Tracxn : SEA FinTech startups see 13 percent decline in funding in first quarter amid slowdown in economic activity

The Southeast Asia (SEA) FinTech sector secured funding worth $530 million in the first quarter of 2024, a 13 percent lower than the $607 million raised in the corresponding quarter last year, Tracxn said in a a report on Tuesday.

The data intelligence platform said in a statement that the funding also showed a 44 percent fall compared with the $939 million raised in the previous quarter.

According to the statement, the drop in funding is largely due to the decline in late-stage funding, which declined 64 percent from $758 million in the fourth quarter of 2023 to $270 million in the first quarter of 2024.

This is also a 40 percent drop when compared with the $447 million raised in the first quarter of 2023.

Meanwhile, seed-stage investments in the first quarter of 2024 stood at $19.4 million, a 27 percent decrease from $26.5 million raised in the previous quarter.

This is also a 59 percent plunge from the $47.4 million raised in the first quarter of 2023.

However, a surge was observed in early-stage investments, which rose 114 percent to $240 million in the first quarter of 2024 from $112 million raised in the first quarter of 2023.

This is also a 56 percent increase from the $154 million raised through early-stage rounds in the fourth quarter of 2023.

It is noted that the first quarter of 2024 witnessed only one $100 million+ funding round, as against four and two such rounds in the fourth quarter of 2023 and the first quarter of 2023 respectively.

Singapore-based ANEXT Bank raised $148 million from Ant Group.

Further, no new unicorns emerged during the first three months of 2024.

It is also noted that the SEA fintech startup ecosystem did not witness any initial public offerings (IPOs) in the first three months of 2024, similar to both the first quarter of 2023 and the fourth quarter of 2023.

However, the number of acquisitions rose to ten in the first quarter of 2024, from six in the fourth quarter of 2023 and five in the first quarter of 2023.

Banking tech, alternative lending, and cryptocurrency were the top funded segments in this space in the first quarter of 2024.

Companies in the banking tech space witnessed $180 million in funding in the first quarter of 2024, compared with $108 million raised in the previous quarter and just $5.5 million raised in the first quarter of 2023.

Funding into the alternative lending segment stood at $126 million in the first quarter of 2024, a 76 percent plunge compared with the $531 million funding raised in the fourth quarter of 2023 and a 58 percent drop from the $302 million raised in the corresponding quarter last year.

The cryptocurrency sector attracted investments worth $91.9 million in the first quarter of 2024, a spike of 138 percent and 246 percent compared with $38.2 million and $26.3 million raised in the first quarter of 2023 and the fourth quarter of 2023 respectively.

FinTech companies based in Singapore accounted for 70 percent of the total funding in the region, raising $372 million.

This is followed by companies based in Jakarta and Taguig, which raised $103 million and $32.1 million respectively.

East Ventures, Y Combinator, and 500 Global are the all-time most active investors in the SEA fintech space.

Mirana, Bixin Ventures, and Draper Dragon were the most active seed-stage investors in the first quarter of 2024, while MassMutual Ventures, Nyca Partners and Illuminate Financial were the most active early-stage investors.

MUFG Innovation Partners was the lead investor in terms of late-stage funding in the first quarter of 2024.

According to the statement, the SEA FinTech startup ecosystem witnessed funding of more than $1 billion in each quarter, starting from the second quarter of 2021 to the second quarter of 2022.

However, investments began to decline after this period.

Though funding grew in the fourth quarter of 2023, a decrease was observed again in the first three months of 2024.

This downward trend can be attributed to multiple factors including the slowing economic activity across industries, reduced consumer spending, and a shift in investor interest toward more sustainable and profitable businesses.

“Despite the downward trend, the SEA FinTech startup ecosystem can continue to attract investor interest in the coming months, driven by the digital readiness of this region,” Tracxn said.

Tracxn : Total funding into SEA FinTech startups plunge 65 percent to $2B in 2023