E-99: Asian Startups Await Spring
A very quiet quarter of investment in China led to the overall startup funding decline.
Spring hasn’t come yet for Asian startups. The regional entrepreneurs have just learned to survive in the prolonged winter.
As per a recent report by KPMG, venture capital investments in Asia fell from US$20.8 billion to US$17.4 billion between Q1’24 and Q2’24.
One thing stood out in the region though: E-commerce and consumer-focused companies attracted big fat checks. These sectors witnessed the two largest deals in Asia during Q2’24, including a US$1.9 billion raise by Singapore-based Lazada and a US$1 billion raise by India’s Flipkart. This indicates the increasing competition in the Asian retail e-commerce market and investors’ confidence in continued consumer spending.
Another interesting thing to note is not all Asian countries caught cold during the funding winter. VC investments rose in India, Singapore, and Japan, but Asia’s wild card China turned out to be a big drag. A very quiet quarter of investment in China led to the overall startup funding decline.
Chinese startup raised a total venture funding of US$7.4 billion in Q2’24, a piercing 42% decline from Q1’24, which saw US$12.8 billion invested, per Crunchbase data.
Still, new energy, semiconductors, and AI remained hot sectors in China during Q2’24, driven by a US$693 million raise by China-based EV maker Neta Auto and a US$599 million raise by CRRC Times Semiconductor, notes KPMG. Chinese AI companies also continued to charm investors in Q2’24, with generative AI company Zhipu AI raising US$400 million and AI and IoT platform company Terminus Technologies bagging US$278 million, among other deals.
Back in Southeast Asia, startups raised US$1.3 billion in venture capital in the second quarter of the year, compared to US$1.4 billion in the previous quarter, according to the data collated by DealRoom.
The noteworthy fact here is that the number of deals in the region remains high. 167 rounds of US$2 million plus have been raised by Southeast Asian startups in the first half of 2024, which is more than what they raised in the same period in 2019 or 2020.
Interestingly, while early-stage venture funding in Southeast Asia in Q2’24 remained consistent with the pre-2021 levels and growth stage deals declined big time, late-stage investments (those over US$250 million) grew quarter-on-quarter, according to a DealRoom report.
Meanwhile, VC investments in Japan surprisingly rose from US$842 million in Q1’24 to US$1.2 billion in Q2’24, despite worsening macroeconomic conditions. Deep tech companies including those in areas like space tech, nuclear fusion, biotech, and AI saw a strong investor interest.
Similarly in India, VC funding rose considerably between Q1’24 and Q2’24 — from US$2.9 billion to US$4 billion, partly due to its political stability. However, investors played safe by sticking to deals in traditional sectors like fintech, electric vehicles, and consumer technologies.
As per KPMG, in Q3 2024, AI and alternative energy vehicles in Asia are expected to remain attractive for venture capitalists. China may remain subdued, but there is hope as a number of Chinese companies prepare for IPOs expecting the market to revive in 2025.
India, on its part, is likely to continue seeing a pick-up in VC investments, while venture funding in Japan is predicted to remain solid. Japanese startups have, after all, begun expanding outside the country, better positioning themselves to attract investment from overseas.
On that note, let’s dive into this week’s recap.
Buzzing Deals
➤ The Philippines-based investment platform Invesko bagged US$1.6 million in seed funding from TNB Aura’s Scout Initiative, 500 Southeast Asia, Kaya Founders, and Foxmont Capital Partners. The startup, focused on Gen Z in Southeast Asia, lets them invest in stocks and ETFs (through a partnership with a broker-dealer) with just US$1 and earn rewards in cash and stocks. Founded in 2023, Invesko launched its app in May 2024 and claims to have roped in over 20,000 young investors. With new money in their kitty, they plan to expand to local stocks, US stocks, automated investment products, and a high-yield USD cash account, among other things. They will also grow their team to evolve into an all-in-one wealth tech app.
➤ South Korean Edtech artificial intelligence startup Catius Inc. netted an undisclosed pre-Series A round from Smilegate Investments, STIC Ventures, and Farquhar VC (FVC). Catius offers an interactive conversational AI toy Cati that can have continuous back-and-forth conversations with children, exploring fun and educational topics to help them learn the world around them. Catius is the second Korean startup to join FVC’s portfolio of high-growth companies, following F&B retail tech firm Sicpama.
➤ Indonesian fintech startup Finture bagged a US$30 million Series B round. Asia-focused VC firm MindWorks Capital led the funding, while XVC, SWC Global, Richen Pioneer, and Antao Capital joined in. Finture runs YUP, a consumer finance tool that allows consumers to use card payments to get pay-later services from its financial institution partners. The startup, founded in 2021, will use the funding to expand into new markets like Hong Kong, Vietnam, and the Philippines over the coming years.
➤ Malaysia-based B2B software startup ByteGami raised US$110,000 in a pre-seed funding round from Antler. ByteGami helps developers build gamified features into their apps from scratch and scale these features. The platform offers developer-friendly software development kits (SDKs) and documentation, user behavior analysis and insights, and A/B testing for gamification strategies. The company will use the capital to develop its product and nurture a developer community around gamification.
➤ Hong Kong-based startup Return Helper secured an additional US$1.8 million in the pre-Series A round, bringing its total pre-Series A funding to US$3.3 million. Hirac Fund, a seed fund operated by Japanese VC firm Money Forward Venture Partners led the round. Return Helper offers cross-border e-commerce return services for online retailers, which is an expensive process for e-commerce brands. Following the funding, the startup plans to make that process more efficient by integrating AI into its solutions, which will help online retailers cut return costs further.
➤ Hong Kong-based Animoca Brands’ GAMEE received an undisclosed investment from Pantera Capital. GAMEE is the mobile gaming platform behind the viral game WatBird. The firm will use the funds to expand its presence on The Open Network (TON), a decentralized and open internet, based on a technology designed by Telegram. GAMEE will amplify its presence in the TON ecosystem by integrating TON-based digital assets, including tokens and NFTs, into GAMEE’s gaming experiences on Telegram.
➤ Malaysian startup SurplusLoop landed a US$ $110,000 pre-seed check from Antler. SurplusLoop manages surplus assets for asset-heavy enterprises in manufacturing, hospitality, and construction. The fragmented market makes the existing process of buying and selling unused assets time-consuming and complex. SurplusLoop aims to connect buyers and sellers on its platform and provide accurate pricing for machinery and equipment using predictive analytics. With the fresh money, the company will build the initial version of the Minimum Viable Product and test and validate the solution with current pilot partners.
What Stood Out This Week
➤ Amazon Web Services (AWS), the cloud service arm of Amazon.com, will invest US$6.2 billion in Malaysia through 2038, alongside the launch of the AWS Asia Pacific (Malaysia) Region. This move is set to give local developers, startups, and big businesses more options for running their tech. This is pegged to be the largest investment by an international tech company in the country. AWS’ investment is expected to pump about US$12.1 billion into Malaysia's GDP over the next 15 years and create around 3,500 full-time jobs annually, giving a big boost to Malaysia's digital innovation capabilities.
➤ Indian food delivery giant Zomato is acquiring fintech giant Paytm's entertainment ticketing business for US$244.1 million. This is huge news for India's tech scene, which expands Zomato’s "going out" options. Building onto their dining-out offering, this deal gives them Paytm's ticketing services for movies, sports, and events. It's a smart move for Zomato—the entertainment ticketing market is a two-horse race with Reliance-backed BookMyShow controlling three-fourths of online movie ticketing and over half of online event ticketing. Plus, with Zomato's stock soaring this year and their quick commerce business booming, they've got the cash to make big moves like this.
➤ Singapore's Vizzio Technologies has joined forces with Taiwanese giant Foxconn subsidiaries—electrical equipment firm Foxconn Industrial Internet and AI company INGRASYS—to revolutionize smart manufacturing using digital twins. This partnership aims to create immersive 3D representations of World Economic Forum Lighthouse Factories, leveraging advanced satellite imaging and AI. Digital twins, virtual replicas of physical environments, enable real-time analytics and integration of AI and IoT, enhancing precision and sustainability in manufacturing. This collaboration sets a new benchmark for digital innovation in Industry 4.0.
➤ Chinese ride-hailing giant Didi Global reported a record high order volume and transaction value in the second quarter of 2024. Orders in both China and overseas markets rose 17.4% to nearly 3.9 billion, while gross transaction value reached US$13.5 billion, up 14.7% from a year earlier. Meanwhile, the company reported a profit of 1.4 billion yuan for the June quarter, compared with a loss of 267 million yuan in the same period in 2023. Revenue grew 4.1% to 50.9 billion yuan in the same period.
➤ Vietnamese healthcare solutions provider TrueDoc has merged with AiHealth, a local teleconsult platform. This merger aims to enhance TrueDoc's services and customer experience by integrating AiHealth's technology and expertise. Following the deal, TrueDoc secured pre-seed funding from TNB Aura Scout which they will utilize to optimize their platform and expand their services.
And that’s the wrap for this edition of #ICYMI. Every week, we recap the latest developments in the Southeast Asian startup ecosystem, along with a commentary on what catches our eye.