E-106: Southeast Asia Well Positioned To Win Over The Next Decade

The situation in Southeast Asia remains somber. 

In the third quarter of 2024, Southeast Asian startups received US$1.1 billion in venture capital across 137 funding rounds, down 42% compared to US$1.9 billion raised in a year ago period, per the latest quarterly funding report by Dealroom.

Notably, there were 66 rounds of US$2 million plus raised by Southeast Asian startups in Q3 2024.

Early-stage funding in the region continued to be resilient. Although it declined year-on-year, the pre-seed, seed, and Series A investments in Q3 2024 roughly touched Q3 2020 levels. 

But what stands out is the fact that breakout-stage VC funding (Series B and Series C) rose year-on-year. As for larger checks, there was only one round above US$100 million in Q3 2024.

Fintech, unsurprisingly, was the most funded industry in the region this year, followed by enterprise software, marketing, and semiconductors. 

The region’s M&A activity has also been a bit disappointing. 

There were eight M&A deals in the first nine months of 2024 in Southeast Asia, with a total deal value of US $1.8 billion. In comparison, the region witnessed 15 deals with a total value of about US$820 million in the same period last year.

Generally, the private market sentiments mirror the public markets. This year is marked by subdued IPO activity in Southeast Asia. 

In the first three quarters of 2024, IPOs in ASEAN were down 26% to 330, while the proceeds halved to US$20 billion year-on-year, per an EY report. 

However, there was a surprising uptick in the third quarter of the year. ASEAN launched 28 IPOs in Q3 with proceeds totaling US$1.1 billion. This was double the IPO proceeds in the previous quarter.

The prime reason behind this 100% surge was the listing of 99 Speed Mart Retail Holdings Bhd. from Malaysia—the second-largest IPO in the region this year. This sent out a positive sign amid all doom and gloom. 

Besides, when considering the bigger picture, Southeast Asia seems to be following the predicted growth trajectory, albeit at a slower pace, to reach its true potential. 

According to Southeast Asia Outlook 2024-34 by Angsana Council, Bain & Company, and DBS, Southeast Asia is likely to outpace China in gross domestic product (GDP) and foreign direct investment (FDI) growth over the next decade.

But how can Southeast Asia outgrow China despite global headwinds?

The GDP of the top six economies in Southeast Asia (SEA-6)—Indonesia, Malaysia, the Philippines, Singapore, Vietnam, and Thailand—is projected to grow at an annual rate of 5.1% on average between 2024 and 2034.

Vietnam and the Philippines are likely to drive the region's growth, each expected to exceed 6%, with Indonesia following closely at 5.7%, the report notes. 

In comparison, China is projected to maintain a steady growth at 3.5%–4.5% over the next decade. In a good scenario, the growth rate can cross 5%. 

As for the FDI inflows, between 2018 and 2022, SEA-6 grew its FDI by 37%, compared to China’s 10%. In 2023, SEA-6 outpaced China for the first time in a decade, attracting US$206 billion compared to China's US$43 billion.

With the US-China frosty relations, Southeast Asian countries stand to gain, when it comes to manufacturing. Meanwhile, rising protectionism in the US and Europe is likely offset by trade growth within Asia.

Besides, the region’s current priorities put it in a better position to achieve this feat. 

Southeast Asian nations are focused on skilling up their workforce, increasing physical and digital infrastructure spending, attracting more domestic and foreign investment, and raising competition in domestic markets. 

On top, regional governments are actively working on facilitating green investments to enable its transition to clean energy as well as wooing investments from global investors in emerging areas like EV manufacturing, EV batteries, semiconductors, and data centers. 

Interestingly, the report underlines new growth strategies that Southeast Asian countries can embrace to accelerate their growth. The list includes investing in future growth sectors, fostering tech-enabled disruptors like startup and VC investments, strengthening capital markets, accelerating green transition, and committing to growth-friendly multilateral initiatives to increase intra-ASEAN trade and FDI inflows.

It’s up to Southeast Asian nations to work together and tap the opportunities. 

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

Buzzing Deals

➤ Indonesian poultry startup Chickin closed an undisclosed Series A round led by Granite Asia. Integra Partners and East Ventures participated in the round. Chickin helps chicken farmers with poultry management. It offers smart farm equipment that enables them to do livestock monitoring, cage management, and optimized climate control. The firm had last raised an undisclosed seed round led by East Ventures in 2022.

➤ Singapore-based thermal sensors provider Meridian Innovation raised US$12.5 million in new funding. The round saw participation from Seeds Capital, Moveon Technologies, TCVC, and Hong Kong Science and Technology Parks Corporation, and brought the total amount raised so far to US$30 million. Meridian Innovation offers low-cost, mass-producible thermal imaging sensors. This funding will enable Meridian Innovation to scale operations, accelerate product development, and expand its reach into broader consumer and commercial markets. 

➤ Singapore-based AI-powered hotel solutions startup Vouch closed a US$2.5 million funding round backed by Forge Ventures. Founded in 2016, Vouch offers a comprehensive suite that integrates a guest platform with a back-end hotel operations management ecosystem. This empowers hotels to streamline operations and enhance the guest experience through features like contactless check-in, streamlined task management for operations teams, and a convenient guest request platform. The firm also expanded its product suite infused with AI-powered features, designed to boost operational efficiency and drive hotel revenue growth.

➤ Indonesia-based shipping platform Andalin raised at least US$1.5 million as part of its Series C round from Intudo Ventures, Hiven, BEENEXT, and other investors. So far it has raised US$6 million in funding over six rounds. Andalin is a trading platform that operates an online export-import marketplace to provide shipping services.

➤ Singapore-based fintech startup Earlybird AI bagged an undisclosed pre-seed funding round Antler. This round included additional contributions from several unnamed strategic angel investors. The startup offers an AI-powered bookkeeping solution and plans to develop a mobile app that simplifies financial management.

➤ Philippine-based lending fintech company OneLot netted US$4 million in pre-seed funding led by 468 Capital. Other backers include Kaya Founders, Crestone Venture Capital, 21yield, and Founders Launchpad. Founded in 2023, OneLot specializes in offering working capital financing exclusively to used car dealers. It allows dealers to access funding based on a pre-approved credit line, determined by a data-driven and AI-enabled assessment of their business. The company will use the funding to expand its services to even more dealers and fast-track the development of its products and AI capabilities.

➤ The Singapore-based firm ticketing platform GlobalTix raised US$4.9 million in a series B funding round, led by VC firm Tin Men Capital. SEEDS Capital, ORZON Ventures, and a US-based family office, also participated in the round. Founded in 2013, GlobalTix is a SaaS platform designed for the tourism industry, offering over 150,000 experiences, and 8,000 plus travel agents and issuing over 10 million tickets annually. Present in 10 markets across Asia, the company plans to use the capital to fuel its expansion efforts, including developing and integrating AI tools into its operations. 

Hong Kong-based early cancer detection firm Insighta received US$30 million in funding ➤ from Tencent. This has elevated Insighta’s valuation to US$200 million. Insighta employs its proprietary Fragma technology in its cancer detection platform, a non-invasive and precise method to detect various cancers early by identifying distinctive fragment patterns associated with malignancies. The new funding will improve cash reserves for its parent company Prenetics. 

What Stood Out This Week

➤ Singaporean digital healthcare provider WhiteCoat Global is acquiring Good Doctor Indonesia in a significant consolidation of the Southeast Asian digital health sector. The acquisition, described as the largest merger of its kind in the region, will create a comprehensive digital healthcare group, working with over 130 insurers and 7,500 corporate partners to service over 6.8 million clients. WhiteCoat Global also secured new funding from Raffles Family Office, MDI Ventures, and SoftBank Vision Fund. The terms of the deal were not disclosed. 

➤ Indonesian conglomerate Astra International has acquired Heartology Cardiovascular Hospital, one of the largest private cardiac centers in the country, for approximately US$41 million. This acquisition, made through Astra's subsidiary PT Astra Sehat Nusantara, marks a significant step in Astra's expansion within Indonesia's growing healthcare sector. Heartology has a strong track record, having handled over 1,500 heart cases with advanced facilities and a team of experienced doctors. This strategic acquisition brings Astra's total investment in healthcare to US$275 million since its initial foray into the sector with investments in the Halodoc platform in 2021 and then investment in Hermina Hospital in 2022.

➤ Private equity firm KKR is preparing to sell Goodpack, a Singapore-based logistics company for an estimated US$1.8 billion. Goodpack manages the movement of metal containers in 5000-plus delivery and collection locations across the globe. KKR acquired Goodpack in 2014 for US$985 million. This divestiture comes after a previous attempt stalled due to pandemic-related disruptions. Deutsche Bank and Rippledot are advising KKR on the sale, which is expected to formally launch in the coming weeks. 

➤ Malaysian private equity firm Bintang Capital Partners has launched a new US$46.5 million impact fund with a focus on women empowerment in the local semiconductor industry. Dubbed Bintang Semiconductor Impact Fund I (BSIF I), the fund will invest in high-growth semiconductor companies in Malaysia, prioritizing environmental and social impact. Moreover, it will operate with a "carry-at-risk" model, linking financial returns to social impact performance. Three female Venture Partners with extensive experience in the semiconductor and technology industries have been appointed to lead the fund's strategic direction.

And that’s the wrap for this edition of #ICYMI, our weekly curated highlights from the Asian tech ecosystem. Subscribe to receive it every Thursday and stay updated on the noteworthy tech developments you might have missed during the week. Like this newsletter? Share it with your friends and colleagues here.