This interview originally appeared in the DealStreetAsia DATA VANTAGE report SE Asia Deal Review: Q1 2025.
While many investors have pulled back amid a steep funding slowdown and renewed US tariff threats, Gobi Partners has remained active, betting on Southeast Asia’s long-term innovation.
The Kuala Lumpur- and Hong Kong-based venture capital firm, which has approximately $1.6 billion in assets under management (AUM), sees structural growth drivers and rising digital adoption creating continued opportunities across the region.
In a recent interview with DealStreetAsia, Thomas G. Tsao, Gobi’s co-founder and chairperson, attributed the firm’s conviction to structural tailwinds across the region. While Q1 2025 marked the lowest quarterly venture funding in Southeast Asia in at least six years, Tsao noted that demand for innovations in healthcare, education, and climate resilience remained strong, particularly among underserved communities.
The need to solve fundamental challenges, he said, continued to create significant headroom for growth-stage opportunities in Southeast Asia.
Southeast Asia’s openness to adopting emerging technologies ahead of many developed markets is seen as another critical advantage. Tsao noted that across the broader region, Asia accounted for 60% of global growth last year, a share he expects will climb further as sectors such as AI, semiconductors, and climate tech attract capital inflows.
Founded in 2002, Gobi Partners has built its franchise around backing early- to growth-stage startups across emerging and underserved markets in Asia. In 2025, the firm sharpened its sector focus, deploying capital into areas such as semiconductors, fintech, cybersecurity, and sustainable materials. Recent investments include Malaysia-based SkyeChip, digital finance leader Funding Societies, cybersecurity platform ArmourZero, and sustainable packaging innovator Zence Object Tech.
The newly proposed US tariffs, which target Vietnamese, Thai, and Indonesian exports, are also viewed as a potential catalyst. Tsao pointed to the semiconductor sector’s realignment—with Malaysia benefiting from supply chain decoupling—as a precedent for broader manufacturing and logistics opportunities across Southeast Asia. Should foreign direct investment into the region accelerate, he expects a knock-on effect on technology transfer, capability building, and startup formation.
With Southeast Asia’s digital economy forecast to reach $363 billion by 2025, and returns in Western markets relatively compressed, Tsao believes the region is rapidly shedding its “emerging market” tag to become a keystone of global growth.
In the following Q&A, Tsao shares Gobi’s views on navigating the current funding downturn, the firm’s evolving investment theses, and why Southeast Asia remains a core focus for global capital allocators.
Gobi has remained an active investor even as Q1 2025 recorded the lowest funding activity in Southeast Asia since 2016. What’s giving you the confidence to keep deploying when many are sitting on dry powder?
Although the past few weeks have been “tariff-iying” and funding may have slowed, the need for innovation hasn’t. More people are coming online in markets like Southeast Asia, Pakistan, and MENA, increasing demand for digital solutions to longstanding issues. Access to healthcare, education, and even climate resilience remains uneven, especially in lower-income communities. Startups that can solve these fundamental challenges are poised for high growth.
“Developing economies in Asia, like SE Asia, are adopting Generative AI at a higher rate than developed economies.”
Asia has also shown itself to be very open to emerging technologies. Developing economies in Asia, like Southeast Asia, are adopting Generative AI at a higher rate than developed economies. Asia is also evolving into the new epicentre of the global economy, driving 60% of global growth last year. We expect that percentage to continue to climb as sectors like AI, semiconductors, and climate tech continue to attract investment.
Gobi has identified fintech, healthtech, TaqwaTech [using technology for purpose-driven innovation serving Muslim consumers], and the circular economy as priorities. Which of these sectors are proving more resilient in today’s constrained capital environment?
Gobi focuses on these sectors because they have consistently demonstrated resilience in the face of shifting geopolitical, macroeconomic, and social conditions.
In Southeast Asia alone, over 70% of the population is unbanked or underbanked. At the same time, cross-border trade is increasing throughout Asia. Both create significant opportunities for fintech. Healthtech fosters equitable societies by addressing healthcare access, such as affordability, provider shortages, and fragmented insurance systems.
“With six of the ten top plastic polluting countries in Asia, the circular economy is not only crucial to the region’s wellbeing but also to the whole world.”
With six of the ten top plastic polluting countries in Asia, the circular economy is not only crucial to the region’s wellbeing but also to the whole world. Solutions in this space are both environmentally urgent and commercially scalable.
Finally, though the global Muslim market is a $6.3 trillion market opportunity, it has been historically underinvested. The sector serves nearly 30% of the world’s population and is poised for rapid growth, especially as internet penetration increases in Muslim markets.
Are current valuations more in line with fundamentals, or are there still mismatches between founder expectations and market reality?
Most of the founders that Gobi works with have had their expectations managed by the funding environment of the last few years. High-potential startups with strong unit economics that can demonstrate real traction are still commanding healthy valuations. This has created a more disciplined market where businesses solving real-world problems and demonstrating well-honed financial discipline are still raising capital.
“High-potential startups with strong unit economics… are still commanding healthy valuations.”
While the current environment has been challenging for entrepreneurs and ecosystems, it is also laying the foundation for balanced, long-term and sustainable growth.
How would you describe the current exit environment in Southeast Asia? Are M&As or IPOs viable in this climate?
The decline in exits since 2021 has been challenging, but it also means that the exit landscape is evolving in ways that ultimately create more options for startups.
For many founders, the pathway to an exit is still a traditional IPO, but companies and investors are now more often looking at M&As and buyouts, particularly with strategic buyers. These M&As give sellers a higher degree of certainty and flexibility in structuring payments to accommodate the tighter funding environment. It also lets buyers factor in synergies that the merged entity will have when considering the price. Such M&As take longer, but it happened successfully with our portfolio company Hotelmize, a B2B travel optimisation solution provider that was acquired by South Korea-based travel superapp Yanolja. Despite a tighter liquidity environment, many high-growth companies still need to expand through acquisitions.
“For many founders, the pathway to an exit is still a traditional IPO, but companies and investors are now more often looking at M&As and buyouts.”
There are other increasingly popular options for liquidity. These include SPACs and reverse takeovers (RTOs). Both are more founder-friendly than traditional IPOs, costing less, completing more quickly, and offering more control over timing. Several markets, including the United States, Hong Kong, and Singapore, have introduced new regulations to protect investors, enhancing the attractiveness of SPACs. Gobi portfolio companies that have exited through SPACs or RTOs include Synagistics, Amber Premium, and Prenetics. Thanks to their flexibility, we expect more startups to choose these routes for their listings, even after the number of exits begins to increase again.
Furthermore, more companies are looking at local exchanges to list their businesses as geopolitical uncertainty mounts.
How will the newly imposed US tariffs, such as the 46% on Vietnamese goods, 36% on Thai exports and 32% on Indonesian imports, affect investor sentiment and capital deployment strategies in Southeast Asia?
Despite the 90-day pause, the potential US tariffs are still creating a lot of economic uncertainty throughout the world. But they can open windows of opportunity in Southeast Asia, too.
The chip war brought significant investment to Malaysia as chipmakers decoupled their supply chains from China. Similarly, once the tariffs go into effect, we expect them to boost Southeast Asia’s role in the global supply chain. This will create opportunities for startups that address friction points in manufacturing and logistics. If foreign direct investment in the region increases, technology transfer and skill development will also accelerate.
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.
