SEA fintech funding hits record high of $3.5b in first nine months of 2021

Fintech investments in Southeast Asia hit a record high of US$3.5 billion in the first nine months of 2021, up 3x the amount raised last year, according to a report by United Overseas Bank (UOB), PwC Singapore, and the Singapore Fintech Association.

Photo credit: siraphol / 123RF

A strong interest in late-stage fintech firms, which secured 10 out of 13 mega rounds this year, drove the surge in investments. (The report defines a mega round as a funding round of at least US$100 million.)

Among early-stage fintech startups, the two companies that received the highest amount of investments are Grab Financial Group and VNPay, which are backed by well-funded parent firms Grab and VNLife, respectively. Nium, GCash, Voyager Innovations, Ascend Money, Xendit, FinAccel, and Matrixport are also among the most funded fintech firms in the region.

After the longer-term impacts of Covid-19 became clear, an increasing number of investors stepped off the sidelines and drove valuations up across the region’s fintech sector. The most active fintech investors in Southeast Asia by number of deals include local and global backers such as Y Combinator, 1982 Ventures, East Ventures, and AC Ventures.

This trend signals a shift in the strategy of investors across several Southeast Asian markets, as they take a more cautious and risk-adverse approach of backing mature firms that are seen as standing a higher chance of emerging stronger from the pandemic, the report added.

Source: Tracxn, as at 30 September 2021, accessed on 5 October 2021 / Photo credit: UOB, PwC Singapore, and Singapore Fintech Association

Notably, Singapore-based fintech firms attracted the strongest funding in the region, amassing nearly half of the 167 deals in the first nine months of the year, which amounted to US$1.6 billion in funding. This includes six mega rounds worth US$972 million in total.

“Singapore, in particular, has seen the most robust funding, supported by a growing number of [fintech companies] looking to set up their headquarters here due to the strong regulatory support, opportunities for regional collaboration, and a flourishing startup-focused investor ecosystem,” the report said.

Photo credit: UOB, PwC Singapore, and Singapore Fintech Association

Meanwhile, Indonesia received the second largest amount of investments this year, raking in US$904 million in funding and making up a quarter of the total deals. It was followed by Vietnam, which saw a “sharp rebound” in funding thanks to two large deals, namely VNPay’s US$250 million series B round and MoMo’s US$100 million series D fundraise.

See also: A list of SEA’s unicorns and their early investors (Updated)