The long funding winter in Southeast Asia’s startup ecosystem has persisted longer than expected. Since the downturn began in 2022, founders and investors have been holding out for a decisive rebound. A brief pickup in early 2024 raised hopes, but momentum quickly faded.
By mid-2025, dealmaking had slowed to its weakest level in over six years, according to DealStreetAsia DATA VANTAGE‘s Southeast Asia Startup Funding Report: H1 2025 sponsored by Kickstart Ventures. The first half of the year saw only 229 equity deals closed, with just $1.85 billion deployed, reflecting deep investor caution and a much higher bar for funding. Macroeconomic uncertainty and increased scrutiny of governance have further weighed on activity.
However, the second quarter of the year offered signs of stabilisation. Deal volume remained flat, compared with the previous three months, but capital deployment jumped to $1.28 billion, more than double the previous quarter’s $570 million, as investors channelled capital into high-conviction bets.
Late-stage rounds are gaining favour, as fund managers prioritise startups with clearer paths to profitability. The emphasis has shifted from aggressive growth to capital efficiency and strong fundamentals, forcing founders to adapt to a more disciplined fundraising environment.
The market appears to be recalibrating rather than collapsing.
While the overall pace remains slow, the market appears to be recalibrating rather than collapsing. If the Q2 momentum holds, Southeast Asia could be entering a new phase of recovery, driven less by hype, and more by conviction.
Late-stage funding shows signs of life
The pullback has been most pronounced at the early stage, where investors have traditionally shown the highest risk tolerance. Deals up to Series B fell to 219 in the first half of 2025, down 15.4% from the previous six months and 38% year-on-year. It was the lowest volume recorded in more than six years.
Early-stage funding proceeds totalled $1.1 billion, nearly 30% lower than a year earlier and just a quarter of the peak reached in the first half of 2022. The decline reflects a sharp correction in valuations and a much tougher bar for younger companies, as investors now demand stronger fundamentals and capital efficiency before committing.
Late-stage activity held up better, by comparison. Six Series C and beyond deals closed in the second quarter, bringing the half-year total to ten. That compares with nine in the second half of 2024, indicating modest improvement.
Capital raised from late-stage rounds rose 69.7% to $756 million. The increase points to the continued appetite for more mature startups that can demonstrate scale, clear monetisation models and viable exit pathways.
Still, capital deployment remains skewed. Early-stage deals have accounted for a larger share of activity since early 2024, even as late-stage rounds show signs of recovery. A broad-based rebound across all stages has yet to emerge.
New unicorns on the block
Despite the overall slowdown, a handful of large-ticket deals helped anchor sentiment in the first half of 2025. Malaysia’s Ashita Group led the region’s equity funding with a $155 million raise from AEI Capital Group and LDA Capital. The B2B2C commerce company secured the growth capital at a unicorn valuation ahead of a planned regional expansion and public listing.
Malaysia’s Ashita Group led the region’s equity funding in H1 2025, followed by Singapore-based Thunes.
Close behind was Singapore-based Thunes, which raised $150 million in a Series D round. The cross-border payments firm reached a post-money valuation of $1.42 billion, based on DealStreetAsia’s calculations. The round was led by Apis Partners and Vitruvian Partners and is expected to accelerate Thunes’ push into the US and other global markets.
In January, Sygnum, a digital asset banking group with dual headquarters in Singapore and Switzerland, also cemented its unicorn status. It raised $58 million in an oversubscribed strategic growth round, signalling continued investor interest in regulated digital finance infrastructure.
These three companies stood out in an otherwise cautious funding environment. Their ability to raise significant capital at premium valuations underscores the selective nature of investor appetite. Backers are showing willingness to write large cheques for companies that offer clear visibility on scale, monetisation and exit readiness.
According to DealStreetAsia’s tracking, 58 venture or growth equity-backed companies in Southeast Asia have now crossed the $1 billion valuation threshold as private entities. The path to unicorn status has become harder, but not closed.
Bracing for a prolonged shakeout
Looking ahead, fund managers expect the funding landscape in Southeast Asia to remain uneven. Survival, they note, will depend on financial discipline, sectoral positioning and the ability to weather external shocks.
Minette Navarrete of Kickstart Ventures highlights that investor sentiment in the region is acutely sensitive to geopolitical events, policy changes and local market volatility. These factors have made uncertainty a structural feature of Southeast Asia’s venture capital environment.
Even so, Navarrete sees pockets of momentum in themes aligned with long-term demand and LP interest. She points to new retail, sustainability and vertical applications of AI as areas where selective capital continues to flow.
Others are more cautious. John Kim of Amasia warns that the path to recovery is likely to be slow and uneven. He expects more companies to shut down or avoid fundraising altogether to preserve valuations under pressure.
Taken together, the outlook suggests a prolonged shakeout. Capital is consolidating around companies that can demonstrate structural growth and resilience, while weaker players face mounting difficulty in securing funding or sustaining operations.
Read the Southeast Asia Startup Funding Report: H1 2025 for:
- Half-yearly and quarterly startup fundraising trends in Southeast Asia
- Top deals of H1 2025
- Most favoured industries by venture investors
- Fundraising trends by country
- Trends in climate tech funding
- Insights from prominent private market participants
