the second half of 2023.

Tracxn said there still exists significant optimism for South-east Asia’s long-term growth. A young population, a large consumer base and government initiatives are expected to accelerate growth in the region.

THE BUSINESS TIMES