Venture capital funding in Southeast Asia showed no surprises in the first quarter of 2025. Deal momentum continued to decline, hitting new historic lows and reinforcing the view that the market remains in a prolonged recalibration.
DealStreetAsia DATA VANTAGE‘s latest report Southeast Asia Deal Review: Q1 2025 shows venture-backed companies in the region secured 113 deals in the March quarter, raising a total of $555 million, a sharp 43% decline in deal count and a 46% drop in capital raised compared to the same period in 2024. The slowdown was further underscored by a 50% quarter-on-quarter fall in proceeds.
The slump comes amid broader caution in the venture capital space, triggered in part by the major governance scandal at the Indonesian agritech startup eFishery, the report said. Allegations of financial misreporting at the company have further shaken investor sentiment, particularly among those with exposure to late-stage Southeast Asian startups.
Late-stage funding took a deep hit, with only three Series C or later rounds recorded in the March quarter. This marks a 50% drop from the previous quarter and matches the low reached in Q3 2024—the weakest quarterly tally in at least six years.
Notable among the late-stage deals were Endowus, a Singapore-based digital wealth platform, which secured $17.5 million in a Series C round, and Sygnum, a digital asset neobank, with a $58 million raise that catapulted the company into the unicorn club. The largest disclosed transaction of the quarter was Vietnam’s Nhi Dong 315, a paediatric care group that attracted $135 million.
Early-stage activity, comprising rounds up to Series B, remained relatively resilient in terms of deal count. Q1 2025 saw 110 early-stage deals, unchanged from the previous quarter. However, the total capital deployed into these rounds fell sharply to $344 million, from $820 million in Q4 2024, pointing to more modest cheque sizes and tighter investment filters.
Debt financing also lost momentum in Q1 2025, with Southeast Asian startups securing just seven deals worth $154 million. This represents a significant drop from the 16 debt deals closed in Q4 2024, which collectively raised $720 million, underscoring a slowdown in non-dilutive funding activity at the start of the year. On a year-on-year basis, too, debt value was down from $210 million in Q1 2024.
The drop indicates reduced lender confidence and a potential re-evaluation of credit risk across the startup ecosystem.
Whether Q1’s slump is merely a blip or the start of a long-term contraction remains uncertain. But the trend highlights the underlying fragility of debt appetite in the region’s risk capital ecosystem, says the report.
Founders feel the pinch
Founders interviewed for the report said they have made strategic shifts to adapt to the tough funding environment. Tubagus Syailendra, the co-founder and CEO of poultry farming startup Chickin, which secured a $15 million loan from DBS Indonesia earlier this year, said equity fundraising is no longer his main focus.
“We’re now preferably looking at new alternative financing options that allow us to balance growth with dilution. The loan facility is a good example of that. It gave us the flexibility to extend our runway without sacrificing ownership or long-term strategic control,” said Syailendra.
As part of the company’s strategic shift, Syailendra said his team is building a long-term capital plan that assumes more conservative fundraising timelines, with greater focus on efficient growth and enough flexibility to respond to unexpected market challenges.
Gil Carmo, the co-founder and CEO of iMotorbike, which announced its $10 million Series A round in January this year, said the fundraising process under the current climate was “a humbling yet validating experience”.
He said the Q1 2025 figures confirmed what he had been observing on the ground for months. Investors have become more cautious, deal cycles are taking longer, and there is a stronger focus on unit economics and clearly defined paths to profitability.
“Valuation discussions were, of course, sensitive. The correction meant expectations had to be grounded in today’s market realities, not yesterday’s hype. We approached it with clarity and data, benchmarking against automotive sector peers, highlighting our cost efficiency, and showing we are moving toward profitability,” said Carmo.
Lower median value in seed stages
An analysis of median deal sizes in Q1 2025 shows diverging trends across early-stage funding. Seed round medians fell to $2 million, from $2.5 million in the same quarter last year. This continues a downward movement from the $2.7 million recorded in Q1 2022, aligning with more conservative valuations at the earliest funding stages.
In contrast, Series A rounds showed an increase in median investment size, reaching $12.5 million. This compares with $10 million in Q1 2024, indicating a more favourable outlook for growth-stage startups that have demonstrated early traction.
Series B data was too limited in Q1 2025 to draw meaningful conclusions. The number of recorded deals in this stage did not provide a sufficient sample size to calculate a reliable median, highlighting the current scarcity of mid-stage activity in the region.
The mixed picture across early-stage rounds reflects ongoing recalibrations in capital deployment strategies, the report says. While seed valuations are adjusting to market realities, Series A rounds appear to be benefiting from relatively stronger investor conviction.
While seed valuations are adjusting to market realities, Series A rounds appear to be benefiting from relatively stronger investor conviction.
Separately, investments based on value brackets highlight reduced investor appetite for big cheques and a shift toward smaller, more cautious bets in a reversal from the pandemic funding surge.
Only nine deals were recorded in the $10-25 million range in Q1 2025, less than half of the volume recorded in the same period last year, and a third of the 27 seen during the height of market exuberance in Q1 2022.
The drop was even more pronounced in the higher-value range. Only two deals above $50 million were closed in Q1 2025, a steep fall from 20 during the same period in 2022.
Greater precision in investments
VC fund managers interviewed for the report said that despite the tough climate, their overall investment theses and pace of deployment have remained largely unchanged, though decisions are now made with greater precision.
“We’re backing founders with a clear [product market fit], solid fundamentals, and a real plan to get to cash flow positivity. Equity crowdfunding has also become a bigger part of our toolkit, especially for businesses that are growing profitably but may not fit the traditional VC mould,” said 1337 Ventures founding partner and CEO Bikesh Lakhmichand.
Joseph Huang, Partner at Headline Asia, said the firm continues to pursue bold, industry-defining opportunities despite a more constrained market environment. While due diligence processes have become more rigorous, he noted that challenging conditions have not deterred the firm from backing resilient founders with long-term vision.
He highlighted Headline Asia’s Japan+Asia strategy as a key differentiator from conventional venture firms, rather than simply injecting capital.
“We’re also looking at how founders can tap into Japanese expertise and distribution channels early on. That approach has let us find deals that others might miss, because we’re constantly bridging networks across borders. When you see the region through a cross-border lens, new opportunities pop up everywhere,” Huang said.
As long-term investors, fund managers interviewed for the report said the sweeping macroeconomic shifts triggered by the US government’s unilateral tariff measures have significantly heightened risk and uncertainty and may influence the trajectory of startup funding in the region.
Thomas G. Tsao, Co-founder and Chairperson of Gobi Partners, said that while the 90-day pause on proposed US tariffs has provided temporary relief, the underlying uncertainty continues to weigh on the global economy. However, he noted that such disruptions could also create new opportunities for Southeast Asia, particularly as global supply chains shift away from China.
Tsao pointed to Malaysia as a case in point, where the ongoing chip war has led to a surge in investment as manufacturers diversify production hubs. He expects a similar trend to follow if tariffs are implemented, potentially strengthening Southeast Asia’s role in the global supply chain.
“Southeast Asia’s digital economy is expected to hit $363 billion by 2025. As returns remain low in Western markets, we expect more interest from investors who have watched Southeast Asia evolve from an ‘emerging’ market to a keystone of the global economy,” Tsao said.
The Southeast Asia Deal Review: Q1 2025 report has extensive data on:
- Quarterly fundraising trends
- Median and average deal values across funding stages
- Top sectors by deal volume and value
- Fundraising performance of each SE Asian market
- Perspectives from fund managers
