Southeast Asia’s technology scene needs a capital injection
24 March 2025
A sudden slump in Indonesian equities in March underscores the challenges facing the region’s underfunded tech sector.
At one point on March 18, selling became so intense that it triggered a trading halt in Jakarta, with the local benchmark falling 7% in a single morning.[1] Stocks in Indonesia fell to their lowest since 2021 as volatility edged to a five-year high.
The volatility of the equity markets highlights the funding challenge facing entrepreneurs in Southeast Asia. Indonesia is Southeast Asia’s biggest economy and its biggest consumer market, presenting an attractive growth opportunity for tech platforms. Yet with public equity markets unreceptive, high-growth technology businesses are unable to raise the capital they need to scale, while early-stage investors have limited appetite for start-ups with no clear exit route.
Venture capital funding for start-ups in the region fell by two-fifths year-on-year to US$4.5 billion in 2024.[2] For listed names, risk-averse retail investors are hesitant to back them for the long-term leading to depressed valuations that make it difficult to secure follow-on capital through debt or equity sales.
It hasn’t helped that corporate governance concerns have emerged once again. Indonesian aquaculture start-up eFishery is alleged to have inflated revenue by almost US$600 million in the nine months through September last year.[3]
A merger of super-app Grab and Indonesian rival GoTo could provide a confidence boost by creating a regional champion able to attract more capital to Southeast Asia’s startup scene.[4] Public market volatility, however, will remain a challenge: both have suffered big swings in their respective stock prices since listing in the US and Indonesia, respectively.
Securities-backed financing can help to address some of these challenges and improve overall liquidity in Southeast Asia. Serial entrepreneurs looking to invest in new tech ventures can unlock capital by monetizing their existing holdings without sacrificing the potential for long-term capital appreciation. Securities-backed financing also allows existing investors to navigate continued volatility in share prices. Long-term investors may also be able to reduce their borrowing costs by using their securities as collateral, freeing up more capital for early-stage investments.
Digital foundations
Ultimately, rising incomes in Southeast Asia promise steady revenue and a historic opportunity for entrepreneurs who can overcome current capital constraints. The number of middle-class and affluent consumers in Southeast Asia is projected to reach 415 million by 2040 – more than the entire population of the United States.6
At the same time, Southeast Asia’s digital economy is well placed to benefit from surging investment in AI and associated infrastructure. For the 12 months ending on January 31, the iEdge Southeast Asia+ TECH Index grew by 30%,[5] faster than peer indices in Europe[6] and India[7] which rose by 6.6% and 19% respectively.
Whether it’s because multinational companies need to diversify their supply chains in response to US-China trade tensions or artificial intelligence firms needing vast data centres to feed their computing needs, Southeast Asia is enjoying a wave of inbound interest.
UK semiconductor firm Arm Holdings, for instance, has announced plans to establish a regional base in Malaysia to support local companies developing their own chip designs.[8] Analysts expect the number of data centres in Southeast Asia to grow by 20% annually[9] over the next five years as well. DeepSeek’s lower-cost AI model also points to an acceleration in AI adoption.
Securities-backed financing offers a flexible option for entrepreneurs looking to supplement their start-up capital. By using their liquid assets as collateral, business owners and directors can free up capital for new investments without sacrificing the long-term potential for capital appreciation and thereby take advantage of a potential sea-change in investor outlook towards Southeast Asia’s fast-growing technology sector.
[1] https://www.bloomberg.com/news/articles/2025-03-18/indonesian-stock-plunge-triggers-trading-halt-on-economic-woes
[2] https://www.dealstreetasia.com/stories/se-asia-deal-review-fy-2024-summary-426246
[3] https://www.bloomberg.com/news/articles/2025-01-21/softbank-backed-fish-startup-allegedly-faked-most-of-its-sales
[4] https://www.reuters.com/markets/deals/grab-goto-advanced-merger-talks-sources-say-2025-02-04/
[5] https://api2.sgx.com/sites/default/files/2025-02/iEdge%20Southeast%20Asia%2B%20TECH_Factsheet_20250131.pdf
[6] https://stoxx.com/index/sx8p/?factsheet=true&d=2025-01
[7] https://www.niftyindices.com/Index_Dashboard/Index_Dashboard_JAN2025.pdf
[8] https://asia.nikkei.com/Business/Technology/Malaysia-bets-big-on-chips-with-250m-Arm-deal
[9] https://mkefactsettd.maybank-ke.com/PDFS/407187.pdf
Disclaimer
Past performance does not guarantee future returns, and individual returns are not guaranteed or warranted.
This Document is intended solely for accredited investors, sophisticated investors, professional investors, or otherwise qualified investors, as may be required by law or otherwise, and it is not intended for, and should not be used by, persons who do not meet the relevant requirements. The content provided herein is for informational purposes only and is general in nature and not targeted to any specific objective or financial need. The views and opinions expressed in this Document have been prepared by third parties and do not necessarily reflect the views and opinions of EquitiesFirst. EquitiesFirst has not independently examined or verified the information provided herein, and no representation is made that it is accurate or complete. Opinions and information herein are subject to change without notice. The content provided does not constitute an offer to sell (or solicitation of an offer to purchase) any securities, investments, or any financial products (“Offer”). Any such Offer shall only be made through a relevant offering or other documentation which sets forth its material terms and conditions. Nothing contained in this Document shall constitute a recommendation, solicitation, invitation, inducement, promotion, or offer for the purchase or sale of any investment product by Equities First Holdings, LLC or its subsidiaries (collectively, “EquitiesFirst”), nor shall this Document be construed in any way as investment, legal, or tax advice, or as a recommendation, reference, or endorsement by EquitiesFirst. You should seek independent financial advice prior to making an investment decision about a financial product.
This Document contains the intellectual property of EquitiesFirst in the United States and other countries, including, without limitation, their respective logos and other registered and unregistered trademarks and service marks. EquitiesFirst reserves all rights in and to their intellectual property contained in this Document. The Document should not be distributed, published, reproduced or otherwise made available in whole or in part by recipients to any other person and, in particular, should not be distributed to persons in any country where such distribution may lead to a breach of any legal or regulatory requirement.
EquitiesFirst make no representation or warranty with respect to this Document and expressly disclaim any implied warranty under law. You acknowledge that EquitiesFirst is not liable under any circumstances for any direct, indirect, special, consequential, incidental, or punitive damages whatsoever, including, without limitation, any lost profits or lost opportunity, even if EquitiesFirst has been advised of the possibility of such damages.
EquitiesFirst makes the following further statements that may be applicable in the stated jurisdiction:
Australia: Equities First Holdings (Australia) Pty Ltd (ACN: 142 644 399) holds an Australian Financial Services Licence (AFSL Number: 387079). All rights reserved.
The information contained on this Document is intended for persons located in Australia only and classified as a Wholesale Client only as defined in Section 761G of the Corporations Act 2001. The distribution of information to persons outside this criteria may be restricted by law and persons who come into possession of it should seek advice and observe any such restriction.
The material contained in this Document is for information purposes only and should not be construed as an offer or solicitation or recommendation to buy or sell financial products.
The information contained in this Document is intended to be general in nature and is not personal financial product advice. Any advice contained in the Document is general advice only and has been prepared without considering your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. You should seek independent financial advice and read the relevant disclosure statements or other offer documents prior to making an investment decision about a financial product.
Dubai: Equities First Holdings Hong Kong Ltd (DIFC Representative Office) at Gate Precinct Building 4, 6th Floor, Office 7, Dubai International Financial Centre (commercial license number CL7354) is regulated by the Dubai Financial Services Authority (“DFSA”) as a Representative Office (DFSA Firm Reference No.: F008752). All rights reserved.
The information contained in this document is intended to be general in nature, and, to the extent that it is perceived as advice, any advice contained in this document is general advice only and has been prepared without considering your objectives, financial situation, suitability of the financial products or your needs.
The material contained in this document is for information purposes only and should not be construed as financial advice, including an offer or solicitation or recommendation to buy or sell financial products. The information contained in this document is intended to be general in nature and any advice contained in this document is general advice only and has been prepared without considering your objectives, financial situation, suitability of the financial products or your needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. If you do not understand the contents of this document, you should consult an authorised financial adviser.
This document relates to a financial product which is not subject to any form of regulation or approval by the DFSA. The DFSA has no responsibility for reviewing or verifying any documents in connection with this financial product. Accordingly, the DFSA has not approved this document or any other associated documents nor taken any steps to verify the information set out in this document, and has no responsibility for it.
Hong Kong: Equities First Holdings Hong Kong Limited is licensed under the Money Lenders Ordinance (Money Lender’s Licence No. 1659/2024) and to carry on the business of dealing in securities (Type 1 licence) under the Securities and Futures Ordinance (“SFO”) (CE No. BFJ407). This Document has not been reviewed by the Hong Kong Securities and Futures Commission. It is not intended as an offer to sell securities or a solicitation to buy any product managed or provided by Equities First Holdings Hong Kong Limited and is only intended for persons who qualify as Professional Investors under the SFO. This document is not directed to individuals or organizations for whom such offers or invitations would be unlawful or prohibited.
Korea: The foregoing is intended solely for sophisticated investors, professional investors or otherwise qualified investors who have sufficient knowledge and experience in entering into securities financing transactions. It is not intended for, and should not be used by, persons who do not meet those criteria.
United Kingdom: Equities First (London) Limited is authorised and regulated in the UK by the Financial Conduct Authority (“FCA”). In the UK, this Document is only being distributed and made available to persons of the kind described in Article 19(5) (investment professionals) and Article 49(2) (high net worth companies, unincorporated associations etc.) of Part IV of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (‘’FPO’’) and any investment activity to which this presentation relates is only available to, and will only be engaged in with, such persons. Persons who do not have professional experience in matters relating to investment or who are not persons to whom Article 49 of the FPO applies should not rely on this document. This Document is only prepared for and available to persons who qualify as Professional Investors under the Markets in Financial Instruments Directive.
