According to a report released on Tuesday by Momentum Works and Cento Ventures, Southeast Asian tech startups raised $10.4 billion in 2022, making it the third-strongest year on record and comparable to pre-pandemic investment levels.
The total amount raised decreased from $14.5 billion in 2021, according to the report “Southeast Asia tech investment 2022”.
In 2022, the second-strongest year on record, the region saw 929 deals. However, the number of deals fell from 991 in 2021.
“Southeast Asia did not see an abnormal deficit of digital investment capital until the very end of 2022 despite the souring capital market’s mood,” the report said.
According to the report, the region’s tech scene responded to changes in the world more slowly than Latin America and India.
“Southeast Asia remained much closer to its 2017-2020 capital intake baseline than the peer regions, likely softening the inevitable early 2023 correction,” it said.
Additionally, the region experienced a swift shift in the make-up of active investors halfway through the year, which led to a reallocation of capital across stages and regions and significantly altered the valuation environment.
The report claims that the international late-stage investors driving the Series C+ and mega deals categories were pulling back, refocusing their attention on investment stages as early as Series B, and then almost abandoning the market altogether.
Late-stage deals continued to attract regional and North Asian investors, which reduced mega-deal activity to 2016 levels and Series C+ activity to late 2019 levels.
Although capital invested in the second half of 2022 decreased by 48 percent compared to the first half of 2022, a drop off typical for 4 out of 5 preceding years, funds managed by Southeast Asian investors have accumulated enough dry powder to keep Series A-C going at a normal volume, with a slowdown only apparent in the very last weeks of 2022.
It should be noted that the valuation environment dramatically changed throughout the year, with Series B valuations being the most unstable.
While Series B valuations in Vietnam have steadily declined throughout the year from the exceptional heights of 2021, Indonesia’s Series B valuations surged during global players’ retreat into earlier stages before falling back to late 2021 levels toward the end of the year.
The Philippines’ investment volume surpassed Vietnam’s in early 2022, the report claims, as the narratives of Vietnam’s “Next China” and the Philippines’ “Next Indonesia” were being tested against one another as Series B valuations in Indonesia reached their peak and the search for the next regional growth story began.
As the year progressed, investment volumes decreased in both markets, with Vietnam narrowly leading for the second half of 2022.
