Singapore = AI X Fintech

Investors wrote fewer and smaller checks in 2023, everywhere. Southeast Asia is no exception.?

Venture capital funding for regional startups halved to US$7.72 billion last year, over a year earlier. Fintech—always a top grabber of funds in Southeast Asia—raised US$2.2 billion in 2023, down 68% from the previous year. The number of fintech deals also went down by half.

However—and it’s a good however—it is often in times of crunch that new opportunity areas emerge.?

In Southeast Asia’s case, it was AI X Fintech in Singapore. The city-state saw a swift rise in funding for AI companies focusing on fintech despite the widespread investment slump, notes a new report by KPMG.?

Funding in the AI fintech space in Singapore reached over US$333 million in the second half of 2023, jumping 77% from US$148 million in the first half of the year. With 24 investment deals totaling US$481 million throughout the whole year, Singapore’s AI fintech firms stood out in the crowded financial services space.?

In contrast, global funding in the subsector witnessed a slowdown, dropping from US$28.1 billion in 2022 to US$12.1 billion in 2023. That’s because many companies strengthened their capabilities in AI through collaborations instead of direct investments, believes KPMG.?

What does AI X Fintech entail? Startups that are embracing large language models to develop unique AI applications for the fintech space, in areas such as wealth management, payments, and insurtech.

This year, investors are expected to keep watching closely the companies leveraging AI and AI-generated content as part of solutions to enable the financial services sector.

Zooming out, fintech companies in the Asia Pacific received US$10.8 billion in 882 deals across PE, VC, and M&A in 2023 compared to US$51.3 billion across 1,537 deals a year before, notes KPMG’s latest Pulse of Fintech report.

Of this US$10.8 billion, about 72% came out of VCs’ pockets. Notably, PEs invested more money in the fintech sector in 2023—US$1.97 billion—compared with US$1.8 billion in 2022.?

Lack of exits likely contributed to lower fintech funding in the Asia Pacific region, with IPO markets particularly quiet in both China and Hong Kong, notes the report. Without exit opportunities, VCs have been quite reluctant to write checks, particularly for later deal stages.

In 2024, things may get better though. Pulse of Fintech predicts that insurtech and wealth tech will keep growing on the radar of fintech investors. Moreover, China-based fintechs are working to expand globally, particularly in regions like Southeast Asia, which means more money flowing into the regional tech ecosystem.?

On that note, let’s dive into this week’s recap.?

Funding Dips, Healthtech Rises in SEA

The venture capital funding raised by Southeast Asian startups fell 53% to US$7.72 billion on the revaluation of assets in 2023, per a new report by DealStreet Asia and Rigel Capital. The number of equity deals was down 30% year-on-year.?

Fintech, Healthtech, and E-commerce remain the region's top three sectors in terms of deal value and deal volume.?

Of the three sectors, healthtech deal volume grew in 2023, driven by telemedicine and diagnostics. The sector saw 60 deals in 2023, compared to 50 a year earlier.? However, the total funding value dropped by 34% to US$582 million, thanks to smaller healthtech deal sizes, particularly among late-stage startups.

Singapore landed over 70% of the total regional healthtech funding.

At the same time, greentech startups emerged as a new hot sector with US$280 million in funding across 42 deals. Singapore dominated greentech funding with 97% of funds flowing into the city center.?

Overall, Singapore and? Indonesia received nearly 90% of equity funding. Not a big surprise there.

Last year also saw fundraising woes extend beyond late-stage companies. VC? investments in early-stage deals—funding rounds up to Series B—fell 29% y-o-y to 657 deals in 2023, while total capital raised dropped by 49% to US$3.41 billion.

Meanwhile, debt funding in 2023 stood at US$840 million compared to US$1.97 billion a year earlier.?

Buzzing Deals

• Singapore-headquartered maritime electrification technology startup Pyxis has bagged US$3.4 million in a seed funding round co-led by Motion Ventures and Shift4Good. Founded by Tommy Phun in 2022, the company aims to electrify the maritime industry and help it reduce its dependence on fossil fuels to cut down carbon emissions. Pyxis will use the new funds to accelerate its electrification tech development and expand the production of its electric harbor crafts. It has recently partnered with Japanese transport company Mitsui O.S.K Lines to produce and promote electric vessels in Singapore and Japan.?
• Singapore-based Web3 startup Startale Labs has landed a US$3.5 million series A follow-up check . The round, which took the company’s valuation to US$63.5 million, saw UVM Signum Blockchain Fund, Sony Network, and Samsung Next Ventures as backers. Founded in January 2023, Startale Labs specializes in Web3 infrastructure development. Headed by Sota Watanabe, the company creates core infrastructure and applications for Web3 that are integrated into the Astar Network blockchain. Watanabe is also the founder of Astar Foundation, a decentralized app hub focused on the Japanese market.
• Singapore-headquartered mobile crypto payment app Oobit has secured US$25 million in series A funding that will help it expand across Asia Pacific and Latin America, as well as to the United Arab Emirates. Solana Labs co-founder Anatoly Yakovenko and stablecoin issuer Tether Limited, as well as 468 Capital and CMCC Global’s Titan Fund, participated in the round. Oobit aims to streamline crypto payments and take its platform to mainstream users. The startup plans to allow payments to and from external e-wallets, be it crypto or non-crypto, to bridge Web3 and real-world spending, aside from letting its users purchase cryptocurrencies directly on its app.
• NFT gaming firm Pixelmon has raised US$8 million in seed funding from investors like Animoca Brands, Delphi Ventures, Amber Group, and Bing Ventures.? In October 2023, Pixelmon launched its first hypercasual game Kevin the Adventurer, which, as per the company, had 36,000 active players and saw over 10,000 hours of gameplay during its first month. The new investment will give a leg up to the ongoing development of its games. The company plans to launch another new hypercasual title called PixelPals in the first quarter of 2024.
• Indonesian edtech startup Pintar has bagged US$3 million in a pre-series A funding round, led by Havez Capital and supported by SIG Venture Capital. Previously known as HarukaEdu, Pintar stands out by focusing on workforce development, offering training, credentialing, and job placement services rather than the common K-12 educational content. Currently serving over 2 million users, it aims to empower the labor force and help workers escape the middle-income trap. Furthermore, it collaborates with Indonesia’s Ministry of Education and the Indonesian Chamber of Commerce and Industry to improve workforce skills across the country.
• Indonesian digital legal services provider Hukumonline received series B funding from the Media Development Investment Fund (MDIF) , though the investment amount remains undisclosed. MDIF, a New York-based nonprofit investment fund, is an existing backer of Hukumonline, which injected capital into the company’s series A investments in 2017 and 2020. The company has announced plans to utilize the funding to enhance its Regulatory Compliance System (RCS) and develop what it describes as Indonesia's first generative AI tool in the legal sector. This AI-driven RCS will help enterprise customers efficiently monitor and ensure legal compliance in real time.?

What Stood Out This Week

American software company Genesys plans to acquire Singaporean AI-driven SaaS startup Radarr Technologies . The deal is set to conclude in the first quarter of 2025. The purchase price remains confidential. Originally named Circus Social, Radarr was founded in 2013 and specializes in analyzing online conversations across social media and digital platforms to help companies make informed decisions. It has offices in Singapore, India, Indonesia, Malaysia, Japan, the US, and the Middle East. Meanwhile, Genesys uses AI-powered tech to connect customer movements across marketing, sales, and service channels, while improving employee experiences. With the acquisition, Genesys said Radarr’s tech will broaden its consumer engagement services.

The merger between Indonesia's Tokopedia and TikTok Shop has been finalized , marking TikTok Shop's comeback to the Indonesian market. This strategic deal, initially announced in November 2023, merges Tokopedia with TikTok Shop Indonesia under the Tokopedia brand, now jointly owned by TikTok and GoTo Group. With TikTok holding a controlling interest, GoTo Group will earn money from e-commerce service fees linked to Tokopedia's growth. The development comes as GoTo Group finally reports a positive EBITDA in Q4 2023 and hints at future financial strategies including potential share buybacks.?

Singapore-based fintech company Nium has received preliminary approvals for two key payment licenses in India from the Reserve Bank of India . These licenses pave the way for Nium to introduce new financial offerings, including prepaid cards and merchant acquiring solutions, enhancing its service portfolio beyond prepaid forex cards under the Nium Forex brand. The licenses will facilitate the distribution of prepaid cards for various uses and connect Nium to India's real-time payment services UPI, a big step toward the company's expansion in the Indian financial market.

And that’s the wrap for this edition of #ICYMI . We will continue to curate the weekly highlights of the Asian tech ecosystem in case you missed what made the buzz in the week that just went by. You can subscribe to #ICYMI to get it every Thursday to stay abreast of noteworthy tech developments.