Startup funding in Southeast Asia stabilised in the second half of 2025 after hitting a cyclical low earlier in the year, with equity dealmaking ticking up modestly and signalling an end to the prolonged contraction in activity, a joint report by DealStreetAsia and Kickstart Ventures finds.
Deal volume edged up modestly in H2 2025, with 233 equity transactions recorded, compared with 228 deals in the first half. Quarterly data also point to stabilisation, with deal counts holding broadly steady over the past five quarters, reinforcing the view that activity has found a functional floor.
Funding value rebounded more sharply in the second half, rising to $3.51 billion from $1.86 billion in H1. However, the divergence between deal count and capital deployed should be interpreted with caution, as the increase was driven largely by a small number of outsized transactions rather than a broad-based recovery in activity, says the Southeast Asia Startup Funding Report: 2025.
On a full-year basis, 2025 closed with one of the lowest annual deal counts in more than six years, underscoring the extent to which activity has reset from prior-cycle norms despite signs of stabilisation in the second half.
The data point to a market environment characterised by disciplined deployment and tighter underwriting standards, with investors maintaining a selective approach to new investments amid continued macro and exit uncertainties.
That selectivity was most evident at the later stages. While early-stage funding continued to decelerate over the year, late-stage deal flow showed a clearer recovery, with transaction volume more than doubling to 24 deals in H2 from 10 in the previous semester and nine a year earlier, signalling a renewed willingness to transact at the top end of the market.
Southeast Asia minted four unicorns in 2025, up sharply from just one in 2024 and two in 2023, reinforcing the growing concentration of capital in a smaller pool of companies with clearer scale potential and more sustainable growth profiles.
Fragmentation across markets
While second-half data suggest Southeast Asia’s venture market has stabilised, the recovery remains uneven and increasingly market-specific, according to the report. Activity patterns in H2 2025 diverged sharply across key markets, reflecting differences in investor appetite, deal flow depth, and the ability to sustain deployment under tighter underwriting standards.
Singapore, which accounted for more than 60% of regional deal count in 2025, recorded a clear pickup in deal activity in the second half, the report says. The improvement underscores its continued role as the region’s most resilient venture market, with investors maintaining deployment even amid stricter valuation and diligence thresholds.
Thailand also saw an improvement in dealmaking in H2, albeit from a low base. The uptick reinforces its position as a recovering but still small venture market, where incremental increases in activity can materially shift headline trends.
Indonesia, by contrast, remained broadly flat through the year, with little semester-on-semester movement in deal volumes. The data point to a market that has stabilised after a prolonged slowdown but has yet to show signs of renewed momentum.
Indonesia recorded little semester-on-semester movement in deal volume—pointing to a market that has stabilised after a prolonged slowdown
Vietnam, alongside Malaysia and the Philippines, saw activity weaken into the second half, with declining deal volumes signalling continued retrenchment rather than consolidation. Across the region, persistently thin deal flow in 2025 reflects sustained capital discipline and selective deployment, rather than a return of broad-based risk-taking.
A functional floor
Fund managers interviewed for the report point to stabilisation rather than a rebound across Southeast Asia’s venture market.
Kickstart Ventures president & managing partner Minette Navarrete says the consistency in deal activity suggests the market has found a functional floor, after several years of pullback forced investors and founders to reset expectations around valuation, growth and capital efficiency.
“There is confidence returning to the market, but it is a quieter, more thoughtful kind. From our perspective, that is healthy. It creates the conditions for a more resilient and sustainable next growth cycle, rather than a premature rebound driven by excess risk-taking,” said Navarrete.
Edgar Hardless, the CEO of Singtel Innov8, cautioned that it remains unclear whether the region has reached a cyclical bottom. He expects investor sentiment to stay cautious into the first half of 2026.
“One of the biggest challenges is the lack of exits, creating higher uncertainty of returns for investors in this region. High valuations in the past few years have made it harder for startups to find local acquirers,” Hardless said, while adding that the appetite of companies in Southeast Asia to meet the valuation expectations from entrepreneurs and investors is more limited compared to other regions like North America.
Speaking from the perspective of corporations, Carl Cruz, the president & CEO of Philippine’s telco giant Globe, said shifting consumer behaviour, inflation and intensifying competition are driving tighter execution, more disciplined capex, and a sharper focus on scaling initiatives that move the needle across the network and technology stack.
“We are pouring support into efforts that will future-proof our business. For example, we are embedding AI across multiple facets of our organisation, and it is now a critical piece of our customer engagement and network operations,” Cruz said.
Resilient sectors hold up
Sector performance in 2025 highlighted a widening divergence across Southeast Asia’s venture market, as capital increasingly concentrated in areas seen as more resilient under tighter funding conditions. While overall activity remained subdued, select sectors continued to attract relatively stronger investor interest.
Fintech remains SE Asia’s most active vertical but delivered one of the weakest full-year deal volumes
Fintech remained the region’s most active vertical by deal count, but delivered one of its weakest full-year outcomes in more than six years. The decline in both deal volume and funding value suggests the slowdown has been structural rather than cyclical, with investors maintaining exposure through smaller, more selective transactions.
Green tech emerged as the second most active sector in 2025, standing out for its relative resilience. Deal activity held broadly stable across both halves of the year, signalling sustained engagement even as funding values remained volatile amid shifting policy and return expectations.
Health tech ranked third and regained momentum following a sharp correction in 2024. Activity strengthened in the second half of the year, with funding supported by a rebound in capital deployment, positioning the sector as one of the clearer beneficiaries of renewed selectivity.
By contrast, e-commerce continued to lose ground in 2025, as deal flow thinned further and the sector recorded one of its weakest annual outcomes in over six years. Investor appetite remained constrained by margin pressure, competitive intensity and ongoing challenges around sustainable growth.
Enterprise software & IT solutions rounded out the top five by deal volume, but activity reset sharply following a brief rebound in 2024. Funding levels declined further, reflecting a pullback in investor appetite as scrutiny around monetisation, scalability and customer economics intensified.
Read the Southeast Asia Startup Funding Report: Full year 2025 for:
- Quarterly, half-yearly, and annual startup fundraising trends in SE Asia
- Top deals of 2025
- Most favoured industries by venture investors
- Fundraising trends by country
- Trends in climate tech funding
- Insights from prominent founders, fund managers, and corporate executives
