Southeast Asia’s startup funding market has recorded its weakest performance in over six years, with equity investments in the first half of 2025 falling 20.7% year-on-year to US$1.85 billion across 229 deals. According to the Southeast Asia Startup Funding Report: H1 2025, published by DealStreetAsia in partnership with Kickstart Ventures, the slowdown reflects global economic headwinds and tighter scrutiny of governance standards.
Despite the decline, the second quarter brought signs of recovery. Funding more than doubled compared with the first quarter, reaching US$1.28 billion versus US$580 million, suggesting that while overall deal flow remains limited, investors are prepared to back companies with strong fundamentals.
Regional shifts in investment
The report highlights changing investment dynamics across the region. Singapore continued to dominate, attracting nearly two-thirds of total funding at US$1.21 billion, but the country also recorded its weakest half-year yet. Deal numbers fell 13% compared with the second half of 2024, and nearly 44% year-on-year.
Indonesia, traditionally a key market because of its large consumer base, saw funding collapse 67% to just US$78.5 million, its lowest level on record. For the first time, it trailed the Philippines, where startups raised US$86.4 million, positioning the country as a rare standout in an otherwise cautious landscape.
Vietnam emerged as the region’s most notable success story. The number of deals rose from 17 to 23, with total funding soaring nearly 169% to US$275 million. Malaysia also posted stronger results, with proceeds doubling to US$196 million, driven by major fundraises.
Three companies achieved unicorn status during the period, bringing Southeast Asia’s total to 58. These were Malaysia’s Ashita Group, which raised US$155 million, Singapore’s Thunes with US$150 million at a US$1.42 billion valuation, and digital asset bank Sygnum, which surpassed the US$1 billion mark.
Early-stage funding weakens while late-stage rebounds
Investor caution was most visible in early-stage financing. Deals up to Series B dropped to 219, the lowest in six years, with total funding of US$1.1 billion. This is far below the peak of US$4.54 billion in the first half of 2022. The figures highlight tougher requirements for young startups, with investors placing greater emphasis on efficiency, profitability and sound governance.
Later-stage activity painted a more resilient picture. Although only ten deals were completed, they generated US$756 million, a 70% increase compared with the previous half-year. Median deal size rose to US$60 million, showing that investors are concentrating larger amounts of capital into proven businesses with scale and viable exit strategies.
Minette Navarrete, Founder and Managing Partner at Kickstart Ventures, said, “Global macroeconomic uncertainty and heightened governance scrutiny are reshaping the way capital flows into Southeast Asia. The bar for younger companies has risen considerably. 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.”
Sector focus highlights resilience in climate and health
Fintech remained the leading sector with 57 transactions worth US$631 million, though this was its weakest performance in more than six years. Health-tech rebounded strongly, more than doubling to US$108 million, helped by Nuevocor’s US$45 million Series B.
Green-tech also showed resilience, recording 20 transactions, while climate-focused startups attracted investment across renewable energy, waste management and low-carbon mobility, with 34 deals in total. These sustainability-linked sectors stood out against a backdrop of broader weakness, highlighting ongoing investor interest in companies addressing environmental and health challenges.
In contrast, private debt activity fell sharply to US$490 million, nearly half of the previous half-year’s level, as lenders turned more cautious and prioritised companies with steady revenue streams.
Stronger foundations for future growth
Despite the downturn, industry leaders believe the region is entering a healthier cycle. Navarrete noted, “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.”
Andi Haswidi, Head of Data Research at DealStreetAsia, added that accurate research is key to supporting the ecosystem. “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.”
