Funding to SEA fintechs drop 44% in Q1 but early-stage fintechs fly high

Funding to crypto firms more than tripled compared to Q4 2023.

Southeast Asia’s fintech sector continues to see declining funding although early-stage investments saw a surge.

The sector secured funding worth $530m in Q1, 44% lower than the $939m raised in Q4 2023, and 13% lower than the $607m raised a year ago, according to data from Tracxn.

Both late-stage and seed-stage funding declined. Late-stage funding plunged 64% to just $270m in Q1, from $758m raised in Q4 2023. It is also 40% lower than a year ago. 

Seed-stage investments fell by 27% to $19.4m in Q1 compared to Q4 2023. This is also 59% lower than the $47.4m raised in Q1 2023.

In contrast, early-stage investments more than doubled to $240m in Q1. This is 114% higher than the $112m raised in Q1 2023, and 56% higher than the $154m raised through early-stage rounds in the last three months of 2023.

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In the past, the SEA fintech startup ecosystem witnessed funding of more than $1b in each quarter, starting from Q2 2021 to Q2 2022, Tracxn noted. However, investments began to decline after this period.

“This downward trend can be attributed to multiple factors including the slowing economic activity across industries, reduced consumer spending, and a shift in investor interest toward more sustainable and profitable businesses,” Tracxn said.

No new unicorns, lower funding
No fintechs became a unicorn (valuation over $1b) in the first three months of 2024.

In fact, only one funding round was higher than $100m in Q1– Singapore-based ANEXT Bank raised $148m from Ant Group, one of its parent companies. In comparison, there were four funding rounds in Q4 2023 that raised over $100m, and two such rounds in Q1 2023.

No fintech startups also went public in the first three months of 2024, similar to boht Q1 2023 and Q4 2023. 

However, the number of acquisitions rose to 10 in Q1, from 6 in Q4 2023 and 5 in Q1 2023.

Crypto, Banking Tech excel
Three segments emerged as funding favorites this quarter: banking tech, alternative lending, and cryptocurrency.

Companies in the banking tech space witnessed $180m in funding in Q1. This is higher than the $108m raised in Q4 2023, and $5.5m it garnered in Q1 2023.

The alternative lending segment clinched $126m in Q1. Whilst it got the second highest number of funding, this was 76% lower than the $531m funding raised in Q4 2023. It is also 58% lower than the $302m the sector raised in Q1 2023. 

Funding to the cryptocurrency sector more than tripled in Q1 compared to the last three months of 2024. Cryptocurrency fintechs raised $91.9m in Q1, 246% higher than the $26.3m in Q4 2023, and 138% higher than the $38.2m in Q1 2023.

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Singapore is investors’ favorite
FinTech companies based in Singapore accounted for 70% of the total funding in the region, raising $372m. 

Jakarta in Indonesia and Taguig in the Philippines also clinched investors’ interest.

Jakarta-based fintechs raised $103m; whilst those based in Taguig raised $32.1m. 

East Ventures, Y Combinator, and 500 Global are the all-time most active investors in the SEA FinTech space. 

Mirana, Bixin Ventures, and Draper Dragon were the most active seed-stage investors in Q1, while MassMutual Ventures, Nyca Partners and Illuminate Financial were the most active early-stage investors. MUFG Innovation Partners was the lead investor in terms of late-stage funding in Q1.