Vietnamese start-up companies secured cumulative funding of US$413 million in the second quarter of this year, according to DealStreetAsia.

Data compiled by DealStreetAsia’s Data Vantage show that start-up fundraising across Asia’s key markets, including Southeast Asia, India, and China, experienced a decline in Q2 in comparison to the same period last year.

The most significant decline in funding, 58.6 percent, was witnessed in Southeast Asia. 

Start-ups based in this region garnered $2.13 billion during the second quarter, as opposed to the $5.13 billion achieved in the corresponding quarter of 2022.

Start-ups from Vietnam amassed a combined sum of $413 million in funding, with only Singaporean companies surpassing this figure by raising $1.24 billion during the three-month period.

Indonesian start-up fundraising lagged behind that of Vietnam, accumulating total equity funding of $327 million.

Gary P. Khoeng, a partner at Vertex Ventures Southeast Asia & India, who also oversees the Indonesian market, said that deal volumes are expected to trend down due to macroeconomic challenges and cautious investor behavior, which have been prevalent since 2022.

“In general, we are cautiously optimistic for the end of 2023 and 2024 because it appears that overall, macro has somewhat improved when compared to last year, although there could still be black swan events that may happen,” he told DealStreetAsia.

An additional concerning pattern emerging from South Asia is the seed-stage funding, which had exhibited a certain level of stability during the funding downturn, but is now beginning to be affected. 

In the second quarter, a mere 52 start-ups in Southeast Asia managed to secure seed funding, reflecting a sequential drop of 29.7 percent and a year-on-year decrease of 45 percent.

This trend “raises concerns as seed funding plays a crucial role in helping start-ups get off the ground, covering essential expenses like product development, key personnel recruitment, marketing, and early-stage operations,” the Data Vantage report said.

At the current run rate, achieving a higher level of capital for the entirety of 2023 than what was raised in 2022 is proving to be exceedingly challenging for start-ups in Southeast Asia.

Start-up fundraising in the region in the first half of 2023 reached only 44 percent of the levels recorded for the same period last year.

Southeast Asian start-ups amassed $4.2 billion in total proceeds in the first half, down 56 percent year on year and less than fundraising in the first quarter of 2022.

This suggests Southeast Asian start-ups will find it hard to make up for the shortfall in the second half of 2023. 

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