Southeast Asia’s deep tech sector, once seen as somewhat insulated from venture capital headwinds, experienced a sharp reversal in 2024, as macro pressures and risk-off sentiment rippled through even the most defensible verticals.
Deal volume in the space fell 16% year-on-year to 106 rounds, while total funding tumbled 34% to $801 million, according to The State of Deep Tech in SE Asia 2025 report by DealStreetAsia DATA VANTAGE. The downturn was particularly stark at the late stage, which saw activity collapse to its lowest level on record, both in terms of the number of deals and aggregate value.
The pullback marks a significant departure from the resilience shown between 2021 and 2023, when deep tech outperformed mainstream sectors. Even as consumer internet and DeFi-led fintech came under pressure, deep tech funding had climbed 44% from 2021 levels to reach a peak of $1.22 billion in 2023, buoyed by investor appetite for high-IP ventures with longer time horizons.
Early-stage dominance remains a defining feature of Southeast Asia’s deep tech landscape. Rounds up to Series B have consistently made up more than 90% of deal flow over the past five years, a trend that intensified in 2024, with early-stage activity accounting for a record 98.1% of all deals.
Early-stage dominance remains a defining feature of Southeast Asia’s deep tech landscape.
The sharp tilt towards early-stage reflects both structural gaps and investor caution. While seed and Series A cheques continue to flow, often driven by university spinouts and venture studios, the collapse in late-stage funding highlights the absence of a robust growth capital base.
Despite the 2024 correction, deep tech’s momentum remains well above pandemic-era benchmarks. Deal count and total funding are up 43% and 56%, respectively from 2020 levels, underscoring that long-term conviction in the vertical continues to hold.
More notably, deep tech’s share of Southeast Asia’s overall VC activity has grown steadily, from just 3.6% of funding value and 9.1% of deal volume in 2021 to a record 17.6% of funding value and 16.7% of funding volume in 2024. This sustained growth signals a clear pivot toward IP-rich, defensible sectors, establishing deep tech as an increasingly core component of the region’s venture landscape.
Deep tech’s share of SE Asia’s overall VC activity has grown steadily.
Healthtech has seen better days
AI is fast emerging as a foundational layer across Southeast Asia’s deep tech verticals, powering a new wave of defensible, high-impact startups. It is accelerating discovery by replacing conventional trial-and-error with algorithmic optimisation, while pushing innovation further upstream into design, modelling, and simulation.
From climate tech to energy systems, AI is becoming central to how the region addresses complex, system-level challenges. In fintech, it is driving the convergence of blockchain infrastructure and adaptive intelligence.
Software & IT solutions led all deep tech verticals in 2024, racking up 36 deals worth $244 million, a sharp jump from 21 deals and $84 million the previous year. Over a five-year horizon, the segment has expanded nearly six-fold by volume, fuelled in large part by the emergence of blockchain infrastructure startups.
Software & IT solutions led all deep tech verticals in 2024.
Distinct from those focusing on speculative crypto plays, these ventures are building foundational technologies, including distributed computing, cross-chain interoperability, and modular architectures, aimed at powering the next wave of enterprise and financial infrastructure across Southeast Asia.
Healthtech slipped to the second most active deep tech vertical in 2024, with 16 deals and at least $99 million in disclosed funding, down sharply from 31 deals totalling $350 million the year before. The pullback reflects both the broader VC downturn and a recalibration of investor sentiment in the wake of high-profile failures that revealed underlying structural risks.
That said, investor appetite for frontier health innovations hasn’t disappeared. Capital continues to back enterprise-grade solutions, particularly those targeting diagnostics, clinical workflow automation, and scalable digital therapeutics.
Greentech remained a strategic focus in 2024, ranking third by deal volume with 13 transactions amounting to $122 million. While this was down from 24 deals and $258 million in 2023, the decline mirrors a more cautious and selective deployment environment.
Greentech remained a strategic focus in 2024, ranking third by deal volume.
Investors are increasingly channelling capital into startups with high defensibility, measurable decarbonisation outcomes, and clear commercial pathways, particularly B2B models anchored by long-term offtake agreements that align with corporate sustainability targets and operational efficiency mandates.
Sovereign matters
Singapore tightened its grip on Southeast Asia’s deep tech landscape in 2024, accounting for 85.6% of all deal volume and 91.1% of total funding across the region. Over the past five years, Singapore-based companies have consistently made up 87.3% of deep tech deal flow and a staggering 95.4% of total invested capital.
Singapore’s lead is underpinned by a deliberate and coordinated national strategy, one that combines long-range policy vision, robust public R&D infrastructure, and a layered capital stack extending from seed grants to sovereign-backed growth funding. The result is a deep tech engine that not only drives early-stage formation but also supports commercial scaling in sectors aligned with national interest.
Singapore accounted for 85.6% of deep tech deal volume and 91.1% of total funding across the region in 2024.
A key frontier emerging in Southeast Asia is the sovereign push into deep tech, with AI at the centre of efforts to build national capability and strategic advantage, the report finds. Across Southeast Asia, governments are beginning to integrate AI into cyber defence, maritime surveillance, and autonomous systems, signalling a shift in demand away from purely consumer markets.
While venture participation in defence technology remains limited, constrained by political sensitivities and opaque procurement cycles, a dual-use thesis is poised to gain more traction, the report argues. Startups in cybersecurity, autonomous navigation, and AI-powered analytics are increasingly straddling commercial adoption and strategic relevance. Investors with the network and risk appetite to navigate state-linked processes may find themselves early movers in a niche but expanding category.
As sovereign priorities reshape deep tech demand, Singapore’s position at the intersection of capital, capability, and coordination will likely remain central to how the region defines and deploys breakthrough innovation.
Eye on industrial solutions
In the context of accelerating progress toward Artificial General Intelligence (AGI) and superintelligence, Southeast Asia is unlikely to lead on foundation model development but is well placed to capitalise on applied AI within deep tech.
The report argues that the next five years will demand sharper theses, focused not on speculative AGI moonshots, but on executional depth, domain specificity, and capital-efficient infrastructure plays.
Mukaya Tai Panich, CIO and Managing Partner of AICONIC Ventures, echoed this shift in investment focus, noting that Southeast Asia’s edge lies not in competing on core model development, but in backing infrastructure and application layers with strong commercial pathways.
“You can think of the [Generative AI] stack as having four layers,” Panich explained. At the base of the stack is computing power and AI infrastructure, including hardware, semiconductors, power systems, optical links, Edge AI, and robotics. Above that are the core generative AI models, such as large language models (LLMs), followed by development tools. At the top sit end-user applications.
“At AICONIC, we are going to be laser-focused on the bottom of the stack, which is computing power and AI Infra, and then at the top layer of the stack, which is end-user applications. The two middle layers, I find less interesting,” Panich said.
Hong Kong-based venture capital firm Audacy Ventures, which focuses on early-stage climate tech investments, is betting on deep tech startups to drive industrial decarbonisation across Southeast Asia.
In aviation, Audacy has backed FlyORO, which tackles last-mile supply and blending challenges in sustainable aviation fuel (SAF), and JetZero, an aerospace startup focused on fuel-efficient aircraft design. In heavy industry, the firm supports integrated approaches, such as carbon capture at the source and downstream utilisation, to accelerate decarbonisation in sectors like cement and steel.
“These are difficult problems to solve, years of development have often already been invested in the solution, resulting in significant and highly defensible IP,” said Toby Chan, Co-founder & General Partner at Audacy Ventures. He added that Audacy targets companies with mature technologies entering early commercialisation, where its APAC-focused network and sector expertise can help accelerate scale.
The State of Deep Tech in SE Asia 2025 report has extensive data on:
- The number of venture deals sealed and funds raised by deep tech startups in SE Asia since 2020.
- The most funded SE Asian deep tech startups of 2024
- Fundraising trends by deep tech sector
- Fundraising trends by country
- Early- and late-stage fundraising trends
- Insights from industry experts
