5 ASEAN startups tackling the messy middle of the agrifood value chain

While the bulk of agrifoodtech VC funding in Southeast Asia went to downstream categories in 2019, startups sitting in the middle of the value chain are increasingly attracting interest from investors.

According to AgFunder’s first-ever ASEAN AgriFoodTech Investment Report, the three most-funded categories were all downstream: In-Store Retail & Restaurant Tech, with $115 million in total funding across 23 deals; Online Restaurants & Mealkits ($86 million, 13 deals); and eGrocery ($51 million, nine deals.) [Disclosure: AgFunder is AFN‘s parent company.]

Investor focus on downstream, consumer-facing business models reflects the comparatively nascent nature of the region’s wider tech ecosystem. Southeast Asia is still at an earlier stage of development than its counterparts in Europe, North America, and elsewhere in Asia. The situation in ASEAN mirrors these more mature markets, which predominantly experienced downstream investment in early years as investors chased the much larger — though more fickle — consumer end of the market.

But there are signs that is beginning to change.

Of particular note is AgFunder’s Midstream Technologies category, which covers a diverse range of tech and business models in the middle of the agrifood value chain, in areas such as food traceability, logistics, and quality and freshness testing.

ASEAN startups in this segment secured a healthy $43 million across 10 deals last year. Three of those deals involved B2B marketplaces connecting farmers, suppliers, and merchants, indicative of the demand for enhanced, tech-enabled market linkages between the region’s smallholder farmers and their suppliers and customers.

Here are ASEAN’s top five Midstream Technologies startups by total 2019 funding:

• Telio.vn (Vietnam) – Two of the biggest deals in this category last year went to Hanoi-based Telio, which sells food and other supplies to restaurants and grocery retailers. It got $25 million in funding from Tiger Global, Sequoia Capital, and other investors for its December Series A round, which followed a $1.5 million seed raise in April from Surge, Sequoia’s South and Southeast Asian accelerator.
• Ralali (Indonesia) – This B2B marketplace, which connects suppliers of agricultural, restaurant, and other equipment with buyers such as local merchants, raised $13 million from investors including Qualgro, Arbor Ventures, TNB Ventures, and Siam Cement Group’s corporate VC unit in one of just two agrifoodtech Series C rounds in ASEAN last year.
• Seppure (Singapore) – This startup has created nano-filtration membranes that can be used to separate chemicals in a more energy-efficient, cost-effective manner than currently available solutions in the food, pharmaceutical, and petroleum industries. It raised $2.6 million in seed funding from lead investor SOSV as well as 500 Startups, Entrepreneur First, and others in August.
• AI Palette (Singapore) – An artificial intelligence-driven food concept development platform, AI Palette secured $1.1 million in seed funding from investors including AgFunder, Decacorn Capital, and SGInnovate in August.
• SinGene (Singapore) – A graduate of the AgFunder-backed GROW Accelerator, this startup has developed a machine-learning system to detect bacterial and viral contamination throughout the food supply chain.

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