Venture funding for Singapore start-ups weakens in 2022

The number of equity deals involving Singapore start-ups has been trending downwards since the fourth quarter of 2021. PHOTO: BT FILE

SINGAPORE – The amount of venture capital funding raised by Singapore-headquartered tech companies dipped in 2022 as investors turned cautious amid an uncertain macroeconomic climate.

Annual deal volume in 2022 dropped 11 per cent year on year to 651, while total deal value dipped 3 per cent to US$11 billion (S$14.8 billion), a report from Enterprise Singapore and DealStreetAsia showed. The study primarily tracked equity fund-raising – debt funding, bridge loans, initial coin offerings and grants were excluded.

Deal value was propped up by a further injection of US$1.63 billion by Alibaba Group into its subsidiary Lazada Group.

The number of equity deals involving Singapore start-ups has been on a downward trend beginning from the fourth quarter of 2021. Deal volume dropped from 244 during the quarter to 133 in the fourth quarter of 2022.

The quarterly data raises concerns over the potential for a further slowdown in venture funding in 2023, the report noted.

Still, a number of start-ups managed to carry out blockbuster funding rounds that helped Singapore maintain the lion’s share of equity fund-raising in South-east Asia. The Republic took home 63.8 per cent of deal value in 2022, followed by Indonesia at 21.9 per cent.

Top deals included fintech Coda Payments raising US$690 million from sovereign wealth fund GIC, Insight Partners and others, as well as data centre operator Princeton Digital’s fund-raising round of US$500 million, led by Abu Dhabi state fund Mubadala.

Early-stage deals remained robust, with the median value of seed rounds rising 82.4 per cent to US$2.7 million, and that of Series A rounds rising 60 per cent to US$10 million.

Overall, investments up to the Series B stage recorded a 12.3 per cent increase, despite an 8.2 per cent fall in volume.

The impact of investor pullback was more visible among mature companies, as new private valuations began to mimic the public market decline.

The median value of Series C rounds dropped 14.3 per cent to US$45 million, while that of Series D rounds plunged 66.1 per cent to US$50 million.

“Many crossover funds, which were active in late-stage investments, took a step back after their publicly listed portfolios took a beating in the stock market rout,” the authors of the report said.

In deep tech – a key growth area for Singapore – deal value fell 24 per cent from a historic high to US$1.95 billion. Deal volume decreased from 198 to 127.

The report, however, noted a healthy pipeline of new ventures for the ecosystem. Singapore’s deep-tech start-ups closed 116 early-stage deals in 2022, with 41 comprising seed-stage deals.

Meanwhile, companies continued to mature, with at least 21 seed-stage start-ups graduating to the Series A stage, and another seven companies raising Series B funding.

Biofourmis and Mirxes, which focus on advanced biomedical technology, secured late-stage funding of US$320 million and US$87 million respectively.

The Singapore Government has continued to spur start-up investments through co-funding initiatives. Seeds Capital, the investment arm of Enterprise Singapore, committed more than $40 million and catalysed $132 million of private funding into 36 early-stage start-ups in 2022. This is almost double the amount from five years ago, said the agency. THE BUSINESS TIMES

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