Funding in Southeast Asia’s Tech Ecosystem Plunges to Five-year Low in Q3

Startups in Southeast Asia continue to struggle with funding as ecosystem funding falls to a five-year low for the third quarter of this year, according to a report released by SaaS-based market intelligence platform Tracxn.

The report said the tech startup ecosystem in Southeast Asia raised a total of $835 million in Q3 2023, a 74% decline from $3.2 billion raised a quarter earlier and a 66% fall from $2.5 billion in Q3 2022.

The Southeast tech startup ecosystem received its highest funding in Q4 2021, after which there has been a steady decline in funding in the region, with a minor spike in Q2 2023.

Indonesia, however, bucked the trend of decline in funding, recording an uptick on a quarter-on-quarter basis of 110% to $448 million in Q3 from $213 million in Q2. On a year-on-year basis, Q3 funding fell 28% from $628 million.

The Q3 of this year witnessed early-stage funding worth $329 million, a fall of 37% compared with Q2 2023, and also a drop of 75% compared with Q3 2022.

A downward trend was observed in seed-stage rounds as well in Q3 2023, which saw funding of $111 million, a 17% drop compared with Q2 2023 and a 58.4% drop from Q3 2022.

Food and Agriculture Tech, FinTech and Life Sciences were the three segments that received the highest funding in the third quarter of 2023.

The Food and Agriculture Tech segment secured funding of $248 million in Q3 2023, which is a growth of 75% from $142 million raised in Q2 2023. However, this is a drop of 40% compared with Q3 2022.

FinTech is also one of the segments that took a hit, with funding worth $236 million in Q3 2023, which is a drop of 46% and 73% from Q2 2023 and Q3 2022, respectively. Retail, InsurTech and Auto Tech were most affected, falling 98%, 73% and 66%, respectively, compared with Q2 2023.

There were no new entrants to the Unicorn club in Q3 2023. The number of acquisitions rose slightly from 20 in Q2 2023 to 22 in Q3 2023. Only one company from the overall SEA Tech space went public in Q3 2023.

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