Climate Tech Shines Through in Southeast Asia in 2023

It’s no secret that the Southeast Asian startup funding in 2023 is down big time.

The data collated by DealStreetAsia shows the total regional equity funding in the first nine months of the year nose-dived 52% to US$6.29 billion across 554 deals from last year’s US$13.17 billion funding across 840 deals. This number is even lower than the pandemic-stricken figure of 2020. 

Debt funding has also halved to US$0.76 billion between January and September 2023 compared to the same period last year. Although, at US$533 million, Q3 2023 recorded the third-highest quarterly debt deal value since 2016. 

Evergreen sectors like fintech and ecommerce received bigger chunks of the funding, but those numbers were dwarfed in comparison to past years. However, healthtech and climate tech emerged as the bright spots in the Southeast Asian startup ecosystem even though the funding plummeted. 

Particularly, climate tech. A recent DealStreetAsia report notes that the green tech sector (which falls under climate tech) saw 16 deals in Q3 2023, the highest deal volume in at least five years. The deal value reached US$140 million, a four-quarter high driven by investments in renewable energy solutions and waste management.

Just this past week, several investment firms unveiled climate funds for Southeast Asia, joining a long list of investors eyeing regional climate tech startups. 

Southeast Asian venture builder Wavemaker Impact has hit the final close of its debut climate fund at US$60 million after raising US$15 million in September. This is 2.5x more than the initial target of US$25 million. Its limited partners include the US Development Finance Corporation and British International Investment.

Similarly, Circulate Capital, a Singapore-based investment firm focused on the circular economy has closed a US$76 million climate tech fund to address plastic pollution and combat climate change across various industries in Asia. This includes US$7 million in committed capital from British International Investment. Other institutions that have poured funds into Circulate Capital include the International Finance Corporation, the European Investment Bank, and Proparco.

Meanwhile, Swiss asset management firm Edelweiss Capital Group launched a US$150 million PE fund to invest in Asian startups across agritech, aqua tech, and food tech.

All this money has begun trickling into the climate startups across the region. For instance, in Southeast Asia’s largest economy Indonesia, at least three early-stage local climate startups have attracted interest from investors recently. This includes carbon capture firm Bioniqa, sustainable waste company Sampangan, and EV startup BANiQL, which has developed a patent-pending process to efficiently extract nickel at a lower cost, with minimal environmental impact.

Then there is Singapore, which typically gets the highest funding in the entire region. In the first nine months of 2023, the city-state received US$3.76 billion, or 60% of the total regional funding. It isn’t surprising then that Singapore is the hub for climate tech startups as well. 

As per Startup Genome’s recent climate tech report, Singapore is the world’s top startup ecosystem for the Blue Economy, followed by Beijing and Seoul. Thanks to its high number of relevant startups and its strong support for Blue Economy innovation in local universities. Blue economy refers to economic activities involving ocean, marine, and coastal resources, such as producing sustainable seafood and generating marine renewable energy.

On that note, let’s dive into this week’s recap. 

Singapore's AI Endeavour

Singapore is on a fast track to become an AI hub. Nvidia, the American chip maker giant that’s behind powering iconic generative AI bot ChatGPT, has big plans for the city-state. 

Nvidia is looking to set up a larger supercomputer and make potential AI investments in Singapore. The chipmaker is expected to discuss these plans with the Singapore government. Why Nvdia is focusing on Singapore is clear after its third-quarter results. 

The city-state accounted for US$2.7 billion, or 15%, of its Q3 revenue for its 2024 fiscal year. While Nvidia’s overall revenue grew by a jaw-dropping 205.5% year-on-year, its Singapore business surpassed that figure, generating a 404.1% revenue growth for the company—thanks to its robust data center infrastructure as well as the city-state’s elaborate initiatives to promote AI.

While all this is happening, Singapore is leveling up in its game to promote AI in the country. Just recently, Singapore launched a US$52 million AI project to develop Southeast Asia’s first large language model for regional languages to foster collaboration across borders and drive the next wave of AI innovation in Southeast Asia. The project aims to launch the model over the next two years.

Parallelly, Singapore is focusing on boosting its AI talent pool to 15,000 as per Deputy Prime Minister Lawrence Wong. The initiative involves training local talent and bringing in professionals from overseas under Singapore’s updated national AI strategy. 

Buzzing Deals

A slew of interesting companies announced raising money this past week. 

• Singapore-based cultivated meat company Meatiply secured US$3.75 million in funding in the first close of its seed round led by Wavemaker Partners and AgFunder. Meatiply is in the process of developing meat products by producing natural compounds that can replicate the taste and nutritional value of real meat. The startup will use the funds to level up its R&D capabilities and scale up production by collaborating with its commercial partners. Meatiply will open a new facility in 2024, two years ahead of a planned commercial launch. So far, the company has showcased three prototypes including Asia’s first cultivated smoked duck breast.
• Social gaming and live entertainment company Box Vietnam has received undisclosed funding led by TheVentures. Founded in 2018, Box Vietnam operates Box Studio, a multichannel network of over 500 influencers, gaming streamers, and esports commentators; Box Sports,  a sports content provider that also manages professional esports teams; and GG Live, a live streaming platform for gaming, tournaments, challenges, and talent shows. Box Vietnam will use the funds to strengthen its platforms’ tech capabilities and expand its network of creators. Box Vietnam currently has 461,000 active users per month.
• Singapore-based insurtech company Igloo has raised US$36 million in a pre-series C funding round led by French investment firm Eurazeo. La Maison and Openspace Ventures’ OSV+ also participated in the round. With the new funding, the company’s valuation has jumped 50% and its total raise to date has reached US$100 million. The company will use the fresh funds to support its acquisition efforts next year as well as to strengthen its data infrastructure. Aside from Singapore, Igloo is present in Thailand, Malaysia, Vietnam, China, India, and the Philippines.
• Indonesian construction startup Gravel has bagged US$14 million in funding from New Enterprise Associates, SMDV,  East Ventures, and others. Gravel, which connects skilled construction workers with contractors and architects, plans to expand its platform with the new funding. Gravel has about 1.7 million workers listed on its platform, and has supported over 6,000 projects across 20 provinces in Indonesia. 
• Singapore and Indonesia-based logistics startup Fr8Labs has recently bagged US$1.5 million in seed funding from East Ventures, FEBE Ventures, and Venturra. FR8Labs , which aims to be the “Shopify of logistics,” provides a cloud-based operating system for freight forwarders that streamlines the entire process. By uploading a PDF of a shipping order on Fr8Labs’ system, a forwarder can automate the process including the shipment booking and other required workflows. Currently, the company has signed over 50 customers in its three key markets: Singapore, Indonesia, and Malaysia. 

What Stood Out This Week

The past week saw more VC and PE firms announcing new funds, which underscores investors’ excitement about the Southeast Asian market.

Indonesia’s Bank BTN and Mandiri Capital Indonesia (MCI), the corporate VC arm of Bank Mandiri, have joined hands to create the BTN Fund to invest in startups across sectors like proptech, mortgage tech, and construction tech. The development is in line with Bank BTN’s goal to become Southeast Asia’s leading mortgage bank by 2025. MCI will manage the fund while fostering partnerships with other state-owned tech ecosystems.

Vietnam-based venture capital firm FEBE Ventures has launched a US$75 million fund to invest in early-stage startups. This is the firm’s second fund, Fund II, which is 2.5 times larger than FEBE's first fund. Reportedly, 90% of it has already been committed. Otium Capital is the anchor partner of Fund II. FEBE has also announced a co-investment partnership with Tekton Ventures. The new fund will write checks ranging between US$250,000 to US$750,000 for companies in business-to-business software, marketplaces, health and sustainability. 

Sydney-based alternative investment manager ROC Partners is in the market to raise its sixth Asia Pacific-focused with a target of US$300 million. ROC Partners specializes in private equity in the Asia-Pacific region, investing across primary and secondary deals. It has offices in Sydney, Melbourne, Hong Kong, and Shanghai. The vehicle, ROC Asia Pacific Private Equity Fund VI, has already raised at least US$66 million from three investors since its launch in late October. Its limited partners include Australian pension funds, insurance funds, sovereign wealth funds, and family offices.

Sovereign funds from Saudi Arabia, the United Arab Emirates, and Qatar have significantly increased their investments in Southeast Asia, despite the global funding plunge that pushed the fundraising in the region to its lowest in six years. A Financial Times report, quoting data from Refinitiv, said there were 59 deals in the region involving a Gulf-based investor in 2022-23 compared to a mere seven deals in 2018-19. Some of the key deals include Qatari fund participating in Malaysian online used car platform Carsome’s US$300 million round and Aramco Ventures leading a US$10 million round in Singapore-based trading platform for Renewable Energy Certificates Redex. 

And that’s the wrap for this edition of #ICYMI. We will continue to curate the weekly highlights of the Asian tech ecosystem in case you missed what made the buzz in the week that just went by. You can subscribe to #ICYMI to get it every Thursday to stay abreast of noteworthy tech developments.