Southeast Asian venture investors are excited about AI, but not too excited about the region

We’ve covered the impact of AI on almost everything: health care, bank, Agriculture, video gameand even k-pop. (As an aside, please check it out My debut as a Korean singer-Thank you for your support from Korean AI developer Supertone.

Deepseek’s Efficient, powerful, and, importantly, inexpensive models It shook the Asian AI conversation, giving investors a second look to local AI developers and encouraging companies to adopt new technology.

Speaking on our stage last week, Jixun Foo, senior managing partner at Granite Asia, celebrated the “Deepseek moment” that democratized access to AI throughout the region.

AI optimism has also been lifted Hong Kong Stock Marketinvestors are rushing to invest in mainland China AI developers like Alibaba and Kuaishou. Stocks from other Asian high-tech companies, including TSMC, SoftBank, South Korean Naver and Kakao, are also rising amid the AI boom.

At first glance, Southeast Asia should be an attractive home for startups. The region’s population is young, still growing and digitally savvy. However, at our conference stage, people who actually have to fund these AI efforts. I was more vigilant.

Even amid a global slowdown, venture capital in Southeast Asia plummeted almost 80% from its 2022 high. CNBC. “Funds have drastically dried up as people are looking for more profitable companies and stable cash flows rather than cash-burning tech companies,” said Helen Wong, managing partner at AC Ventures.

She urged investors to be cautious. “This is not a very mature ecosystem unlike China, where there are entrepreneurs who are experiencing intense competition. We’re still a little more raw here,” she said.

“What is this (Southeast Asia)?” asked Phylicia Koh, general partner at Play Ventures, on another panel of video games. “It’s a challenge and I’m not jealous of a VCS focused on Southeast Asia.”

Singapore, the region’s financial hub, had only three IPOs in mid-July this year. That largest, NTT DC REIT (a data center real estate investment trust from NTT Japan) raised $773 million. Hong Kong’s largest IPO – Secondary list Battery-making giant CATL boosted at least $4 billion.

Public tech companies aren’t doing very well either. In a recent issue of the magazine, my colleague Lionel Lim Let’s talk One such startup, Indonesian passenger company Goto, has plummeted almost 85% in its stock since its 2022 IPO in Indonesia.

“() Is the capital market here mature enough to support the exit? It’s probably not performing as investors wanted,” Koh added.

What is another reason why Southeast Asia is struggling? It’s big, but not very As much as markets like China, India or the US, “Why are there no renotes in this part of the world?” Foo asked using global names. The intensely successful Chinese social media platform Xiaohongshu. Southeast Asia, smaller than China (and divided into different markets), lacks the network effect to charge local content platforms.

Still, the speaker pointed out that Southeast Asia has many opportunities for those who are good to look for them. Wong said that while fintech and e-commerce companies may be struggling, climate and sustainability startups are still raising money.

Matthew Graham of Ryze Labs said: (However, he said, “I wasn’t interested in the company trying to become the 19th LLM.”

And Southeast Asia-based funders are ready to start investing again, if not now. “We want to be patient, we want to see the convergence of talent and market recruitment, and we’re going to start investing,” Foo says.

Nicholas Gordon
X: @nickrigordon
Email: nicholas.gordon@fortune.com

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Venture deals

– Lemotivea programmable optics company based in Redmond, Washington, raised $59 million in Series B funding. Amazon’s Industrial Innovation Fund, Omani’s ithca, Gates Frontierand metavc.

– Positrons you havethe Reno-based hardware developer for multimodal AI has raised $51.6 million in Series A funding. courage impartial partner, Managementand DFJ growth Leading the round and participating Waterway Venture others.

– Bright topsthe developer of Cybersecurity Microagent, based in Austin, Texas, raised $50 million in Series B funding. OG Venture Partners lead the round, joining Lightspeed Venture Partners and Vertex Growth.

– Fable SecuritySan Francisco-based human risk management platform raised $31 million from Greylock partner and Red Point Venture.

– E2Bthe San Francisco-based provider of open source cloud infrastructure designed for AI agents, has raised $21 million in Series A funding. Insight partner Leading the round and participating Decibels, Sunflower capital, Soand an angel investor.

– Julius AIraised $10 million in seed funding from San Francisco-based data analyst for AI-powered knowledge workers. Bessemer Venture partner, Y Combinator, horizon VC, AI grants, 8vcand an angel investor.

– arrival safetyThe San Francisco-based developer of AI-powered assistant technology raised $10 million from the company, designed to reduce exposure to security risks. M12 Existing investors including Artisan Ventures.

– Journeya New York City-based company provider of mental health solutions, has raised $8 million in Series A funding. Cumbria’s Growth Partner Leading the round and participating Manchester story, Canan partner, J-Ventures, J-Impact, Life Science Angel, HealthTech capitaland others.

– Overwatch ImagingHood River, Oregon, developers of aerial imaging systems and AI-powered automation software for intelligence and monitoring raised $6 million in funding. Venture Team Leading the round and participating You have semcap, Promote Oregon Venture Direct Fundand Edo Capital.

– keyNew York City-based AI tool designed for private equity teams has raised $5 million in seed funding from Sorenson capital, General catalyst, Y Combinator, The era, Tiferes Ventures, Dunamu Ventures, The capital of Palm Driveand an angel investor.

Private Equity

– BVP Forge Acquired a majority stake Betterrxa Hospice Pharmacy Platform based in Salt Lake City. Financial conditions have not been disclosed.

Exit

– eqt and CPP Investment I agreed to get it Neo Goffa compliance software provider for HR and US public sector agents based in El Segundo, California; Warburg Pincus and Carlyle. Financial conditions have not been disclosed.

– The capital of grid irons I agreed to get it Greenix Pest Controlfrom a pest control company based in Orem, Utah. Reata Capital Group. Financial conditions have not been disclosed.

– Warburg Pincus I agreed to get it flavorsuma provider of natural flavor solutions for food and beverage companies based in Kalamazoo, Michigan; Riverside Company. Financial conditions have not been disclosed.

other

– Nice I agreed to get it Cognitiona Dallas-based customer service AI agent developer who treasures the company for around $955 million.

ipos

– FigmaThe San Francisco-based design software company is currently planning to raise up to $115 billion with a 36.9 million share offering priced between $30 and $32. The company recorded sales of $821 million for the year ended March 31, 2025. Index Venture, Greylock Partner, KPCB Holdings, Sequoia capitaland Woowaras family trust I’m going back to work.

– Firefly Air SpaceThe Cedar Park, Texas-based space and defense technology company has announced plans to raise $631.8 million on NASDAQ with 16.2 million shares offerings priced between $35 and $39. The company recorded revenue of $108 million for the year ended March 31, 2025. AE Industry Partner, Weekly Instituteand Thomas Mercucic I’m going back to work.