South-east Asia’s healthtech startups face funding challenges
HEALTH is wealth. In South-east Asia, this phrase is catching on – at least if the amount of money people are putting into digital healthcare products is any indication.
Revenue from the region’s digital health market is expected to reach US$5.4 billion by the end of this year and US$8.4 billion by 2028, a Statista report stated.
This is keeping investors interested. Total funding secured by healthtech companies in 2023 has reached US$372.1 million in the year to date, according to Tech in Asia data.
That figure is higher than the amount raised for the whole of 2021 – when investor interest in the sector was at its peak due to the pandemic.
There is more here than meets the eye, however, as over 75 per cent of the funding this year came from two deals: Halodoc’s US$100 million Series D round and Temasek-backed SeaTown’s US$110 million investment in Foundation Healthcare.
If you exclude those, total funds raised by the sector would be 35 per cent lower than last year.
The number of funding deals fell 40 per cent from 2022 to the lowest level in four years. Even with two months left, 2023 will likely finish with the number of deals at a three-year low.
This situation is similar to 2021, when slightly over 80 per cent of total funding went to five companies.
The slowdown does not mean investors are calling it quits. The data shows a higher number of bridge rounds – making up nine out of 30 deals – among the funding rounds in 2023.
Nearly half the number of bridge rounds raised by healthtech companies since 2019 – 19 out of 43 – happened over the last two years.
An industry insider tells Tech in Asia that the rise in the number of bridge rounds comes from existing investors trying to buy more runway for their portfolio companies to build a sustainable business.
Still, the source said healthtech startups in the region are finding it difficult to raise money.
Antler has been the most active investor in South-east Asia’s healthtech space, with investments in 18 startups. Just behind are East Ventures and Seeds Capital. The latter is the venture arm of Enterprise Singapore.
While the region’s healthtech industry is still nascent – most of the startups are in the pre-Series A stage – two startups closed late-stage deals: Halodoc had a Series D fundraise, and Doctor Anywhere a Series C1 round.
Given that the sector is in the middle of a funding winter, even this small number of late-stage deals bodes well for healthtech. Many other sectors in the region haven’t reported even one such deal over the past year.
The lifting of Covid-19 movement restrictions was expected to lead to a decline in the popularity of telehealth services. This hasn’t turned out to be the case.
A large number of startups continue to offer telemedicine services, especially in Singapore, Indonesia and Vietnam.
Three telemedicine players – Doctor Anywhere, Halodoc and Good Doctor – have secured funding this year.
Doctor Anywhere has opened physical clinics to build trust with customers. The Singapore-based company grew its revenue by 62 per cent in 2022 to US$38.2 million. It expects to double this figure by the end of this year.
The company’s losses, however, more than doubled to US$33 million.
As for other verticals, diagnostic test providers and those offering healthcare IT services – such as software-as-a-service platforms that digitalise the operations of traditional hospitals and clinics – are gaining traction in the region.
Mental health startups are also gaining prominence, with four players in this sub-vertical – Intellect, ThoughtFull, SoftenMind and MindPeers – each raising a round of funding this year. TECH IN ASIA
