Over the years, our friends at Cento Ventures have been systematically tracking tech and venture investments in Southeast Asia. The result is a very good repository of intelligence about evolving trends of the region’s booming tech ecosystem. 

For the past few iterations, Momentum Works has had the privilege to partner with Cento Ventures on the Chinese release of the Southeast Asia Tech Investment report. We have included a section with specific data points and analyses for Chinese investors and the tech ecosystem that are expanding into the region. 

In the newly released Southeast Asia Tech Investment FY 2021 H1 Report, the latest in the series, we thought the following insights are worth noting: 

1. Number of tech investment deals reached a historical high 

Despite the ongoing covid situation, Southeast Asia registered a new record of 393 tech investment deals in the first half of 2021, across all deal sizes. 

Total capital invested, at $4.4B, was lower than in the same period of the previous year. This is because there were fewer mega-size deals ($100M or above) in H1 2021. However, deals smaller than $100M grew significantly, reaching a record total of $2.4B. 

2. Valuations increased across all stages

In H1 2021, we saw a sharp upturn in both deal sizes and valuations at each of the early funding stages.

3. Indonesia and Singapore still dominated, the Philippines attracted more capital

We had predicted a few times that tech investment in the Philippines would take off. However, by the end of 2020, this had not happened. This year, the Philippines gained a record share of capital. Notable deals include Gcash, Great Deals eCommerce, Kumu, and GrowSari.

Meanwhile, Indonesia and Singapore accounted for over 80% of total capital invested as the top 2 destinations. Indonesia remains the primary destination for investment, with companies such as Bukalapak, Go-Jek,  Sicepat, and Ajaib attracting a significant flow of capital. Singapore’s investment allocation is driven by the Carro deal, followed by a long-tail of $10M – $50M deals.

4. Fintech and retail became dominant sector in investments 

The relative absence of mega-deals means that investment in the multi-vertical category (the super-app companies) fell in H1 2021.

In contrast, slightly more narrowly focused digital retailers collected over $1.1B in investment, nearly double that of H1 2020. 

Fintech startups saw a similar amount of capital inflows, quadrupling from the volume of H1 2020. Fintech appears to be the sector of investor focus at the moment.

5. New unicorns and more

H1 2021 saw PropertyGuru, Nium, Carro added to Southeast Asia’s list of unicorns . 

While relevant press announcements did not make it to a strictly defined H1 timeframe, we now know $1B+ valuations were being finalized for companies such as Carsome, Carousell, Xendit, VN Life, and Advance.ai. We are thus considering them as $1B+ companies, although some of the announcements came in Q3.

6. IPOs appear

In a first for the region, IPOs accounted for more than 50% of liquidity. While this was mainly the result of one IPO (that of CTOS in Malaysia), it may signal the start of an interesting trend. 

We know that a number of large digital companies are preparing for their IPOs in H2 2021 and beyond e.g., Bukalapak’s recent listing on IDX, various ongoing SPAC efforts, and Goto’s ongoing IPO plan. 

The potential success of these listings, as well as the good performance of existing public companies from Southeast Asia (such as iFast and SEA Group), will encourage more digital companies to follow. 

The profile of other exits in H1 2021 seems to follow the trend in 2020, which is rather mute.  We continue to assume that some larger potential deals have been delayed and that we will see some increase in trade sales in the second half of the year. 

Get your copy of the report!

Southeast Asia Tech Investment FY 2021 H1 Report is free for industry stakeholders. You can click here to request a full copy in English. Alternatively, you may click here to request a full copy in Chinese. Please share your questions and thoughts with us too – we are curious to hear what you have in mind as well.

Momentum Works and Cento Ventures will also host a briefing about the report as well as other trends in tech investment in Southeast Asia on 15 October. You can register through our Eventbrite link.

See you there!

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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