Total funding for FinTech startups in Southeast Asia (SEA) fell 28% to $322 million in the third quarter of 2024, compared to $447.5 million in the second quarter. Tracxn said Wednesday.
The market intelligence platform said in a statement that SEA remains an important hub for FinTech investments, accounting for 14.5% of total sector funding in Asia.
Notably, Singapore ranks third in the region in terms of investment in FinTech, thus establishing itself as a major player in this area.
While the SEA FinTech ecosystem saw its peak funding in Q3 2021, a steady decline has persisted since, despite a brief recovery in Q4 2023.
The third quarter saw funding fall to $322 million, a 28 percent drop from the $447.5 million raised in the previous quarter.
However, compared to the previous year, this represents an increase of 8% from the $299 million in the third quarter of 2023.
“The FinTech landscape in SEA continues to be dynamic despite persistent macroeconomic challenges. Although late-stage financing has been hit, it is encouraging to see that early-stage investments are showing resilience,
“The region’s large consumer base and rapidly growing digital economy provide strong long-term growth opportunities,” said Neha Singh, CEO and co-founder of Tracxn.
Seed and seed funding in the region remained a bright spot in the third quarter of 2024, according to Tracxn.
Seed funding increased 32% to $196 million from $148 million in the previous quarter, while seed funding increased 40% to $52 million from $37.5 million in the second quarter of 2024.
Late-stage funding, however, saw a sharp decline of 72%, falling to $73 million in Q3 2024 from $263 million in Q2 2024.
None of the FinTech startups managed to secure fundraisings exceeding $100 million in the third quarter, signaling challenges for more mature companies seeking large capital injections.
Of note, notable funding rounds in Q3 2024 included Superbank’s $73.2 million Series C and Partior’s $60 million Series B.
Despite the overall decline, payments, banking technology and Forex technology remained the best performing segments of the FinTech sector.
The payments segment raised $123 million in Q3 2024, although this was 44% lower than the $223 million raised in Q2 2024.
Banking technology saw a significant increase, raising $80 million compared to just $6 million in the previous quarter, while forex technology raised $60 million, marking a substantial improvement.
The third quarter saw no new unicorns or initial public offerings (IPOs) in the SEA FinTech space. There have been no IPOs in this sector in 2024.
However, the number of acquisitions increased to seven in the third quarter of 2024, compared to five in the second quarter of 2024, reflecting ongoing consolidation in the region.
Among cities, Singapore leads with $157.7 million in funding raised during the third quarter of 2024, followed by Jakarta with $103.2 million and Taguig with $8.6 million.
Major investors in the space included 500 Global, East Ventures and Y Combinator.
Specifically, 500 Global, K300 Ventures, and Antler dominated seed-stage investments, while Peak XV Partners, Temasek, and Valor Capital Group led early rounds of funding.
“While the immediate outlook remains cautious, general optimism in Southeast Asia’s FinTech sector continues to be bolstered by long-term tailwinds,
“Government initiatives, wide internet penetration and a thriving digital economy will be crucial drivers of future growth,” added Neha Singh.
Despite the current slowdown in funding, Tracxn remains optimistic about the region’s long-term growth potential.
SEA’s large consumer base, rapid growth in the digital economy and supportive government policies make it a region to watch closely in the coming years, the report notes.
Tracxn: Funding for SEA FinTech startups drops 25% in the first half