Southeast Asia’s startup funding market is showing signs of life again, but the recovery is not reaching most founders.
Venture-backed companies in the region raised US$7.25 billion across 217 equity deals in the first half of 2026, according to the Southeast Asia Startup Funding Report H1 2026 by Kickstart Ventures and DealStreetAsia. That is the strongest half-year total since H1 2022 and nearly four times the US$1.86 billion recorded a year earlier.
On the surface, it looks like a sharp rebound after two difficult years. Look closer, however, and the picture is far more uneven. Deal volume fell 5 per cent year on year and is now nearly 62 per cent below the H1 2022 peak of 572 transactions. The number of equity deals is the lowest the report has recorded since 2018.
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The message is clear: capital is back, but it is not back for everyone.
A recovery led by a few large cheques
The rebound was heavily concentrated among a small group of companies. The five largest rounds accounted for 75.5 per cent of all equity funding, while the top 20 took 89 per cent. The remaining 196 transactions shared just US$800 million.
Much of this reflects a global shift in investor appetite. Capital is flowing into AI, compute infrastructure, semiconductors, robotics, defence technology and other areas seen as strategically important. KPMG recorded US$227.4 billion in global venture investment in Q2 2026, the second-highest quarterly total on record, with AI companies driving many of the largest financings.
Southeast Asia is participating in that cycle, but mainly through infrastructure and enabling technologies rather than a broad-based revival across consumer internet, fintech or software.
The clearest example is DayOne, the data-centre operator whose US$4.5 billion Series C round accounted for 62 per cent of all equity funding in the region during the period. The deal is tied to the global buildout of AI and cloud-computing capacity, where investors are backing the physical infrastructure required to train and run large AI models.
Without DayOne’s round, Southeast Asia’s equity funding would have stood at US$2.75 billion. That would still be 80.1 per cent higher than H1 2025, but far less dramatic than the headline figure suggests.
Minette Navarrete, President and Managing Partner at Kickstart Ventures, said the region is benefiting from investors seeking stability, diversification and supply-chain resilience. But she warned against mistaking capital concentration for market strength.
“Deal volume remains a better measure of market momentum, and on that measure, capital has returned but not broadly, and that tells us Southeast Asia’s recovery is still finding its footing,” she said.
Singapore pulls further ahead
Singapore once again dominated the region’s funding landscape. Companies headquartered in the city-state raised US$6.7 billion across 145 deals, representing 92 per cent of disclosed equity funding and 67 per cent of deal volume.
That lead partly reflects Singapore’s role as Southeast Asia’s financing hub. Many companies based there raise money to support regional or global expansion, not just domestic activity. Even so, the gap between Singapore and the rest of the region has widened sharply.
Indonesia, Southeast Asia’s largest digital economy by population and internet users, recorded only 17 deals and US$104 million in funding. No Indonesian company appeared among the region’s top 20 equity rounds. That points to an acute shortage of growth capital in a market that, only a few years ago, was producing some of the region’s biggest venture-backed names.
Malaysia showed the strongest breadth outside Singapore, with 27 deals worth US$203 million. Vietnam raised US$340 million across ten transactions, making it the second-largest market by value, although Vinpearl’s US$255 million round made up three-quarters of that total.
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Thailand and the Philippines showed a similar dependence on single large deals. Amity Solutions accounted for about 77 per cent of Thailand’s US$130 million, while Salmon represented 75 per cent of the Philippines’ US$80 million.
Andi Haswidi, Head of Research at DealStreetAsia, said the US$7.25 billion headline should not distract from the weaker base underneath.
“Every market outside Singapore depended on one or two transactions to make its total. That is characteristic of what a market without depth looks like in any conditions,” he said.
The early-stage warning sign
The most worrying signal is at the early stage, where the next generation of growth companies is supposed to form.
Early-stage deal count fell to 195 in H1 2026, down 11 per cent year on year, 63 per cent below the H1 2022 peak and well short of the 353 deals recorded in H1 2024. If fewer startups are being funded today, the region could face a thinner pipeline of Series A, growth-stage and exit candidates in the years ahead.
Yet the amount of capital going into early-stage companies rose. Startups at this level raised US$1.72 billion, up 56.4 per cent year on year. Median pre-seed funding reached a series high of US$900,000, while median seed funding rose to US$3.7 million.
Investors, in other words, are writing larger cheques for a smaller group of companies. Founders who clear the bar may get more runway. Those outside investors’ preferred sectors or networks may find the door harder to open.
Series A remains the bottleneck. The median Series A round fell from US$11.6 million in H2 2025 to US$8 million, while the average dropped from US$17.6 million to US$12.9 million. Bigger seed rounds, therefore, do not necessarily mean more startups are graduating to institutional Series A financing.
Investors may instead be giving selected companies more time to prove product-market fit before facing a tougher priced round.
A broader but tougher capital stack
Another shift is the changing mix of capital providers. Sovereign funds, corporates, private equity investors and private credit providers are playing a larger role alongside traditional venture capital.
That can give founders access to deeper pools of money and strategic industry relationships. But these investors often assess risk differently from venture funds. They may care more about commercial traction, infrastructure value, strategic relevance or predictable cash flows than about high-growth narratives alone.
Debt is also becoming more common. Debt financing rose to 23 transactions from 17 a year earlier, with total value reaching US$1.36 billion. The implied average debt deal fell to US$59 million from about US$99 million in H1 2025, suggesting debt is being used by a wider set of companies rather than only a few large borrowers.
For Southeast Asian startups, this is both an opportunity and a constraint. The funding market is no longer only about persuading venture capitalists to bet on growth. Founders may need to assemble different types of capital for different stages of expansion.
Still waiting for a broad recovery
The macro backdrop is not weak. Developing Southeast Asia is expected to grow by about 4.6 per cent in 2026, while data-centre investment and technology exports are supporting markets such as Malaysia, Thailand and Vietnam.
But startup funding remains highly exposed to global conditions, including US interest rates, exit markets, currency risk and liquidity among limited partners. Until exits improve and more capital returns to regional venture funds, fundraising is likely to remain selective.
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The first half of 2026 shows that Southeast Asia can still attract large pools of capital when companies sit at the intersection of AI, infrastructure and global strategic demand. What it has not yet shown is a full recovery for the wider startup ecosystem.
For most founders, the funding winter has not ended. It has simply become more selective.
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