Web3, software and health technology deals in SEA attract the likes of Temasek | Options | Jobi Cool

More than 80% of venture capital (VC) firms expect to increase their focus on healthcare technology, software as a service (SaaS) and Web3 in Southeast Asia, according to a new report.

“There is significant dry powder in the area; we are excited about some of the new sectors that we have put forward… The new sectors like web3, software and of course health technology continue to [draw] a lot of investor interest, which we are excited about,” said Fook Wai Hoong, Temasek’s managing director for Southeast Asia, at an event to launch the e-Conomy SEA 2022 report on Thursday 27 October.

The report was conducted by Google, Temasek and Bain & Company and covered six countries in Southeast Asia, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

While VCs expect an increase in health tech, software and Web3 activity from 2025-2030 compared to today, less than half expect an increase in edtech deal activity.

“Edtech certainly saw a boost in adoption during the pandemic, from young learners to adults coming to take disruptive courses. [But] The reopening of school economies is expected to normalize demand for online learning,” Fook said.

Source: e-Conomy SEA 2022

VCs continue to own the region, the report wrote, with $15 billion worth of dry powder in 2021. Even though this was a slight decrease from $16 billion in 2020, it is an increase from previous years.

“Mortgage investors are likely to reinvest in their own portfolio companies and weather through the funding winter,” it wrote, adding that “some investment firms are ‘buying the dip’ at lower valuations, with the aim of seeking better profitability opportunities from 2022 onwards.” /2023 cohort.”

The survey also found that most VCs (75%) expect valuations to continue to decline and most believe it will take several years for it to recover, with less than one in four believing valuations will rebound in 2021 maximum 2023-2024.

While overall business was relatively stable at around 1.2K from H1 2021 to H1 2022,

This year’s contract value has already exceeded last year’s by approx. 15%, mainly driven by larger average ticket sizes. However, the number of contracts has remained relatively stable at around 1,200 from H1 2021 to H1 2022.

“The recent increase in long-term US Treasury yields has made investments in high-growth technology companies less attractive from a financial perspective, leading to a gradual slowdown in the second half of 2022, similar to US VC trends,” the report said. said.

Source: e-Conomy SEA 2022

Investors are also beginning to show interest in early stage investments rather than late stages. Southeast Asia has been relatively insulated from major storms, with ticket sizes increasing by 40-60%, the report wrote.

Growth-stage investments reached an all-time high from H1 2021 to H1 2022. “Larger funds are active in the region and ready to follow up on past investments, particularly in sectors and companies that accelerated during the pandemic,” it said.

Conversely, late-stage investments are on the decline as E+ megaarounds have seen funding dry up amid global headwinds and a recent string of inflated late-stage valuations.

Source: e-Conomy SEA 2022

In fact, investors such as family offices are beginning to pay more attention to early-stage investments, Asian Investor was reported earlier in October. Some also bemoaned inflated valuations, especially late last year.

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