Singapore attracted the most tech startup funding in Southeast Asia over the first quarter of 2023, even as the region experienced its lowest quarterly deal value over the past one year.

Based on a report by data intelligence platform Tracxn, companies based in the city-state drew in the highest investment value among their peers – US$516 million in funding.

Top funding rounds in Singapore included fintech startup Aspire’s US$100 million Series C round, as well as healthtech startup Holmusk, which raised US$45 million in its Series B round.

A total of US$1.1 billion in funding went to Southeast Asian tech startups in Q1 2023, down 69 per cent from the previous year and 42 per cent lower than Q4 2022.

This comes as part of a downtrend since the region’s funding spike in Q4 2021, said Tracxn, which cited rising interest rates and volatile inflation rates among the potential reasons.

Across the region, seed-stage investments fell 27 per cent year on year, and 73 per cent month on month, with Y Combinator, East Ventures and Surge emerging as the top seed-stage investors in Q1 2023.

Early-stage funding plunged 69 per cent on the year, but rose 11 per cent from the previous quarter. Sequoia Capital, Gobi Partners and Openspace Ventures were the top early-stage investors.

The average ticket size for late-stage investments, however, increased over Q1 2023 to US$83 million, from US$61 million in Q1 2022 and US$68 million in the quarter-ago period.

Segments which received the highest amount of investments in the first quarter comprised fintech, insurtech and autotech.

“Since Southeast Asia has a significant number of its population who are unbanked and underbanked, fintech firms play an important role by introducing this target group to new, innovative financial and insurance solutions,” said Tracxn on Friday (Apr 14).

There were no new unicorns in the region over Q1 2023, although four initial public offerings took place.

Acquisition volumes in Southeast Asia fell 70 per cent to just 11 deals in the quarter under review, compared with 37 acquisitions in the same quarter last year.

Despite the challenges, Traxcn observed “considerable optimism” in Southeast Asia’s long-term growth.

This is due to the region’s large consumer base, young population, and dependency on “informal financial and commercial systems that provide a large number of untapped opportunities for both investors and entrepreneurs”, said the company.

“The World Bank has also predicted an increased growth for the region compared with 2022. Moreover, (Southeast Asia) is considered to be a more cost-effective alternative for sourcing commodities and exports,” it added.

Source: The Business Times ©️ SPH Media Limited. Permission required for reproduction.