The SaaS players serving SEA’s tech ecosystem

The market revenue for Southeast Asia’s software-as-a-service sector is expected to grow to US$8.6 billion in the next five years, but the industry hasn’t found the same level of success in the region like it has in India.

With the exceptions of unicorns like Patsnap and Trax, Southeast Asia’s SaaS sector has yet to see the likes of India-based Zoho or Nasdaq-listed Freshworks.

“Unlike India, only a few Southeast Asia-based startups have cracked into developed markets like the US. This has limited their scale of business, as the local demand is nowhere near a developed market,” Roshan Raj Behera, partner at research firm Redseer Southeast Asia, tells Tech in Asia.

Behera notes that “there aren’t as many SaaS companies in the region to begin with,” mostly because of the evolving local demand.

But notable exits like TradeGecko’s have stirred up excitement for the industry in Southeast Asia. The Singapore-based firm was acquired by US SaaS giant Intuit in 2020 for US$80 million.

In 2022, Singapore-based marketing platform Saleswhale also sold its business to a US-based unicorn firm, 6Sense.

While the outlook for the SaaS sector in the region is certainly exciting, much needs to be done to realize it.

Tech in Asia’s funding data of series A rounds and beyond paints a bleak picture for the sector. In 2023, total funding for the segment declined 5x from its peak in 2021. The number of funding rounds also slipped by over 2.5x during the same period.

“There was an increased demand for remote working and contactless solutions during the pandemic that led to vigorous funding in 2021, where business valuations were mismatched and rose significantly,” a spokesperson for research platform Tracxn tells Tech in Asia.

Demand has since started to decline, the person says, and valuations have plummeted after they were rightsized.

The rise in interest rates has also led investors to take a more cautious stance on their investment decisions, compounding the decline in funding.

Things haven’t changed much in 2024. For the first five months of the year, Southeast Asian SaaS firms have only raised US$118 million from just six rounds. But this figure could still improve later in the year.

Late-stage SaaS in limbo

The series A stage is a critical juncture for startups, as many fail to progress beyond this point. According to CB Insights, only 46% of seed-funded companies go on to raise a series A round.

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