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Venture Insight - SEA Ventures Dive Deep: Sustainable Investment and AI took lead amid funding mark

Welcome our esteemed readers to the latest edition of Venture Insight. Throughout this series, we aim to provide our readers a glance into the latest update of the Fundraising landscape and Investment activities in the Southeast Asia region. In this issue, we will explore how Climate Tech and AI are receiving momentum to become the top narratives among leading investors, amid a global fundraising drought, as well as investment sentiments and regional hightlight in the area during Q3/2023. Let's dive right in.



Key Takeaways


  1. Amid the overall drought of global fundraising market, the number of VC funds closed peaked at 177 funds, doubled the amount in Q3/2022

  2. Climate Change and Sustainable Investment is heating up, especially in SEA, luring more funding from traditional VCs into the sector

  3. In Vietnam, the big tech firms are rushing into developing AI, with ambitious goals for the market.



Fundraising insight - A global view 


The sentiment

From a broad perspective, the fundraising market has been in a drought since the beginning of 2023. On a global scale, funding in the market accounts for a combined amount of $250b, with Venture fund alone raising a total of $73b, down 45% from $132b in Q3 2022 (According to data from Venture Capital Journal)


Although Q3 has the lowest fundraising amount of $18b compared to over $30b in Q2, the number of VC funds closed, however, was the highest at 177 funds up from only 88 in Q2. Also, we can find Top VC funds closed from Q1-Q3 2023 at a range of value around $1b to $3.7b, including multinationals and big names like NEA, Bain, and NATO.


Venture Insight - Number of funds closed and the amount raised by Venture Capital funds - Q3/2023
Number of funds closed and the amount raised by Venture Capital funds - Q3/2023. Source: Source: Venture Capital Journal


Regional venture insight:


EU became the rising favorite destination for VC funds  

On a regional level, North America continued to dominate the funding market in terms of top destination choice for VC funds. However, we saw the EU is gaining a lot of momentum and even became the top gainer, with over 6% increase to 12% within the last quarter. 


Venture Insight - EU became the top gainer, with over 6% increase in fundraising amount. Source: VCJ
EU became the top gainer, with over 6% increase in fundraising amount. Source: Venture Capital Journal


Qiming Venture became the largest fund closed in Asia

For Asia, the largest fund closed within the quarter belongs to Qiming Venture at $900m, a leading China venture capital firm with offices in Shanghai, Beijing, Suzhou, Hong Kong, Seattle, Boston, and the San Francisco Bay Area. Their portfolio includes names like Xiaomi, Meituan, Bilibili, and Zhihu.



Venture Insight - Qiming Venture is the largest fund closed in Asia within Q3/2023
Qiming Venture is the largest fund closed in Asia within Q3/2023


The largest fund by fund size in the Asia market, however, is a more global and established name, the Sequoia Southeast Asia and India fund at up to $2.8b, managed by Peak XV Partners. 


Venture funding in SEA

Sustainable Investment gain attention among market trend in SEA  

Zooming into the Southeast Asia region, we can see there are a few notable investment activities. For top investors, Healthcare, Education, and Ecommerce are among the top sectors that receive the most interest. 


The narrative of Climate change is gaining a lot of momentum recently as COP 28, the world's largest conference on preventing climate impacts, has just taken place in November. Sustainable investment, once a niche whisper, now boasts a booming voice. According to Bain & Company, green investment in SEA reached $5.2 billion in 2022, a 7% drop from the previous year, but still represents a significant uptick from before the pandemic. This trend is further fueled by ambitious regional initiatives like the ASEAN Green Deal, aiming to mobilize $1 trillion in sustainable investments by 2030. 


Earth Venture Capital - a global venture firm that has a strong focus on Climate Tech solutions - was listed as one of the top 5 new investors that announced investments in the area. The media covered some deals from the firm recently, with a wide range of innovation aiming at reducing carbon emission and promoting sustainable development, from hyperspectral scope satellites to autonomous underwater robots.



Venture Insight - List of top 5 SEA investors that announced their investments during the last 12 months.
List of top 5 SEA investors that announced their investments during the last 12 months. Source: Tech in Asia

Singapore's Green Climate Ventures, whose portfolio boasts companies like Alchemy Renewable Energy, turning agricultural waste into clean fuel, for every $1 they invest, generating $4 in environmental and social impact. And it's not just local players; global giants like Temasek Holdings are actively deploying capital, with a staggering $3 billion dedicated to climate solutions in 2022 alone. 



Venture Insight - Temasek deployed $3 billion dedicated to climate solutions in 2022
Temasek deployed $3 billion dedicated to climate solutions in 2022

With COP28 still echoing in our minds, one thing's clear: while challenges remain, the seeds of a greener future are firmly planted in Southeast Asia's fertile venture soil. and the sentiment is proving that these roots are growing strong.


Fundraising activities


Venture Insight - Fintech continue to dominate the fundraising market as the most favorable vertical
Fintech continue to dominate the fundraising market as the most favorable vertical. Source: Tech in Asia

For fundraising activities, we still can see a domination of Fintech as the top vertical, which attracts a lot of investments from Venture Funds during this turbulent global finance scheme. With over $150m raised over the past month alone, the development of Fintech is expected to continue for quite some time as some top consulting firms (Fidelity and PwC) are expecting the economy to become more stabilized in the coming future, according to their latest 2024 outlook reports.


Regarding stages, there is a prominent number of Seed and Bridge-round fundings (159 rounds and 143 respectively), while the number of Strategic Investment, Series D-F, and M&A combined is only under 100. However, when considering the amount of capital raised, Strategic Investment and Late Stage account for the most at up to $1.5b for each stage. In the other stages from Seed - Series F, the amount ranges from $400m - to $1b


Venture Insight - Seed and Bridge-round is the most popular stage among funding round in the last 12 months
Seed and Bridge-round is the most popular stage among funding round in the last 12 months. Source: Tech in Asia

Vietnam on the pursuit of AI

The Vietnam market has recently become the rising hub for the Startup Ecosystem with an open and supportive policy from the government toward innovation, supercharged by the young workforce who are also mostly tech-savvy. Aside from Vinfast’s IPO event recently, Vingroup - the parent company of Vinfast is on another AI venture - VinBrain. 


Recently, the largest corporation in Vietnam announced that they are now developing a LLM called PhoGPT, aiming to kick off the development of AI for the Vietnamese. The collaboration secured PhoGPT a $150m investment. 


Venture Insight - VinAi develop a Vietnamese version of ChatGPT called PhoGPT based on open source LLM
VinAi develop a Vietnamese version of ChatGPT called PhoGPT based on open source LLM. Source: VTCNews

FPT, another Vietnamese tech giant, has recently come to an agreement on a strategic partnership with landing AI - the leading player in the world of AI, run by Andew Ng, on a journey for AI development. The partnership is promised to promote the application of AI into the current medical and education infrastructure. With the recent Comprehensive Strategic Partnership with the US, this AI venture is set to become one of the key move and bottleneck to explore further collaboration, utilizing Vietnam talented workforce and US’s technology innovations.



Venture Insight - FPT became a strategic partner of Landing AI
FPT became a strategic partner of Landing AI. Source: Tech in Asia

One of the country’s 4 unicorns - VNG who also owns the country’s largest messaging app - Zalo, which also acts as a payment platform for over 73 million active users is also turning head into AI development.


However, amid the collaboration, representatives from VNG said the development of AI is characterized by its capital-burning rate. Also, to achieve successful AI development for the Vietnamese, the market required a lot more experts and talents to join the field to secure its sustainable development in the long run.


 

If you find the information from this article useful, stay tuned with us for the next issue of Venture Insight. Follow Wiziin on social media to keep up-to-date with latest activities and startup funding knowledge.





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