Top 5 industries in M’sia with future investment potential, based on 2022 SEA funding trends

Despite all the disruptions brought on during the pandemic, 2021 had seen soaring numbers in terms of funding. In Malaysia, the total funds raised in the capital market had risen 14.22% to RM130.9 billion from the previous year.

However, the high didn’t continue in 2022, with a funding winter seemingly settling in across Southeast Asia.

This is backed by a report released by Tracxn, a global market intelligence platform. Its Geo Annual Report: SEA Tech 2022 covers key startup events and stats such as funding rounds, top markets, and more within Southeast Asia (SEA).

According to the report, funding in SEA has fallen 41% to US$11.9 billion, compared to the same January to November period in 2021.

The report also showed that the decrease is related to a drop in late-stage investments, which plummeted by 62%.

But, on the flip side, seed-stage rounds have increased by 60%, an indication that more newcomers were starting up in 2022.

Plus, Kuala Lumpur and Petaling Jaya have actually seen an uptick in the funding amount compared to 2021.

Thus, despite the overall drop in funding, here are a few of the most invested industries in SEA, and some Malaysian startups within those fields that got funding this year.

1. Food and agriculture technology

The food and agriculture technology industry is considered the best-performing sector during the January to November period in 2022. With US$1.33 billion in funding during this period, this is an increase of 68% from the same period last year.

A Malaysian foodtech startup that has received funding this year includes Nanka, a jackfruit plant-based meat brand.

Meanwhile, local agritech startup Plant Cartridge, a 500 Global-backed firm offering sustainable agriculture solutions, raised US$3 million in seed funding.

DAdvance Agarwood Solutions, an agritech company improving the yield of agarwood, has also raised around US$433,000 via equity crowdfunding this year.

2. Fintech

Fintech has seen a drop of 28% in total funding, from US$7.4 billion in January to November 2021 to US$5.3 billion in the same period in 2022.

Even so, the amount of funding received in 2022 is still the second-highest amount recorded in the sector to date.

One prime example of a local fintech company that secured funding this year is TNG Digital. In fact, according to Tracxn, TNG Digital has raised the highest amount of money out of all the startups in Kuala Lumpur this year with a US$168 million round, raised by Lazada.

TNG Digital is also regarded as a soonicorn by Tracxn, meaning it’s a “soon-to-be unicorn”.

Payd, an earned-wage access service in Malaysia, also raised US$1.7 million in seed funding this year.

JurisTech, a homegrown fintech startup offering credit management systems, is also named on the report with funding of US$49.1 million. CTOS Digital had acquired a 49% stake in the fintech startup.  

Fundaztic made the list too with a US$3.7 million round. A peer-to-peer lending platform, Fundaztic had raised the amount via equity crowdfunding.

3. Enterprise applications

The third sector mentioned in Tracxn’s SEA report is enterprise applications, which saw a 7% increase in funding in 2022 as compared to the same period last year.

Enterprise applications refer to software that serves organisations rather than individual users.

StoreHub, a local cloud-based retail management platform, raised US$13.5 million in its pre-series B round this year, led by 500 Global.

The aforementioned Juristech could be considered an enterprise application as well, as it provides enterprise-class software for banks and enterprises in Malaysia, according to its website.

Another Malaysian startup in this industry is Dropee, a B2B wholesale startup that raised US$7 million this year during its series A round.

4. Ecommerce

Although ecommerce startups weren’t mentioned as a top-performing industry in the report, it’s certainly a sector that continues to bag a lot of funding locally.

Carsome, the integrated car ecommerce platform, hardly needs an introduction. The unicorn startup raised US$300 million this year, making it one of the SEA companies that saw the highest funding rounds in 2022.

RPG Commerce, a direct-to-consumer ecommerce startup known for its brands such as Thousand Miles, Montigo, and Cosmic cookware, raised US$29 million in July 2022.

With that said, the report did also mention that retail tech saw a decline in funding of 43% to US$2.7 billion in 2022, perhaps brought on by the end of the pandemic and the return of in-person retail.

5. Edutech

Also not mentioned in the Tracxn report is the edutech industry. However, we’ve seen quite a few Malaysian edutech startups that received funding this year.

A cohort member of Y Combinator’s accelerator programme, Pandai is a KL-based edutech startup that raised a total of US$2.03 million in January 2022.

ReSkills, an edutech app that helps coaches move their services online, raised US$1.5 million this year. Meanwhile, GuruLab, an online learning platform that analyses students’ performances, raised US$1 million.

Rise and falls

According to the report, the SEA region has been experiencing funding winter since the first quarter of 2022. Since then, funding has been on a declining trend.

Reasons for this may lie in inflation, supply chain disruptions, increased interest rates, and depreciating currencies.

With that said, with many seed-stage rounds in this region, it may be true that SEA’s economy has great potential in the long run.

Featured Image Credit: Effendy Shahul Hamid, Group Chief Executive Officer, Touch ‘n Go Group / Wai Hong Fong and Congyu Li, co-founders of StoreHub / David Liew, founder of DAdvance Agarwood Solutions