Indonesian fintech investments halved in 2023: study

Seed-stage and early-stage funding plummeted during the year.

Indonesia’s financial technology (fintech) companies saw investments plunge by half in 2023, according to a study by startup data intelligence platform Tracxn.

Fintechs in Indonesia raised a total of $765m in 2023, a 51% decline from the $1.6b in total raised in 2022.

“Investors are still taking cautious steps due to the global macroeconomic slowdown and other geopolitical issues,” Tracxn noted in a press release.

Seed-stage funding took the hardest hit, falling 84% to only $9.5m.

Early-stage funding plummeted 79% to just $99.4m in 2023, from $466m in 2022.

Late-stage funding made up the bulk of the investments, but even more “mature” startups saw fewer investments go their way. Companies in this space secured late-stage funding worth $656m in 2023, a 40% decrease from $1.1b in 2022, the Tracxn data showed.

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A bulk of the investments came in during the beginning and end of the year. In Q1, Indonesian fintechs received $312m in funding. The last three months of the year saw them amass the most investments, for a total of $407m.

However, these were dragged down by slowdown in the middle of the year– with Q2 and Q3 2023 witnessing only $25.5m and $21m in investments, respectively.

Despite the decline, Indonesia’s overall startup ecosystem was reportedly the second highest-funded startup ecosystem in the Southeast Asian region in term sof overall funding, Tracxn noted.

Fewer ‘large’ funding rounds
There were only 3 fundings rounds in Indonesia's fintech space that surpassed $100m in the past twelve months, lower than the 4 nine-digit funding rounds in 2022 and 6 in 101`.

Investree, GoJek, and Kredvio were the three companies that attracted funding of $100m and above during the year.

There were also new unicorns from this space in 2023.

Finance fintechs got most love
By segment, fintechs in the financial sector attracted the most investments, with Alternative Lending, Payments, and Banking Tech names as the top-performing segments based on funding during the year by Tracxn.

Alternative Lending companies attracted investments worth $554m in 2023, 82%  higher than the $305m raised in 2022. 

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The Payments segment, meanwhile, secured total funding of $217m in 2023, although this was 67% lower than the $659m the segment amassed in 2022.

The Banking Tech space witnessed a total of $8.5M, an 81% drop compared to $44.2M raised in 2022, Tracxn said.

East Ventures, Mandiri Capital Indonesia & AC Ventures were the overall most active Investors till date in the Indonesian FinTech sector. 

500 Global, Hustle Fund & Mandiri Capital Indonesia were the top investors in the seed stage in 2023

Gobi Partners, Alpha Trio & Openspace Ventures were the most active early-stage investors.