The slowdown in startup funding in Southeast Asia continued into the third quarter of 2025, pushing nine-month performance to a new low. Late‑stage activity, however, showed a modest but encouraging rebound, DealStreetAsia’s latest quarterly review finds.
Equity funding rounds continued to falter in the third quarter, with only 112 deals sealed—the weakest quarterly performance in over six years, according to the Southeast Asia Deal Review: Q3 2025 report by DealStreetAsia DATA VANTAGE. The sharp contraction in deal activity underscores sustained investor caution, particularly at the early stage, as risk appetite remains subdued amid ongoing macroeconomic uncertainty.
Despite the weak volume, total capital raised surged to $2.27 billion in the third quarter, largely due to a single mega-deal: Singapore-based data centre firm Princeton Digital Group (PDG) secured $1.3 billion in growth capital. Stripping out this outlier, funding levels remained tepid across most markets and verticals, suggesting that the uptick in value was not reflective of a broader market rebound.
Across the first nine months of 2025, Southeast Asia saw 341 equity rounds, a 34% decline year-on-year and a steeper drop than the 4.6% contraction seen in the same period last year. The slowdown marks a return to 2023-like levels, when deal activity had similarly slumped by more than a third.
In value terms, startups across the region raised $4.14 billion during the nine months, representing a 22.9% increase from the previous year. However, this headline growth was again skewed by the PDG transaction, masking what remains a challenging fundraising environment for the vast majority of startups.
Selective deployment
While overall funding momentum remained subdued, the third quarter of 2025 offered a glimmer of optimism in late-stage funding. The region recorded eight late-stage equity deals in Q3, up from six in Q2 and four in Q1, bringing the nine-month total to 18. This marks the first year-on-year increase in late-stage activity in four years, the report shows.
The modest rebound suggests a selective return of conviction at the upper end of the capital stack. Investors appear willing to back scaled-up ventures with proven business models and clearer paths to profitability, especially in sectors with structural tailwinds such as AI, data centres and health tech. This contrasts with the continued pullback at the early stage, where deal flow has thinned in both volume and value amid tighter screening and slower deployment.
Apart from PDG’s mega round, notable late-stage transactions this year included Indonesia’s Astro, which raised $51.9 million, Carro, the regional used-car platform, which secured a $60 million top-up, and SingAuto, an EV startup headquartered in Singapore, which closed a $50 million round. The deal activity highlights continued cross-border investor interest in mobility solutions anchored in Southeast Asia.
A standout among the late-stage deals was Ultragreen.ai, a Singapore-based healthtech firm that raised $188 million at a $1.3 billion valuation. The company became Southeast Asia’s 59th unicorn, reinforcing the healthtech vertical’s growing weight in the region’s late-stage pipeline. Earlier in the year, payments firm Thunes, digital asset platform Sygnum, and diversified business group Ashita Group also joined the unicorn cohort.
While it is too early to call a full-fledged recovery, the report says that the relative strength of late-stage activity in recent quarters signals early signs of resilience. It further argues that for founders nearing scale, this could open windows for strategic capital raises, albeit in a more disciplined, metrics-driven environment. For investors, it points to a gradual reawakening of appetite, concentrated in fewer but higher-conviction bets.
Private debt stays relevant
Private debt remained an important, even if selective, funding channel for Southeast Asia’s startups in the third quarter. Startups raised $214 million across four deals, offering a buffer amid the ongoing equity squeeze. While activity has cooled, credit continues to flow to companies with strong financials and clear monetisation plans.
Across the first nine months, private debt transactions fell 44.7% year-on-year to 21 deals, with total proceeds reaching $1.9 billion. The latest quarterly report reflects revisions to past data, including the addition of Princeton Digital Group’s $1.2 billion facility in Q2 2025 and the removal of a $40 million entry previously attributed to Philippine proptech firm Lhoopa in Q3 2024. Although Lhoopa has secured commitments from the Asian Development Bank and the US Development Finance Corporation, each worth $20 million, the loans have yet to materialise.
It is worth noting that DealStreetAsia’s private debt data captures only publicly disclosed transactions, meaning the actual level of activity is likely higher. Many deals remain unannounced, particularly those involving smaller facilities or privately negotiated structures between lenders and startups.
Still, the drop in deal count points to growing lender caution. Venture lenders are prioritising balance sheet strength and cash flow visibility, with fewer deals closing in riskier segments. The bar for debt issuance has clearly risen.
The report further says that fund managers continue to view private credit as a viable tool, particularly for later-stage startups seeking to extend runway without equity dilution. While deployment is down, private debt remains firmly in the mix, just more selective, and more aligned with capital discipline.
Focus on governance
Founders interviewed for the report emphasised the importance of governance amid the challenging fundraising landscape, while investors said they have become more selective, prioritising concrete business performance, such as profitability, over storytelling and future aspirations.
Pavel Fedorov, co-founder and director of Philippine fintech startup Salmon Group, observed that global capital has become more selective, with a clear flight to quality accompanied by rising governance standards across emerging Asia.
“Salmon’s ability to build a business with strong positive unit economics in a short period of time, while also securing early-stage funding during highly volatile market conditions in 2022, helped set us apart,” he said, reflecting on how he managed investor expectations ahead of the company’s oversubscribed $50 million Nordic bond offering earlier this year.
Separately, Donny Zhang, co-founder and CEO of Indonesian e-payment and credit services startup YUP, said investors are shifting their focus from storytelling and future aspirations to tangible business performance.
“We rarely see anyone question the market potential of Indonesia. The real focus, instead, has shifted to how that potential can be realised and translated into a scalable, sustainable, and profitable business. In our industry specifically, that comes down to risk management, business operations (which are now under greater scrutiny, especially in light of recent concerns over corporate governance in Southeast Asia), R&D, AI development, and more,” he said.
AiViet Ventures sees resilience in legacy sectors like fintech and logistics when enhanced by AI, while AI-native models, climate-tech, and agritech are gaining strong momentum, fuelled by policy support and evolving investor priorities.
“Agritech robotics, renewable-energy SaaS, and bio-based materials are emerging as Vietnam’s next wave of defensible innovation — areas where local founders have deep domain context and cost advantages. We already invested in early stage startups in those fields and we are interested in exploring new opportunities in 2026,” she said.
Read the Southeast Asia Deal Review: Q3 2025 report for:
- Quarterly startup fundraising trends in Southeast Asia
- Top deals of 9M 2025
- Industries that attracted the most capital
- Fundraising trends by country
- Trends in climate tech funding
- Insights from prominent private market participants
