Funding in Southeast Asia continues to decline, but strong valuations and M&A activity are bright spots, according to an update shared by CBInsights.
Venture funding in Southeast Asia continued “to slide in Q3’23, falling by 24% quarter-over-quarter (QoQ) to $1.6B,” the CBInsights report revealed.
Deals decreased as well, “slipping by 20% QoQ to 169 — their lowest level since 2017.”
As the overall funding continues to slide in SEA, strong valuations and M&A growth “are bright spots -24% Decrease QoQ in SEA funding.”
Deals also down by 20%.
Funding in SEA kept trending down, “with the Q3’23 level reaching $1.6B — a fraction of its $6B peak in Q4’21.” Digital health was the only sector “to see funding increase in Q3, up 6x quarterover-quarter (QoQ) to $126M.” Meanhile, Fintech funding reportedly “fell 7% to $390M, while retail tech funding tumbled 85% to $81M. (Q2’23 retail tech funding had been boosted by a $300M deal to Singapore ecommerce platform TK Mall.)”
$963M Singapore leads in funding.
Indonesia in 2nd with $522M. Singapore and Indonesia maintained “their top positions in SEA funding,” though quarterly growth was mixed:
Funding ticked up in Singapore (+6% QoQ), while it “halved in Indonesia (-49%).”
Meanwhile, deals in both markets “decreased QoQ by double-digit percentages.”
Indonesia saw 3 of the top 5 deals “in Q3’23, while the other 2 went to Singapore.”
$40M Median late-stage deal size YTD — back to 2021 level.
Amid broader declines in deal sizes, late-stage rounds “are an anomaly: median and average late-stage deal sizes are up significantly this year vs. 2022.”
Late-stage deals make up 8% of deals in 2023, in line with past years. Still, it’s taking longer for startups to get to the next funding stage: from Series A to B, “for instance, the median company now takes 25 months (vs. 18 in 2022).”
157% Increase in median valuation YTD for private companies, up to $100M.
As mentioned in the extensive report from CBInsights, the private-market valuations in the Southeast Asia region “have rebounded this year: at $100M, the median valuation in 2023 YTD is over 2.5x last year’s level.” Average valuation is also up by 26% vs. 2022 to $329M.
Nevertheless, the median valuation “in SEA is still significantly off its peak in 2021, when it hit $170M.”
38 M&A deals in Q3’23.
Activity grows for 3rd straight quarter. Following a huge drop (-56%) to just 18 in Q4’22, M&A exits have “increased every quarter in 2023, including growing 23% QoQ in Q3.”
Among the quarter’s top 5 M&A M&A deals, “acquirers based in Malaysia and Japan were prominent, each accounting for 2 deals.”