SOUTH-EAST Asia saw a record number of technology-related investments into startups as well as increasing geography and sector diversification in such deals during the first half of 2019, according to a report by venture capital (VC) firm Cento Ventures.
Some US$5.99 billion in capital was pumped into the region's tech firms during January to June, about 28 per cent lower than the US$8.31 billion invested in H1 2018, but nearly two-thirds more than the US$3.6 billion invested in H2 2018.
However, the full-year investment amount for 2019 is expected to match the level in 2018, as the region's largest tech startups such as Grab, Gojek, Traveloka and Tokopedia continue to attract sizeable funding rounds, Cento Ventures said.
Besides, a burgeoning cohort of newcomers valued above US$100 million is set to attract significant capital, the firm added.
Although the majority of capital will likely continue to flow into a few familiar names, there is also a growing crop of other late-stage companies raising larger rounds, valuing them above US$100 million. These include regional firms Ninja Van and Fave, Singapore's Taiger and Carousell, and Indonesia's RupiahPlus.
As a result, a new set of unicorns - startups valued at over US$1 billion - may emerge soon, as these late-stage firms mature in the coming year and possibly follow the fundraising trajectory of the current South-east Asia unicorns, said Cento Ventures.
There were 332 tech deals done in the first half this year, almost double the 177 a year ago, driven by early-stage investments and marking an all-time high for the region.
Small deals - below US$500,000 - saw a spike in the first half, after staying largely flat in 2016-2018. This surge in early-stage activity was partly boosted by deals done by new accelerators and incubators, such as Antler, SKALA and Accelerating Asia.
"While we continue to see 'mega deals', tech investment in South-east Asia also appears more diversified this year," Cento Ventures said.
Geographically, there was greater diversification in capital deployed, particularly into Vietnam, although Indonesia and Singapore continued to capture the bulk of the activity.
Investments into Vietnam made up 17 per cent of the region's total inflows in the first half, a jump from 5 per cent in 2018. This comes as the country produces more late-stage firms such as Tiki, VNPay and Vntrip.
Meanwhile, Indonesia lost a large share of capital invested due to the absence of mega deals. It captured 48 per cent of the total amount invested in H1 2019, down from 77 per cent in the whole of last year.
Singapore accounted for 25 per cent of the capital invested in H1 2019, up from 13 per cent in 2018. Amounts going into Malaysia, Thailand and the Philippines were consistent with previous years.
A wider range of sectors also attracted interest in January to June. Investments into fintech, healthcare and logistics startups saw solid growth. While fintech has been popular since 2017, the logistics and healthcare sectors have emerged as some of the most funded sectors.
Separately, fintech investments in Singapore were found to have nearly quadrupled from a year ago to US$453 million in H1 2019, based on Accenture's analysis of data from CB Insights on Thursday.