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Funding from VC investors in technology companies has decreased by about 79% between 2022 and 2024, from about $ 10.1 billion to approximately $ 2.2 billion, according to Data Intelligence Platform Tracxn.
KouMaru | Istock | Ghetto images
Risk capitalists usually have a strong appetite for risk, but some investors in Southeast Asia are becoming more and more precautions.
“I think, CNBCS
He added that some VC investors in the region now choose “safe bets” that demonstrate profitability rather than typical high -growing technological starters.
“I see a lot of investment these days-which bothers me a little-(in) what I (I think) are not supportive companies because … they are really offline by nature,” he said.
Risk capital or private capital?
This change has become more apparent in the last two years, as some risk capital investors have focused their focus from the more risky start-ups in later stages of companies that are more adequate, according to Insiders.
Risk funds are currently becoming PE funds.
Aaron so
Co -founder and CEO, Caro
“Risk funds are currently turning into PE funds,” Tang said to Caro. Instead of striving for a 100 -fold return, which is traditional for venture capital companies, some VK investors go for 3x or 4x returns, which is more typical of private capital, he added.
“You see a lot more investment than the traditional VC funds in what I call a brick and mortar business,” Jeremy Tan, co -founder and partner at Tin Men Capital, told CNBC.
“At best, they are a technology business, right? I want to say that you have an application, you have an interface for loyalty, but beyond that (you still) still set up, in essence, physical stores … And can they deliver the same return profile?
From logistics companies, restaurant chains, convenience stores and even farms, some VK investors have allocated more than their capital to traditional sectors and businesses, but without the war or the type of operational participation characteristic of private shares companies.
In Southeast Asia, risk -based investment has been raised since 2022. Financing by VK investors in technology companies has declined by about 79% between 2022 and 2024, from about $ 10.1 billion to approximately $ 2.2 billion, according to the TRACXN data intelligence platform.
Meanwhile, the funding of VK investors in offline, non-technological sectors also fell-macar and less with 61% over the same period, from about $ 1.3 billion to about $ 527.7 million, according to TRACXN.
Southeast Asian startup struggles
All this comes against the background of the ecosystem that goes through the wingS
Internal industries say that many start -ups in the region remain unprofitable. At the same time, a lot of money in Southeast Asia has raised too much money and did not bring the right return to their investors, also known as limited partners.
“Many of the VC has raised too much money, right? So you get there places to deploy and I think they are just trying to understand how to make a return for their investor, for LPS,” said Tin Men Capital Tan.
On top of that, “the macro economy is very weak, be it in Indonesia, be it in Thailand, be it even in Singapore … (s) there is a clear lack of exits in this part of the world,” said Caro’s tan.
Outputs – which offer investors a way to withdraw their money and profits from their investments – have been scarce in the region. More special, many of the listed companies in Southeast Asia have provided only “uncomfortable” exits to investors at the best, Karo Tang said.
“There really is just not that good (technological) deals to make in this part of the world,” Tang said to Caro. Many start -up companies remain overestimated and there has not yet been a correction of the assessment, he added.
“(Many) funds here have attached their hopes to IPO,” said Tin Men Capital Tan. However, recent market turbulence has led to many start -ups delay their public listsS
The startups serving Southeast Asia also face unique challenges, as the economy is a set of different countries with different languages, cultures, regulatory environment and more. “So, the likelihood of building large companies (in the region) is much larger than the US,” said Tin Men Capital Tan.
“So, as a result, investors ask, ‘Where is the money?’
The way forward
In the meantime, some investors say that businesses that work both offline and online or atoms and bits are accordingly positioned to compete.
“We believe that companies in Southeast Asia, which have real digging (sustainable competitive advantages) are atoms,” says Inglan Tan, based on an InSignia Ventures Partners managing partner.
“If you are a clean bite business, I think there is not so much moat against major software companies like Microsoft and Facebook, but if you have … Logistics, local licenses, you have local offline rovins, you are generally more resistant to external competition,” Tan told Insignia.
In other words, businesses that have both online and offline assets can be more resistant than companies that rely on only one.
One way to do this is to find what can be seen as a traditional business, but (injection) in it, make it more efficient, increase margins, optimize revenue, open new products and have online, offline experience, “Tan told Insignia.
“I claim that the era of just finding and passive investment is not. You have to create a joint creation.”