The year 2020 caused shockwaves in a lot of different industries. Many areas of the world saw a massive decline in investment because of the COVID-19 pandemic. However, Southeast Asia was not as impacted by this fall in funding. The region saw almost double the startup investments from venture capital (VC) funders despite the global health crisis. The companies who could bring digital change and advancement during this time of need rather than just optional progress saw widespread adoption and attracted more investors’ interest. 

Southeast Asia VC trends sparked this digital rise, and the region continues to draw attention from investors looking to get in on the ground floor of emerging tech startups. Some seed-stage investments in Southeast Asia are capturing the interest of industry stakeholders such as B Capital, Jungle Ventures, and Qualgro VC, and this new focus on early-stage startups is one of the most significant investment trends of 2021.

The Southeast Asian investment landscape according to STRIVE’s Nikhil Kapur

Surge in seed deals

The startup landscape in Southeast Asia has been growing for years, and even COVID-19 couldn’t hold back the tide. In the second quarter of 2020, the region’s fintech and eCommerce industries welcomed an influx of investors as the pandemic changed the face of the world. Fundraising deals in ASEAN rose exponentially, with many stemming from early in the year.

A Golden Gate Ventures study found that the region was on track to hit blockbuster status due to the increase in seed deals, leading to more Series A funding. Prior to receiving any big Series investments, a startup must be part of a seed deal or find angel investor funding to earn the appropriate capital to get the company off the ground. Without proper investment, startups won’t have the necessary stability or a serious game plan for profitability, meaning investors won’t take a second look.

Changing the investment landscape

The Japan-based venture capital firm Genesia Ventures has committed to investing in the Southeast Asian seed-stage pool. In December 2020, it announced that it was backing the fintech startup Finantier in conjunction with other big-name firms such as East Ventures, AC Ventures, and Two Culture Capital. The Singapore-based open finance startup in question is in beta stages and aims to give everyone easier access to their own financial information. 

Genesia Ventures also has seed-stage investments in ASEAN companies such as Bobobox, Vietcetera and Sinbad, and are likely to invest more into Southeast Asia. They stated that they will be focusing heavily on Vietnamese startups in particular for the upcoming year. 

Another big player in the changing investment landscape in Southeast Asia is Singapore’s Beamstart. The business community platform is launching a $10 million USD fund to help secure seed funding for a variety of different startups with a heavy target on digital solutions that can cross borders in China, Japan, and the United States.

Among the players driving the seed-stage funding trend in 2021 is Malaysia’s MUI, which also recently announced its focus on early-stage startup investments. They have also invested in Singapore’s Genesis Alternative Ventures to help provide entrepreneurs in the region with access to venture debt funding.

Meanwhile, US-based VC firm NEXT Billion Ventures (NBV) has formed a partnership with Singapore’s SeedPlus to boost their investments in the region. NBV already has a small portfolio in ASEAN with investments in Vietnamese proptech firm Propzy, Filipino firms Advance (fintech) and Sprout (HR), and the Indonesian fintech app GajiGesa.

Digital-based economy and healthcare set to dominate 

Indonesia’s digital-based economy industry is already of high value, but with seed investments and continued growth, it is likely to be worth upward of $130 billion USD by 2025. It will then be the largest in the ASEAN region. The eCommerce market should experience steady growth, partly due to the rising demand for online shopping in many areas of the world. Sub-sectors that could benefit the most from digital-based economy investments include telemedicine, online education, and electronic payment systems.

The healthcare sector could also see a boom as the importance of health is amplified thanks to the current pandemic. The expectations are that, by 2027, the healthcare industry will reach an estimated value of $30 billion USD, and with the tech advancements in the health space, it’s not surprising that the region will likely take the crown as the global medical hub. 

The present Southeast Asia VC trends are likely to provide the region with the same growth it has experienced year on year, even during a pandemic. With seed-stage investments in Southeast Asia being a large focus for many big-name investors, it’s no wonder that the investment trends of 2021 are already beginning to have an impact in the region.