Southeast Asia (SEA)’s Fintech space has encountered a staggering 74% decline in funding for Q3 2023, registering the lowest quarter in terms of investments since 2020, according to the recent Geo Quarterly Report: FinTech SEA – Q3 2023 released by global SaaS-based market intelligence platform Tracxn.
While the zenith of the SEA Fintech funding was reached in Q4 2021, a consistent dip was evident post Q2 2022. Data from Tracxn’s extensive database indicates that in Q3 2023, the total capital raised by SEA FinTech entities amounted to $229 million.
This is in stark contrast to the $437 million garnered in Q2 2023 and the substantial $887 million from Q3 2022. An apparent dearth of late-stage investment rounds in Q3 2023 stands as a significant reason for this dramatic fall.
Further disaggregating the funding reveals early-stage rounds in Q3 2023 secured $203 million, which is 37% and 55% less than Q2 2023 and Q3 2022, respectively.
Seed-stage rounds fetched $26.3 million, marking a decline of 27% from Q2 2023 and a steep 73% fall from the $98 million of Q3 2022.
The report highlighted the Cryptocurrency, Insurance IT, and Investment Tech sectors as the highest beneficiaries of funding in Q3 2023. Specifically, Cryptocurrencies amassed $71.5 million, albeit this is 4% lower than Q2 2023 and 8% lesser than Q3 2022.
On the contrary, Internet First Insurance Platforms, Payments, and Alternative Lending sectors witnessed funding droughts, recording drops of 100%, 69%, and 87% respectively when juxtaposed against Q2 2023.
Unicorns were conspicuously absent from the SEA FinTech scene in Q3 2023, mirroring the trend of previous quarters. Moreover, Q3 2023 saw zero $100M+ funding rounds. While no new companies ventured into the public market this quarter, one managed an IPO in Q3 2022. Interestingly, acquisitions surged by 20%, from five in Q3 2022 to six in Q3 2023.
Active investors in the space include luminaries like East Ventures, Y Combinator, and 500 Global. For seed-stage rounds, Y Combinator, Hashed, and Binance Labs took the lead, whereas early-stage rounds predominantly saw investments from Patamar Capital, Lightspeed Venture Partners, and Peak XV Partners.
Despite the turbulent investment environment, a palpable optimism remains. Factors buttressing this sentiment include the region’s youthful populace, expansive consumer market, reliance on informal finance frameworks, and proactive governmental actions.