Southeast Asia startup funding hits six-year low at USD $1.85 billion

Southeast Asia's startup funding market reached its lowest point in more than six years during the first half of 2025, according to new data released by DealStreetAsia in partnership with Kickstart Ventures.

The Southeast Asia Startup Funding Report: H1 2025 shows that equity investments across the region dropped 20.7% year-on-year to USD $1.85 billion, spread over 229 transactions. Both deal volume and value are at their lowest since the report's inception, as investor confidence was dampened by ongoing macroeconomic uncertainty and increased scrutiny of governance standards.

Despite the overall decline, certain markets and sectors demonstrated resilience. Capital deployed in the second quarter more than doubled that of the first quarter (USD $1.28 billion compared to USD $0.58 billion), an indicator that, while transactions remain muted, investors are targeting larger deals with businesses that demonstrate strong fundamentals.

Regional realignment

Singapore continued to dominate as the region's fundraising centre, securing almost two-thirds of total equity capital at USD $1.21 billion. However, the city-state also recorded its weakest half-year performance with 129 deals, representing a 13% drop compared to the previous semester and a 44% decline year-on-year.

Indonesia, traditionally one of Southeast Asia's most robust markets due to its sizeable consumer base, experienced a sharp contraction with investment down 67% to USD $78.5 million. This resulted in Indonesia falling behind the Philippines for the first time, as Philippine startups raised USD $86.4 million, positioning the country as a regional exception.

Vietnam emerged as the standout market, with a 169% surge in funding year-on-year to USD $275 million, and the number of deals rising from 17 to 23. Malaysia also showed improved performance, with proceeds doubling to USD $196 million, due to several notable fundraises in the period.

The region also witnessed the arrival of new unicorns. Malaysia's Ashita Group raised USD $155 million at a unicorn valuation, Singapore-based Thunes garnered USD $150 million at a valuation of USD $1.42 billion, and Sygnum, a digital asset bank operating in Singapore and Switzerland, crossed the USD $1 billion mark. Southeast Asia is now home to 58 unicorn-status startups.

"Global macroeconomic uncertainty and heightened governance scrutiny are reshaping the way capital flows into Southeast Asia. The bar for younger companies has risen considerably," said Minette Navarrete, Founder and Managing Partner at Kickstart Ventures. "Early-stage funding now demands sharper proof of capital efficiency, viable growth models, and teams that can be trusted for both market performance and good governance, while capital at the later stage is consolidating behind companies that have demonstrated resilience and scale. This creates a more disciplined environment for both founders and investors."

Investment stages

Investor caution was most apparent in the early-stage segment, with transactions up to Series B falling to a six-year low of 219 and proceeds dropping to USD $1.1 billion, markedly lower than the USD $4.54 billion peak in the first half of 2022. Investors appear to be prioritising start-ups that present clear paths to efficiency and profitability rather than rapid expansion.

Late-stage funding, by contrast, showed renewed momentum. Though only ten late-stage transactions were completed in the first half of 2025, these deals generated USD $756 million - a 70% increase on the previous half-year. The median deal size grew to USD $60 million, suggesting that investors are concentrating their capital with scale-ready companies with proven business models and credible exit strategies.

Sectoral patterns

Placed under the lens of sectoral activity, fintech led the region with 57 deals totalling USD $631 million, although this still represented a six-year low in both deal volume and total value. Health tech saw a notable rebound to USD $108 million, credit largely to Nuevocor's USD $45 million Series B raise, while green tech completed 20 transactions despite a decline in aggregate funding.

Startups focusing on climate solutions also retained momentum with 34 transactions in the first half of 2025, many of them targeting renewable energy, waste management, and low-carbon mobility. These "sustainability-linked" sectors stood out amid the weaker landscape, showing that investor focus on climate and health impacts remains despite more conservative capital deployment elsewhere.

Private debt activity softened, with proceeds nearly halved from the end of 2024 to USD $490 million as lenders shifted their attention towards revenue-generating companies with greater repayment capacity.

Next cycle outlook

While the market's contraction presents challenges, some industry leaders argue that it marks a necessary recalibration for the region's startup ecosystem.

"The numbers tell us that Southeast Asia is not in decline, but in reset. Investors are no longer chasing growth at any cost, and founders are now challenged to build businesses that are disciplined, efficient, and resilient. The rebound in late-stage deal sizes and the emergence of new unicorns show that capital is still available, but it is increasingly directed toward companies that can prove their fundamentals and readiness for scale. This is a healthy recalibration for the region, laying stronger foundations for the next cycle of growth," Navarrete stated.

Andi Haswidi, Head of Data Research at DealStreetAsia, highlighted the significance of detailed research for industry participants. "This collaboration with Kickstart Ventures underscores the value of tracking venture capital with precision. Our hope is that the report serves as a practical reference for founders and investors, particularly as they plan cross-border growth, and as a reminder of the strength within Southeast Asia's startup ecosystem."

The report draws on a variety of sources, including industry data, regulatory filings, and proprietary research, and acknowledges that some figures may be revised as new information comes to light given the private nature of Southeast Asia's capital markets.