Over the last year, Southeast Asia has emerged as one of the leading fintech markets globally, according to a recent report that says total fintech investment in the region rose over three times in the first three quarters of 2021.
The report from UOB, PwC Singapore, and the Singapore Fintech Association (SFA) says investors pumped more than $3.5 billion into fintechs during the 9-month period ending in September 2021 – more than all of 2020’s injections combined. Investor interest has mostly gone to late-stage fintech firms, which have received ten out of 13 mega-rounds (>$100 million) so far this year.
According to the report, funding in more mature firms signals a more cautious and risk-averse approach by investors, who expect these firms to emerge stronger post-pandemic.
Singapore, Southeast Asia’s financial capital, accounted for over half ($1.6 billion) of the region’s transactions, with six mega-rounds totaling $972 million. Indonesia comes in at second with $904 million raised, followed by Vietnam with $375 million.
“Looking beyond this strong rebound, the opportunity to forge strong win-win-win partnerships between incumbent banks, fintech firms and ecosystem platform players and expanding across the region will remain instrumental in propelling the sustainable growth of ASEAN’s fintech firms,” said Janet Young, head of group channels and digitalisation, UOB.
Within the larger tech ecosystem, global investors poured $11.5 billion into Southeast Asia’s tech firms during the first six months of this year, according to a report by Google, Singapore’s state investor Temasek, and management consultancy Bain & Company.
In the first six months of 2021, deal-making rose by 65% to $11.5 billion. This has resulted in the formation of 11 new consumer tech unicorns during the period, including Singapore-based online car marketplace Carro and Philippines’ only unicorn Mynt.
Despite late-stage fintechs attracting more investors, the general picture of tech deals in the region looks positive for all types of firms. According to Google, seed and Series A-B-C rounds hit an all-time high in H1 2021, foreshadowing good long-term prospects for the SEA market.
“E-commerce and digital financial services continue to attract the lion’s share of investment dollars in SEA. These two sectors are well-poised to continue generating investment opportunities, given innovative new business models and infrastructure enablers,” the report noted.