Southeast Asia (SEA) faces a challenging year in 2024, with tech funding plunging 59 percent year on year to $2.84 billion, according to Tracxn‘s latest report.

The startup data platform said in a statement on Wednesday that SEA tech marked by a significant contraction in funding in 2024, amid a weak global economy.

It noted the region’s tech ecosystem experienced a steep decline in financial inflows and major shifts in the market landscape while continuing to innovate and adapt to the challenges.

According to the report, SEA Tech startups raised $2.84 billion across 420 rounds in 2024 (year to date), a striking 59 percent decline from $7 billion in 2023 and an 80 percent fall compared with $14.2 billion in 2022.

Late-stage investments in the region were most impacted this year, plunging 76.9% to $948 million in 2024 from $4.1 billion in 2023.

Meanwhile, the region’s seed funding reached $373 million in 2024, reflecting a 52.4 percent decline compared to $783 million in 2023.

Its early-stage funding amounted to $1.5 billion, registering a 28.6% decrease from the previous year.

In the second half of 2024 to date, the Southeast Asia startup ecosystem has secured $1.1 billion across 133 deals, reflecting a 40.59 percent decline compared to $1.8 billion in the first half of 2024.

This also represents a substantial 57 percent drop from the $2.4 billion raised in the second half of 2023.

The fourth quarter of 2024 recorded the lowest funding levels in five years, with $494.8 million raised across 62 rounds, a 12.65 percent decrease from the third quarter of 2024 and a 62.9 percent drop from the fourth quarter of 2023.

Among SEA cities, Singapore led funding activity, accounting for nearly 67 percent of the region’s total funding, followed by Jakarta and Bangkok.

Tech startups based in Singapore raised $1.9 billion in 2024, while those headquartered in Jakarta and Bangkok raised $276 million and $261 million respectively.

“While 2024 has undeniably been a challenging year for Southeast Asia’s tech funding landscape, it has also highlighted the region’s resilience and unwavering commitment to innovation,

“Despite a sharp decline in investments, key sectors such as FinTech, CleanTech, and blockchain remain at the forefront, fueled by market evolution and robust government initiatives,” said Neha Singh, Co-Founder of Tracxn.

According to her, this year serves as a reminder that setbacks often pave the way for strategic adaptation, and she is confident that Southeast Asia’s tech ecosystem will emerge stronger, fostering growth and breakthrough technologies in the years to come.

Despite the overall funding decline, certain sectors in Southeast Asia’s tech ecosystem demonstrated resilience and continued to attract investor interest, according to the report.

FinTech led the funding charts with $1.4 billion raised in 2024, followed by High Tech at $966 million and Enterprise Applications at $764 million.

Additionally, emerging industries such as CleanTech and Blockchain showed significant promise, fueled by robust regulatory support and sustained interest from investors, signaling the potential for growth in the coming years.

While overall acquisitions slowed to 63 deals, down from 76 in 2023 (17 percent drop), notable transactions like PropertyGuru’s $1.1 billion acquisition by EQT and GHL’s $154 million acquisition by NTT reflected targeted consolidation efforts.

Only one unicorn, Polyhedra Network, emerged in 2024 similar to one in 2023.

The number of initial public offerings (IPOs), too, declined by over 50 percent, falling to 6 in 2024 from 13 in 2023.

“While 2024 witnessed a notable contraction in tech funding across Southeast Asia, the seeds of long-term growth are being sown,

“The demand for innovation in sustainability, digital transformation and strategic government initiatives along with investor confidence in high-potential sectors reaffirm that challenging times often serve as a catalyst for transformative progress, positioning the region for a dynamic 2025,” said Abhishek Goyal, Co-founder of Tracxn.

The report showed SEA remained a hub for innovation in 2024, with Indonesia and Vietnam ranking among the top five globally in crypto adoption.

Singapore also reported a significant increase in artificial intelligence (AI)-related patents, which have grown by 50 percent over the past five years, demonstrating the region’s commitment to cutting-edge technology.

The report also highlighted the strategic policies introduced by governments across the region aimed to mitigate economic challenges and support startup growth.

For instance, Singapore allocated SGD 440 million ($328.5 million) to its Startup SG Equity scheme to foster deep-tech innovation.

Malaysia also unveiled the KL20 Action Paper to establish itself as a global startup hub by 2030, backed by a $226 million National Fund of Funds.

Vietnam also launched a Digital Infrastructure Strategy targeting nationwide 5G network coverage by 2030.

Despite challenges, Tracxn opined that the SEA tech ecosystem demonstrated adaptability through continued investment, innovation, and government support.

It noted the focus for 2025 will center on high-growth sectors like FinTech, CleanTech, and blockchain, alongside leveraging policy frameworks and investor enthusiasm to navigate economic complexities.

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