E-90: Can Tech M&As In Southeast Asia Rebound In 2024?

2023 wasn’t a shiny year for tech mergers and acquisitions (M&As) in Southeast Asia, especially after the high of 2022. 

With businesses forced to put their expansion plans on hold due to the global financial crunch, the tech M&A deals in the region fell to 114 in 2023 from 174 in 2022, per a new report by DealStreet Asia. 

Southeast Asia’s largest economy Indonesia saw tech M&As decline 51% to 23 in 2023. Meanwhile, Singapore, which receives a major share of investors' attention and money, witnessed 54 tech M&As, a 33% contraction over a year ago. 

Singapore and Indonesia accounted for approximately 70% of the region's tech M&A deals in 2023. American firms led the acquisition trend, completing 18 deals in the region last year, up from 16 in 2022. In contrast, Singaporean companies saw a sharp decline in foreign acquisitions. While they finalized 32 overseas M&A deals in 2022, this number dropped dramatically to just five in 2023.

This year hasn’t turned out all that well, so far, for tech M&As. In the first five months of this year, there were 40 deals in the region, of which Singapore contributed 21 and Indonesia 5. 

However, experts believe there remain several drivers that may help revive tech M&As in Southeast Asia this year—the need for digital transformation to stay competitive, a growing focus on renewables and green tech due to climate change concerns, local market consolidation, regional conglomerates reinventing themselves by expanding into new economy sectors, government initiatives supporting economic growth and critical industries, and strong financial investor appetite with a significant dry powder to deploy. 

Speaking of investor appetite, private equity activity in Southeast Asia showed good momentum in the first quarter of 2024, E&Y noted in a recent report. In Q1 2024, there were 17 deals deploying US$586 million in the region, compared with 9 deals deploying US$447 million in Q1 2023. 

A significant increase in the number of deals and deal value bodes well for the region. After all, PEs are major players in the M&A market, often driving deal activity and shaping trends.

Parallelly, tech companies across Asia have begun eying expansion, as investor confidence rebounds from previous lows. 

For instance, Chinese insurance technology platform Huize just acquired Global Care, a Vietnamese insurtech firm specializing in digital transformation solutions for the insurance industry for an undisclosed sum. The deal will allow Huize to venture into the Southeast Asia market. 

Similarly, last week, the parent company of Indonesian e-commerce player Blibli.com, Global Digital Niaga (BELI) acquired home decor startup Dekoruma to strengthen Blibli’s operations for approximately US$70.6 million. 

Perhaps, the second half of 2024 will see the tech M&A game flip in the region, as businesses prep up for the next wave of growth in the age of AI. 

On that note, let’s dive into this week’s recap.

Buzzing Deals

➤ Malaysian interior design marketplace Homa2u received US$625,000 in pre-Series A money from Asia Fund X, an early-stage VC fund backed by MSW Ventures and Pavilion Capital. This brings up Homa2u’s total pre-series A funding to US$1.5 million. Homa2u sells new or unused building materials and interior finishes, focusing on sustainability in the renovation sector. So far, the seven-year-old firm has repurposed US$4.2 million worth of excess inventories in over 8,000 homes. Homa2u, which has just begun operations in Singapore, will use fresh money to drive its carbon-reducing goals and expansion plans.

➤ Singapore-based used-car marketplace Carro secured a US$55.5 million multi-currency loan from HSBC’s ASEAN Growth Fund for Genie Financial Services, its fintech arm. Genie Financial Services offers financing for used-car buyers in Singapore, Malaysia, Indonesia, and Thailand. IPO-bound Carro, present in seven markets having recently entered Hong Kong and Japan, plans to strengthen its footing in new markets through M&A activities.

➤ South Korean fintech startup Travel Wallet bagged US$10 million in a new funding round led by Lightspeed. The firm lets users exchange funds and make payments in 46 different currencies with a prepaid card. It plans to use the new money for international expansion. To that end, the US$2 billion-plus company has set up local subsidiaries in the US and Japan. Interestingly, it is the first South Korean investment for Lightspeed, which has a bigger travel platform YouTrip as a portfolio. 

➤ Insuretech firm ZA Tech raised a US$35 million Series A round from EQT and Alpha JWC Ventures,  following which it rebranded as Peak3. Founded in 2018, the insurtech firm acts as an end-to-end tech partner for the insurance industry, involved in everything, from crafting new insurance products to processing claims. With new funds in the kitty, Peak3 will invest further in its data and AI capabilities as well as expand in Europe, the Middle East, and Africa.

➤ Malaysian earned-wage access services provider Paywatch raised US$30 million in series A led by Third Prime and a consortium of US investors including Vanderbilt University and the University of Illinois Foundation. The startup offers on-demand pay with 0% interest, which lets workers access a part of their accumulated salary in real-time. This helps decrease employees’ dependence on loans and boosts employee retention. Paywatch plans to use the funds to develop its product further.

➤ Singapore and Seattle-based online safety startup k-ID raised US$45 million in a Series A round from Andreessen Horowitz and Lightspeed Venture Partners. Konvoy, TIRTA, Okta, and Z Venture Capital chipped in. k-ID is building tools for online youth safety that can help game developers comply with age-related regulations. It also helps parents customize what children can and cannot interact with online, both on the internet and in participating networks like online gaming.

➤ Chinese new energy automobiles and autonomous driving firm Leekr Technology bagged a US$137.8 million Series C  round from Chery Holding, CyberNautea, Hangzhou Fuchunwan New City Development Fund, Hefei Baohe Innovation Investment Fund, Hefei Construction Investment Capital, Huaying Investment, and Sealand Innovation. The company plans to use new funds to increase its technology’s production capacity while enhancing supply chain efficiency and accelerating its global market expansion.

➤ South Korean imaging radar technology company Bitsensing landed a US$24.5 million Series B check from investors like the Korea Development Bank, HL Mando Corporation, Industrial Bank of Korea, Aju Capital, Life Asset Management, and SCL Investment. Bitsensing’s high-resolution 4D imaging radar solution provides more than 300 meters of range coverage for the automotive industry.  The company will utilize the fresh funds to scale operations, invest in research and development, explore new market opportunities, expand the team, enhance its radar solutions, and establish strategic partnerships.

What's Hot In AI Land

Quite a few developments made waves this past week in the AI landscape, mostly driven by American and Chinese companies. 

➤ TikTok-owner ByteDance is working with U.S. chip designer Broadcom to develop an advanced AI processor. Known as an application-specific integrated chip (ASIC), the 5-nanometre chip complies with U.S. export restrictions and will be manufactured by Taiwan's TSMC. The development comes amid the ongoing US-China trade tensions which led Washington to exert export controls on cutting-edge semiconductors in 2022. ByteDance’s partnership with Broadcom began sometime in 2022 to reduce procurement costs and ensure a stable chip supply.

➤ Parallelly, TikTok has launched generative AI tools that will help creators expand their reach globally by allowing them to make digital avatars and dub their videos in different languages. These new features are part of TikTok Symphony, the short-video app’s suite of ad solutions. 

➤ SoftBank founder Masayoshi Son said he is all set to make his next big moves in the AI landscape. In the US, the company aims to boost its renewable energy ventures to power its AI initiatives. As per a report by Bloomberg, SoftBank’s Vision Fund is steadily selling off and writing down assets in its portfolio, now that Son’s focus has shifted to AI and semiconductors. Meanwhile, SoftBank is also in talks to acquire British semiconductor startup Graphcore Ltd. As such, Son has reportedly been seeking as much as US$100 billion to fund a chip venture that will supply semiconductors essential for AI, competing with Nvidia.

➤ ChatGPT-maker OpenAI has acquired Rockset, an enterprise analytics startup. The two companies didn’t share the terms of the acquisition. Rockset, which has raised US$105 million in funding to date, empowers companies to transform their data into actionable intelligence. It will help OpenAI solve the hard database problems that AI apps face at a massive scale, by powering its retrieval infrastructure. 

 ➤ Ilya Sutskever, one of the co-founders of OpenAI, has launched a new AI firm called Safe Superintelligence with Daniel Gross, Apple’s former AI head, and Daniel Levy, an ex-OpenAI researcher. The new venture aims to build superintelligence that prioritizes AI safety over rapid advancement. This comes shortly after reports that OpenAI CEO Sam Altman may be considering shifting his company to a solely for-profit model, a move potentially opposed by Ilya Sutskever, who led the OpenAI board vote to remove Altman last year.

And that’s the wrap for this edition of #ICYMI, our weekly curated highlights from the Asian tech ecosystem. Subscribe to receive it every Thursday and stay updated on the noteworthy tech developments you might have missed during the week. Like this newsletter? Share it with your friends and colleagues here.