As a consequence of COVID-19, the SEA Region is still experiencing enormous humanitarian and economic repercussions. The rapid digitalization that’s enabling improved connectivity between society and enterprises is helping communities recoup from the effects of the global pandemic. There are many sectors where SEA is trying to recover, and many new startups are emerging with creative solutions to address the gap. These startups not only improve people’s social lives, but also encompass technological advancement being adopted across the globe. These emerging sectors are a mix of core domains like healthcare, education, enterprise software, biotech, life sciences, etc. In these emerging sectors, most of the startups are utilising technological advancements to create new business models.
In this article, we’ll shed light on the Foodtech, Fintech, Healthtech, and Edtech industries, since they are gaining huge traction in the current market. These four areas are playing a significant part in the progress made in the SEA region. Thus, we’ll look into the problems that startups are addressing in the listed domains, as well as provide a glimpse of the market trends in these segments.
FoodTech: The Future of Food
Problems identified in the food Industry
The food security situation in Southeast Asia has become more precarious as a result of COVID-19. A decrease in the movement has created several obstacles that made it difficult to get meals in some areas. In addition, owing to limitations placed on people’s ability to move, the agricultural sector, which makes up a significant portion of the labour force in the majority of Southeast Asian nations, has been experiencing a scarcity of workers. Food technology is a relatively new area of investment in global markets, but it is one that has the potential to have a significant influence on food security in the context of both population expansion and climate change.
Market trends in foodtech
Since 2019, investment in Southeast Asian alternative protein businesses has increased. According to GPCA statistics, private capital investment in the Foodtech industry increased from $20 million in 2019 to $148 million in 2020.
The bulk of Southeast Asian Foodtech businesses backed by private capital in the last 18 months are located in Singapore, therefore placing the city-state as the powerhouse of Asian Foodtech. Since 2019, plant-based meat and dairy replacements have garnered 75 percent of the total money invested in the foodtech industry.
FinTech: Where Innovation Meets Finance
Problems identified in the banking industry
Southeast Asia is a big area with a large, urbanising, and technologically sophisticated population. However, the majority of the population lacks bank accounts. Even with COVID-19 quickening the digital transition — more than 50 million users came online in 2020 alone. The World Bank estimates that over 290 million people in the area have little or no access to the conventional banking system. This unmet demand presents an opportunity for digital financial services to fill the void.
Super apps like Grab and Gojek have acquired popularity in Southeast Asia by offering a greater range of financial services offerings, including payments, financing, consumer banking, and insurance. However, the area is also seeing a boom in the number of specialised fintech companies aiming to extend their market share while increasing financial inclusion.
Market trends in fintech
Fintech has emerged as one of the most rapidly expanding IT sectors in Southeast Asia, drawing USD 1.6 billion across 75 transactions in the first half and making 2021 a record-setting year.
While payments and digital lending categories continue to dominate, receiving more than 70 percent of the capital invested over the previous two years. New areas of fintech innovation such as wealthtech and insurtech are expanding rapidly.
HealthTech: Delivering Direct Access to Healthcare
New Solutions to Enhance Health Care.
Investors of private money in Southeast Asia are stepping up their investments in digital solutions and technologies for the healthcare business. These investments range from applications that enable patients to speak with their physicians remotely to AI-driven patient care. By enhancing clinical procedures and facilitating better patient outcomes, improvements in health technology are also making it possible for medical professionals to give treatment that is both more expedient and more successful.
Market trends in healthtech
In recent years, investments in healthtech businesses in Southeast Asia have increased dramatically. In the first half of 2021, ten firms got a total of USD 147 million, headed by HaloDoc’s USD 80 million Series C funding. Deals announced for the second half of 2021 include a USD 65.7 million Series C deal raised by Doctor Anywhere of Singapore and a USD 30 million Series C round raised by Homage.
EdTech: The Digitalization of Education
Problems identified in the education industry
While digitalization has led to the change in several sectors, like e-commerce, banking, and insurance, the potential to democratise education and provide education to marginalised areas in Southeast Asia remains largely unexplored. Edtechs, such as Indian businesses Byju’s and Unacademy, are profitable investment opportunities that have increased investor attention in recent years. Southeast Asia trails behind China and India in edtech investment, although this trend is increasing.
Market trends in edtech
In the first-half of 2021, edtech investments totaled USD 120 million across 15 transactions. During this time, notable investments included Ruangguru’s USD 55 million Series C2 round, Zenius’s USD 15 million Series B round, and ELSA’s USD 15 million Series B round. Comparing Southeast Asia to China and India in terms of investment by stage, the edtech industry in Southeast Asia is in its infancy. 96 percent of transactions in Southeast Asia’s still emerging edtech business are early-stage investments.
Conclusion
The 4 prominent sectors discussed above hold huge potential for growth. Few sectors are still in their infancy, and only early-stage startups have been funded in these domains. To help themselves grow, startups can focus on understanding the emerging trends and be on the lookout for new opportunities.
