Anatomy of a shakeout: what 7,538 deadpooled startups reveal about Southeast Asia’s new tech reality

In the last decade, Southeast Asia's startup landscape was shaped by funding milestones, soaring valuations, and a young, digitally connected population. However, a darker dataset emerged: the technology startups that failed. Between January 2020 and July 2026, 7,538 such companies deadpooled, as revealed by the Tracxn dataset. This surge happened after years of cheap global capital, rapid digital adoption, and pandemic-induced behavior shifts that encouraged businesses to chase scale without ensuring economic viability. Here's a closer look at the most troubled sectors and their challenges.

Many notable venture-backed startups that collapsed were found in e-commerce, social commerce, quick commerce, prop-tech, co-working, fintech, Web3, logistics, on-demand services, deeptech, and media distribution. These businesses often raised substantial capital, with several surpassing $10 million in funding, yet their models relied on assumptions that no longer held as interest rates climbed and investors scrutinized margins more rigorously.

The initial impact of the pandemic was not immediate. In 2020, only 412 startups shut down in the region. Government emergency support, bridge rounds, and aggressive cost-cutting allowed many firms to survive. However, the true reckoning arrived the following year. In 2021, 2,260 startups in Southeast Asia deadpooled, a five-fold increase from the previous year and the highest annual figure in the dataset.

This surge reflected the fallout from the 2019 and 2020 overvaluation boom, as many companies had spent heavily on user acquisition, transaction subsidies, and market expansion before proving sustainable revenue models.

The funding winter intensified in 2022 when inflation rose and central banks tightened monetary policy. By then, 2021 and 2022 accounted for 57.3% of all closures in the six-year period. In 2023, the pace slowed with 1,121 closures as weaker companies had largely liquidated, and surviving entities cut costs. However, the pressure returned in 2024, with 1,378 startups shutting down, largely due to companies that had survived on bridge financing in 2022 and 2023 but ran out of options as Series B and C capital failed to arrive.

By the latest period, covering 2025 to July 2026, the number of shutdowns had dropped to 308, indicating that the most indiscriminate phase of the correction had passed. Yet, this doesn't mean Southeast Asia's startup ecosystem is entirely risk-free. Instead, the most reckless businesses have dissipated, leaving behind a more disciplined set of companies.

The business model failures were particularly evident in sectors that required constant cash injection. E-commerce and social commerce were the most exposed, with Indonesian fashion platform Sorabel and direct-to-consumer furniture company Fabelio both collapsing despite raising significant capital. Social commerce players Shox Fashion and WOWBID also struggled as acquisition costs increased and reseller-driven growth became unsustainable.

Quick commerce faced similar issues, with Dropezy, a dark-store grocery delivery startup, collapsing after raising funds. The challenge was that speed did not automatically translate into healthy margins, as rent, labor, stock management, and last-mile delivery costs proved difficult to absorb without subsidies. Proptech and shared-space companies were hit by fixed obligations, as seen with Vietnam's Propzy and Indonesia's CoHive.

Student housing platform Oxfordcaps and fintech companies such as Cabital and AlgoBlocks also folded due to these constraints. Logistics and on-demand services were squeezed by thin margins, with companies like Ritase and Kaodim unable to sustain operations despite securing early funding.