Startups in SE Asia are on track to raise $20b from venture investors in 2021

With a record number of newly-minted tech unicorns, rising valuations, and a steady flow of new startups entering the market, venture-backed companies in Southeast Asia are on track to raise at least $20 billion in funding by the end of this year.

Investors have funnelled at least $17.2 billion into private companies in the region this year, as of Sept. 25, already more than twice the $8.6 billion raised in the entire 2020, according to a special report titled ‘SE Asia Private Capital Markets 2021‘ published to coincide with the DealStreetAsia PE-VC Summit 2021 last week.

Of the total funding raised so far, equity investments contributed $14.7 billion, while debt and other instruments amounted to $2.5 billion, of which $2 billion is attributed to the term loan facility raised by the region’s ride-hailing giant Grab.

It is fair to expect that the total proceeds raised by SE Asia startups may exceed $20 billion for the first time in history this year, given a number of factors — total fundraising value has been trending above $5 billion in every quarter this year, Indonesia’s multi-vertical tech firm GoTo is close to finalising its $2 billion pre-IPO round, and big-ticket fundraisings by Ajaib and Zilingo will be completed soon.

Startup funding in Southeast Asia on track to surpass $20b in 2021

DealStreetAsia expects to publish the final data on third-quarter fundraising performance next week.

Year of the unicorns

With record funding performance in the first nine months of this year, Southeast Asia has welcomed 18 new firms that have surpassed $1 billion in valuation — more than the total number unicorns minted between 2015 and 2020.

Singapore-founded IP analytics firm PatSnap became the first to enter the club after completing a $300 million Series E round led by SoftBank in March. Logistics firm Flash Express became Thailand’s first unicorn in June, followed more recently by Ascend Money, which became the country’s first fintech unicorn.

Singapore generated the most unicorns with nine in total with fintech and AI developer Advance Intelligence Group last to join the ranks after raising $400 million in September. We expect Indonesia’s wealthtech firm Ajaib and Singapore-based Zilingo to attain the coveted valuation before the end of the year.

Unicorns minted in Southeast Asia by year

Source: DealStreetAsia

Having screened hundreds of Southeast Asian startups with a valuation above $100 million, the SE Asia Private Capital Market 2021 report lists 100+ companies that may soon reach unicorn valuation. Following Ajaib and Zilingo, both of which are expected to become unicorns this year, notable companies that may reach $1 billion valuation include LinkAja, Momo, Stockbit, and Voyager Innovations.

Rising global allocations

The fundraising performance in the first nine months suggests that, despite the deep economic and social scars inflicted by the COVID-19 health crisis, businesses that are providing solutions to emerging consumer pain points have continued to lure capital as the confidence of global investors in Southeast Asia’s long-term economic outlook appear to remain largely intact.

The rising capital allocations for Southeast Asian investments by global VCs was a silver lining that lifted the pandemic gloom throughout 2020. We are likely to see this trend continue this year. Six foreign funds with Southeast Asia allocations reached a final close in the first half of this year, amassing more than $3.3 billion in total proceeds. In contrast, four global funds raised $1.8 billion in the first semester of 2020.

Beyond SEA-focused funds, the summit report covers Asia and Asia Pacific funds that include markets in Southeast Asia as part of their investment mandates. A total of seven PE funds within this category reached a final close in the first six months of this year with combined proceeds of $38.1 billion, already more than double the value secured in the whole of last year.

With so many deals happening and a growing volume of dry powder collected for startups in the region, Southeast Asia is likely to see yet another robust fundraising period next year.

Our latest report, SE Asia Private Capital Market 2021 is free for DealStreetAsia PE-VC Summit 2021 attendees and DATA VANTAGE subscribers.

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