Total VC funding in SEA declines by 25% in H1 2023: report

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Investments in Southeast Asian startups fell 25% year on year in the first half of 2023, reversing to pre-Covid numbers, according to a report by January Capital, Venture Cap Insights, and Tracxn.

The decline underscores the challenges faced by the region’s startup ecosystem, including shifting investor sentiment, economic uncertainties, and evolving market trends.

One notable trend that emerged during the period was the shift in investment focus toward early-stage startups, particularly in the seed and series A stages. This pivot resulted in a 41% increase in completed deals in these stages compared to the previous year.

Geographically, Singapore and Indonesia remained focal points for VC funding.

Singapore saw a 60% surge in number of deals and a 19% increase in capital invested during the first half of 2023. While Indonesia’s VC sector saw a steady deal count for the period, there was a 44% year-on-year decline in total capital investment.

Photo credit: Traxcn, VentureCap Insights, and January Capital

There was also a surge in “top-up” or “bridge rounds,” which the report defines as additional investment rounds within 48 months of an initial fundraise. The segment witnessed a 315% year-on-year increase in number of deals, with most executed at the series A stage.

In terms of valuations, series A and series B firms experienced declines in pre-money valuation by 34% and 42%, respectively. On the other hand, seed-stage valuations remained relatively steady.

Valuations of series C+ firms also saw minimal year-on-year changes throughout H1 2023. These include the likes of Funding Societies, Carro, Shopback, eFishery, and FinAccel, which all closed rounds worth over US$100 million during the period.

See also: As funding drops, will Indonesian startups turn to IPOs instead?