Private funding for SE Asia’s digital economy grew 15%

Investments are presently concentrated in late-stage rounds, with the funding share for seed to Series B deals declining from about 30% to about 20% in the last twelve months compared to the prior period

Private funding for Southeast Asia’s internet economy grew 15% from a year earlier to $7.7 billion in the 12 months to June 2025, lagging the global growth rate of 25% for private equity and venture capital investments, an industry report said on Tuesday.

The annual report, by Alphabet’s Google, Singapore state investor Temasek Holdings and global business consultants Bain & Company, also found that the funding was nearly 70% below 2021’s record high of $27 billion.

Investments are presently concentrated in late-stage rounds, with the funding share for seed to Series B deals declining from about 30% to about 20% in the last twelve months compared to the prior period, they said.

The report was expanded this year to cover Brunei, Cambodia, Laos and Myanmar, in addition to Indonesia, Thailand, Vietnam, Singapore, Malaysia, and the Philippines.

The region has around 700 million people and is one of the world’s fastest growing internet markets, due to a young population, widespread smartphone usage, high rates of urbanisation and a growing middle class.

Despite the funding chill, AI startups in the region continue to attract significant investments, the report said.

AI-related investments made up 32% of the private funding raised in Southeast Asia in the first half of this year, compared to 30% in the second half of 2024.

More than 680 AI startups in the region attracted more than $2.3 billion in the year to June, with more than 495 such startups based out of Singapore.

The report also found strong data centre capacity expansion, with countries rushing to build the capacity required to serve the AI boom.

Once all planned projects are completed, data centre capacity in Southeast Asia is expected to grow by 2.8 times, outpacing the rest of the Asia Pacific region, which is expected to grow by 2.2 times.