Southeast Asia Tech Investment – H1 2019

The headline story of Southeast Asia is the sustained investment in technology investment with increasing geography and sector diversification. Close to $6B was invested during the first half of 2019, lower than that of first half of 2018. However, we expect the total investment in 2019 will match the total investment amount in 2018 as local champions like Grab, Go-jek, Traveloka and Tokopedia continue to attract sizeable funding rounds. Besides that, a growing cohort of new companies valued in excess of $100M will attract significant capital.

A closer look at the data partly emphasizes the progression of existing trends, but also reveals interesting findings emerging in the first half of 2019:

Record number of deals

The first half of 2019 sees investment in more than 300 companies, a record high in our data set for the region. The amount invested, remains ‘relatively’ constant relative to 2018. While we continue to see ‘mega-deals’, tech investment in Southeast Asia appears to be more diversified in 2019. ‘

A new set of unicorns?

Although the majority of capital will likely continue to be associated with a few familiar names, we also observe a growing cohort of other late stage companies who are raising larger rounds, putting them above the $100M valuation. As these companies mature in the coming year, they may follow the fundraising trajectory of the current SE Asian unicorns.

Increasing early stage activities

Small deals (less than $500K) experienced a spike in the first half of 2019, after remaining fairly flat between 2016 – 2018. We note that the increase in the early stage activities is partly driven by deals invested by a number of new accelerators/ incubators such as Antler, SKALA and Accelerating Asia.

Investments to Vietnam increases in proportion

As compared to 2018 where Indonesia accounts for more than 70% of the capital invested in Southeast Asia, there seems to be greater geographical diversification in capital deployed. Investment into Vietnam is increasing, making up 17% of the capital invested in 2019 H1, a significant to 2018 where it only made 5% of total capital invested. Indonesia captured a smaller proportion of the total capital invested. Investments into Malaysia, Thailand and Philippines appear to be consistent to previous years

Logistics and healthcare attract more interest

We also continue to observe investment into a wider range of sectors. Fintech, Healthcare and Logistics startup investments demonstrate solid growth. While Fintech has attracted interest since 2017, Logistics and Healthcare are two key sectors that have attracted more interest in the first half of 2019.

Absence of landmark exits

While the number of liquidity event in the first half of 2019 is relatively high, the total proceeds remains low as we have not yet seen a landmark exit during the year. In 2017, the largest liquidity event was the listing of Sea Group in NYSE while in 2018, the region sees the merger of Grab and Uber Southeast Asia. The largest liquidity event in the first half of 2019 remains Go-jek’s $72M acquisition of Coins.ph in the Philippines.