Southeast Asia will still be resilient, as VCs prioritise efficiency

“Twenty twenty-five may see a mixed bag for fundraising as macroeconomic conditions stabilise but remain cautious. While inflationary pressures and high interest rates are expected to ease, their residual effects could still temper risk appetite among investors.

“In Southeast Asia, including Indonesia, the narrative might differ slightly, as the region continues to showcase resilience due to its growing consumer base, rapid digital transformation and relatively low-cost operating environment.

“Many VCs will focus on capital efficiency, preferring startups with clear paths to profitability over aggressive growth plays. Larger funds may reserve more dry powder for portfolio support rather than new investments.

“Meanwhile, startups will face continued scrutiny, with a shift towards demonstrating unit economics, strong governance and resilience against market volatility.”

AI and automation will dominate the trends

“Investors will lean into thematic funds targeting AI, climate tech, fintech and healthcare. Generative AI and automation technologies will dominate attention, while climate-focused innovations could witness a surge due to global ESG commitments.

“For startups struggling to raise at higher valuations, expect a rise in bridge funding and valuation corrections. [We will also see] growth in revenue-based financing, venture debt and crowdfunding as founders seek capital without diluting equity.

“Southeast Asia, including Indonesia, will continue attracting global capital due to its expanding middle class and untapped markets.”

The global economy remains tricky

“The global economy remains a double-edged sword. The reopening of China, easing inflation and stabilising commodity prices could bolster investor confidence in emerging markets like Indonesia.

“However, high interest rates make capital more expensive, and geopolitical risks (for example, the US-China tensions) create uncertainty, limiting cross-border investments. Weak consumer sentiment in developed economies might also impact demand for export-driven startups.”

Read more: Debra Au on the evolution of financial crime in the digital age and how AI can help to fight it

Four challenges for startups seeking funding 

“There are four main challenges: firstly, founders may struggle to secure favourable valuations, especially if they raised at inflated multiples in earlier rounds. Then, they have to show proof of scalability: investors are demanding not only growth but profitable growth.

“There is also a funding gap, where early-stage funding is still relatively healthy, but late-stage funding faces a significant gap.

“Lastly, there is increasing global competition as startups in Indonesia must differentiate themselves amidst increasing competition for funds from neighbouring countries like Vietnam and the Philippines.”

Advice for founders in the coming year

“Refine your value proposition and focus on solving high-impact problems that resonate with current market trends. 

“Demonstrate financial discipline and showcase efficient use of capital, clear unit economics and realistic growth projections.

“Diversify your investor base and explore regional and global investors to mitigate over-dependence on local VCs.

“Build strategic partnerships and collaborate with corporates and industry leaders to strengthen your market position and credibility.

“Lastly, prepare for long timelines as fundraising in 2025 will likely take longer. Founders must plan for extended runways.”

Read more: Founderitis: The syndrome that can kill a startup

Sarah Chen-Spellings co-founded Beyond The Billion to actively pledge and invest in women-founded companies. In 2024, Beyond The Billion doubled down on closing the gender funding gap and expanding its capital campaign to mobilise new markets, including India, France and the UK, for its female founders.

Says Chen-Spellings, “We continue to deepen the systemic work done with our partner funds: to accelerate women as capital allocators and as innovators. New partnerships with key firms and institutions like UBS, Dell Technologies and other family offices have opened new opportunities to drive systemic change in how capital flows to underrepresented founders.”

Read more: Why Sarah Chen-Spellings is investing a billion dollars in female founders 

AI investments defied the broader market downturn in 2024

“Twenty twenty-four has indeed been a challenging year, marked by economic uncertainty and an overall reset and recalibration of valuations. That said, the AI industry was on a different trajectory—and sucked up the majority of VC funding in 2024.

“According to Crunchbase data analysed by EY, AI deals accounted for 37 per cent of the US$38 billion raised by VC-backed companies in Q3 2024, with four of the 10 largest deals involving AI-related companies. The increase in AI-related investments is still expected to be just the beginning of a longer-term trend.

“I believe 2025 will see a continued focus on fundamentals and flight to quality. Investors will focus on quality over quantity, doubling down on startups that exhibit strong unit economics, clear pathways to profitability and leadership teams equipped to navigate volatility. For founders, it will still be a tough climate, but those who align with these criteria will thrive.”

The AI gold rush is here to stay, but...

“With a twist. The gold rush in 2025 will be about applied AI—where AI solves real, industry-specific problems. What excites me most is AI’s potential in areas like education, healthcare and climate tech, creating scalable solutions that have a lasting impact.”

Double bottom line investments are gaining traction, finally 

“We’ll see a sharper emphasis on thematic funds, especially in areas like climate tech, generative AI and healthtech. I’m encouraged despite the marked negativity surrounding ESG and what felt like clear attacks against diversity initiatives in 2024, institutional investors are still committed to double-bottom-line returns—investments that generate financial returns alongside positive societal impact. We’re also seeing LPs (limited partners) becoming more selective, while a ‘proven track record’ has always been a key factor.”

Founders are under greater scrutiny 

“For many startups, the biggest challenge is the heightened scrutiny from investors. Gone are the days of easy funding rounds based solely on growth projections. Today, startups need to demonstrate not just a compelling vision but clear metrics for traction, capital efficiency and market fit. On top of that, the competition for limited capital has intensified.”

Read more: How this Hong Kong entrepreneur is matchmaking impact startups with the right investors

Advice for founders who are looking to raise funds 

“Focus on building genuine relationships with investors well before you need the money. Be prepared to answer tough questions about your business model, unit economics and exit strategy.

“Most importantly, remember that fundraising is a two-way street. The best investors bring more than just capital—they bring networks, expertise and strategic value.”

Read more: Asia’s leading venture capitalists are propelling innovation in the region

Kenrick Drijkoningen is the general partner of Play Ventures, a global venture capital firm specialising in early-stage gaming with a focus on play-to-earn and Web3 gaming studios and startups. Additionally, Drijkoningen is a founding partner of LuneX Ventures, a crypto-focused spin-off from Golden Gate Ventures that invests in cryptocurrency assets and blockchain companies.   

Play Ventures recently raised US$140 million for its third gaming fund, bringing its total assets under management to US$450 million. This marks Play Ventures’ largest fund to date and comes at a crucial time for the gaming industry, which has faced challenges leading to significant layoffs.

Read more: From gamer to gamechanger, Tryke Gutierrez is on a mission to bring Philippine esports to the top tier

A little relief is coming in 2025 

“The last two years were a difficult fundraising environment for startups as two issues converged: interest rates going up and high private valuations at the end of the zero interest policy in the US. The market needed time to adjust and I think going into 2025 things look healthier with more realistic startup valuations and investors slowly starting to allocate again. 

“We will still see a lot of bridge or flat rounds, but easier to come by than in previous years.” 

The web3 craze is back again

“Web3 has been held back from its potential for the past four years under a hostile US administration. This is set to change from next year and we expect top talent and investors to once again enter the space. Web3 is still a fundamental technology set to change the way we transact money and assets globally.

“Gaming is the largest form of entertainment by a long shot. While web3 gaming has been slow to take off, we think we’ll see more elements enter games in years to come.”

But AI will still dominate

“AI is going to see a gold rush for years to come as it’s a fundamental technology shift, just like crypto and Web3.”

Go for a slow and steady when it comes to fundraising 

“Raise a little less to avoid high dilution and raise more later when you can show good traction.” 

Singapore continues to attract investors

“Singapore presents compelling investment opportunities in 2025 [because] you need robust legal and financial infrastructure to support startup investors. Companies can operate regionally but we like to see at least the HQ in Singapore.”

Meet more venture capitalists on the Gen.T Leaders of Tomorrow list. 

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