Southeast Asia startup funding finds a floor, but not a rebound

Southeast Asia's venture capital market has halted its decline but remains far from recovery, according to the "Southeast Asia Startup Funding Report for 2025" by DealStreetAsia and Kickstart Ventures. In 2025, the region saw only 461 equity deals, the lowest annual count since at least 2018. While second-half deal activity showed modest growth, the broader trend points to a more selective funding environment.

Investors are being more cautious, focusing on companies with disciplined operations, strong governance, and a clear path to sustainable growth. This marks a departure from the previous era of rapid scaling and large fundraising rounds. Late-stage startups have seen a resurgence, with deal volume more than doubling to 24 transactions in the second half of 2025, compared to 10 in the first half.

This helped the region create four new unicorns in 2025, including Singapore-based healthtech company Ultragreen.ai and digital asset bank Sygnum, which raised US$58 million to reach a billion-dollar valuation. However, the recovery at the top has not translated into a more favorable market for early-stage startups. Seed-stage founders continue to face a challenging fundraising landscape, with median seed valuations decreasing to US$2 million in 2025 from US$2.5 million in 2024.

The shift in investor behavior reflects a broader change in approach. Investors now demand proof of revenue models, stronger controls, and a credible path to growth, rather than simply betting on potential scale. This change has made the role of the lead investor more critical than ever. Without a reputable lead investor, even promising startups may struggle to gain traction.

The article highlights that Southeast Asia's startup ecosystem needs to move away from the "growth at any cost" mentality, which has been unsustainable in the region's diverse market landscape. Instead, investors are prioritizing revenue and profitability as key indicators of long-term success.