This interview was originally published as part of the DealStreetAsia DATA VANTAGE report SE Asia Venture Funds: H2 2025 Review
For much of the past decade, Southeast Asia’s venture ecosystem ran on a simple formula: back businesses riding the region’s mobile internet boom, prioritise growth, and rely on ever larger funding rounds or an eventual IPO to generate returns. It was a model that created some of the region’s most prominent startups and venture franchises.
The post-pandemic environment, however, has exposed the limits of that playbook. With exits scarce, valuations reset, and LP scrutiny intensifying, the market has become far less forgiving. VC fundraising in Southeast Asia deteriorated sharply in the second half of 2025, marking the weakest period since DealStreetAsia began tracking the market.
Only one fund reached a final close in H2, leaving the region with just four final closes for the full year, down from 17 in 2024 and 33 in 2023.
The pullback has not simply reduced the amount of capital available. It has changed what LPs are willing to back. Macroeconomic volatility, heightened governance scrutiny and fragile startup unit economics have lengthened fundraising cycles and pushed investors towards managers with clearer mandates, stronger governance frameworks and more credible exit pathways. Increasingly, the market is rewarding discipline over ambition.
That shift is beginning to reshape the region’s venture firms themselves.
Rather than remaining pure-play VC managers, a growing number are broadening into hybrid or multi-asset platforms with a more PE-like orientation. Private credit has become the clearest expression of that trend, as managers seek strategies that can deliver yield and downside protection alongside equity upside.
In 2025, Granite Asia launched the Libra Hybrid Capital Fund and secured a $350 million first close toward a $500 million target. January Capital, meanwhile, completed the final close of its APAC private credit fund at more than $130 million in December. Openspace Capital has also rebranded from Openspace Ventures and is reportedly exploring private credit.
Indonesia’s VC heavyweight AC Ventures has been undergoing a similar evolution over the past year, but quite distinct in its approach. The firm has formally changed its name to ACV Capital and identifies itself as a PE firm with a focus on growth equity investments.
Founder and managing partner Adrian Li insists the move is not simply a response to current market conditions. Having built its reputation as one of Indonesia’s best-known early-stage investors, the firm now believes the next phase of value creation in Southeast Asia will come from a different type of company and a different type of capital.
The opportunity, Li argues, increasingly lies in profitable mid-cap businesses that are scaling regionally but require institutional capital, tighter governance and stronger operational execution to reach the next stage. By repositioning itself as a growth equity firm with a private equity mindset, ACV Capital is signalling an emphasis on disciplined underwriting, resilient unit economics and clearer paths to liquidity.
In the following conversation with DealStreetAsia, Li discusses what is driving that evolution, why he believes Southeast Asia needs a different capital model, and where he sees the region’s most credible exit opportunities emerging in a slower, more selective market.
Over the past year, we have noticed an evolution in your messaging, including the rebranding to ACV Capital and your identification as a growth equity firm. Some may interpret this as signalling a more hybrid model with elements of PE discipline. What does the new identity represent in terms of strategy, mandate, and long-term ambition for the platform?
The move to ACV Capital reflects a deliberate shift toward where we see the most durable opportunity in Southeast Asia today.
Over the last cycle, venture in the region was largely driven by early-stage capital riding the mobile internet wave. While that period produced strong companies with now clear leaders in key sectors, it also exposed structural gaps in governance, capital efficiency, and exit readiness. As the market reset, it became clear to us that the next phase of value creation would require greater financial and operational discipline.
Today, we see the opportunity increasingly in profitable mid-cap growth companies that are scaling revenue and expanding regionally, but need institutional capital, stronger governance, and sharper execution — including meaningful upgrades in technology adoption — to reach their full potential.
“Today, we see opportunity in profitable mid-cap growth companies that are scaling revenue and expanding regionally.”
Positioning ourselves as a private equity firm focused on profitable growth signals exactly that: disciplined underwriting, structured governance, resilient unit economics, and a clear line of sight to liquidity.
We also bring something differentiated versus traditional mid-cap PE in the region: deep, operating-level technology experience, built from a decade of backing and working alongside tech and tech-enabled businesses. That translates into practical value creation—from digitisation and data foundations (ERP/CRM, POS, analytics, reporting) to AI deployment across commercial and operational functions (sales productivity, customer service, forecasting, pricing, inventory, and workforce optimisation). In essence, not only finance growth—we help modernise how companies operate to drive durable margins and scalable growth.
Over the long term, our vision continues to be the premier partner for empowering entrepreneurs to build the most valuable and enduring businesses in Southeast Asia, delivering economic and societal impact across the region.
Secondly, what is driving this evolution, and how structural is it? Is it largely a response to current market conditions, such as slower exits and valuation resets, or does it reflect a longer-term conviction that Southeast Asia requires a different capital model to scale companies sustainably?
It’s both cyclical and structural, but the structural piece is the bigger driver. Cyclically, the post-pandemic correction and higher global rates have reset valuation expectations, raised hurdle rates, and made exits more selective. Capital recycling has slowed, and both investors and management teams are being forced to prioritise cash generation, capital efficiency, and credible paths to liquidity.
“The first wave of mobile-internet venture growth proved one can build large companies here, but it also exposed gaps in governance, business model economics and challenges in exit liquidity.”
Structurally, Southeast Asia is maturing. The first wave of mobile-internet venture growth proved one can build large companies here, but it also exposed gaps in governance, business model economics and challenges in exit liquidity. As the ecosystem matured, value creation shifted from “growth at all costs” to building durable businesses: stronger unit economics, institutional controls, professionalised management, and the ability to fund expansion without relying on perpetual equity raises.
This is where we see the core opportunity: profitable mid-cap growth companies that want to keep scaling, often regionally, but need a capital partner who brings underwriting discipline, governance, and operational rigour. This is where our background is well-suited. We combine disciplined investing with hands-on value creation rooted in a decade of operating-level experience in technology and tech-enabled businesses. In practical terms, that means helping companies upgrade from foundational digitisation and data infrastructure through to AI implementation across commercial and operational functions—improving sales productivity, customer service, forecasting, pricing, inventory, and workforce efficiency.
So while the cycle accelerated the shift, our evolution reflects a long-term conviction about how sustainable scale will be achieved in Southeast Asia, not a short-term reaction to market conditions.
How has this strategic shift influenced your LP conversations? Are investors more receptive today to hybrid venture and private equity positioning compared with a pure early-stage mandate?
LP conversations have become more grounded and pragmatic. The focus is on profitable, growing businesses, tangible value creation, attractive entry pricing, and real visibility on exits.
In this environment, investors are less motivated by mark-to-market valuation gains and more focused on fundamentals: cash flow resilience, disciplined deployment, and a clear liquidity plan. As a result, a mid-cap growth positioning anchored in underwriting discipline and active portfolio engagement is resonating with LPs who want risk-adjusted returns in emerging markets.
“In this environment, investors are less motivated by mark-to-market valuation gains and more focused on fundamentals.”
There is also increasing appreciation for strategies that combine attractive upside with private equity-style governance and real downside protection. Many LPs recognise that Southeast Asia is entering a phase where operational value creation matters as much as multiple expansion, and where disciplined execution is what ultimately drives outcomes.
With private credit gaining traction across Asia, are you exploring credit strategies alongside equity, whether through structured deals, venture debt, or a dedicated private credit vehicle?
We are monitoring the development of private credit across Asia. As the ecosystem matures, structured capital solutions, including debt and hybrid instruments, can play a meaningful role in supporting companies while reducing dilution.
At this stage, our primary focus remains equity-led growth capital. However, we do selectively explore structured elements with partners within transactions where appropriate, particularly where they enhance alignment, protect downside, or optimise capital structure.
Over time, we expect private credit to become a more important component of Southeast Asia’s capital ecosystem, especially for companies with predictable cash flows that do not require incremental equity capital.
Lastly, the exit environment for Southeast Asian startups continues to evolve. Where do you see the most credible exit pathways emerging over the next few years, and how are you positioning portfolio companies to realise liquidity?
Exits remain the biggest bottleneck in the region, and it’s true that IPO markets here are still less mature and more selective than in the US or parts of North Asia. But in our view, the constraint isn’t only market infrastructure — it has also been driven by business quality and valuation expectations. Too many companies were built for growth at any cost, and too many stakeholders were anchored to peak-cycle pricing. That combination makes liquidity hard, even when capital is available.
“Exits remain the biggest bottleneck in the region, and it’s true that IPO markets here are still less mature and more selective than in the US or parts of North Asia.”
What’s encouraging today is that both of those factors are improving. Better businesses are being built—with stronger governance, clearer profitability, and more durable unit economics—and entry valuations are more rational. That creates a healthier starting point for future exits.
We also see several credible pathways strengthening:
First, strategic M&A is becoming more active, both regional and cross-border. Local and regional conglomerates in particular are increasingly acquisitive as they look to diversify beyond legacy sectors, and they are actively seeking profitable, fast-growing businesses that can become meaningful platforms.
Second, there is now a large and growing pool of late-stage sponsor capital — growth equity and mid-cap private equity funds that can fund scale, support ownership transitions, and facilitate structured liquidity. This expands the set of realistic outcomes beyond “wait for an IPO.”
Third, secondary transactions and structured liquidity solutions are playing a larger role as a practical bridge while IPO windows remain timing-dependent.
Finally, the listing markets are gradually developing. Public markets will remain selective, but well-governed, profitable mid-cap companies with clean reporting and a credible growth narrative will continue to access IPOs over time.
Our approach is to prepare companies early: institutional reporting standards, disciplined capital allocation, professionalised management teams, and a clear strategic narrative for either acquirers or public markets.
