Asia’s Startup Funding Slipped Again Despite a Modest Q2 2025 Rebound
Despite a slight Q2 rise, Asia’s startup funding is still down 33% YoY, with big rounds and late-stage deals notably absent.
After a sluggish end to 2024, global startup funding finally showed signs of life in Q2 2025, with AI and a string of big exits pushing totals to their highest in over a year. Hopes were high that Asia, home to two of the world’s largest tech ecosystems, would ride that wave and help solidify the recovery. But that didn’t quite happen.
Startups across Asia raised just $26.2 billion in the first half of 2025, according to Crunchbase data, a sharp drop from the $39 billion pulled in during the same period last year. And while Q2 brought a slight uptick ($13.5 billion, compared to $12.7 billion in Q1), the region still posted one of its weakest H1 performances in years.
Kelechi Edeh
What’s Driving the Decline?
The reasons for this decline could largely be attributed to country-specific uncertainties, shrinking late-stage rounds, and investor caution at nearly every level.
China, traditionally the heavyweight of the region, saw funding drop 34% year-over-year in Q2, landing at just $5.1 billion. That’s despite a few standout raises like Biren Technology’s $207 million and SAIC Mobility’s $181 million.
Much of the decline stems from a broader funding chill that’s been brewing for over two years, driven by tightened government scrutiny, IPO dry spells, and a weakened domestic economy.
India, on the other hand, offered a bit more optimism. With $3.2 billion raised in Q2, funding inched up from Q1, buoyed by solid logistics plays like Porter and GreenLine. While year-over-year numbers were still down, the country’s deal pipeline hasn’t frozen over. It’s more like a slow drip, one that could turn into a flow if IPO markets reopen or large global funds return in force.
Meanwhile, Israel quietly posted its strongest quarter in over two years, raking in $1.9 billion in Q2 alone. Cybersecurity and AI took the lion’s share, led by Cato Networks ($359M) and AI21 Labs ($300M). In many ways, Israel’s funding resilience reflects a sectoral focus rather than sheer volume and shows that deep tech bets can still attract big checks even in a cautious market.
Signals of Resilience Amid Investor Caution
Zooming out to the regional trend, late- and growth-stage funding hit $6.4 billion in Q2, slightly up from Q1 but still far below historical averages. Only 155 late-stage deals were recorded, a low figure considering Asia's scale. This shortage of big-ticket raises mirrors what we saw in Africa’s March slump, where not a single $10M+ deal was announced. Across continents, it seems that mega-deals are still waiting for market signals to reemerge.
Early-stage funding in Asia has been remarkably stable, hovering between $5.5 billion and $7 billion over the last five quarters. However, seed deal counts dropped again in Q2, with just $1.6 billion spread across 827 known rounds. These early-stage figures are likely undercounted (due to reporting lag), but the slowdown signals investor selectiveness, especially at the smallest funding levels.
Country-by-country, Japan and Singapore both saw modest Q2 rebounds, though not enough to shift the region’s overall trajectory. Southeast Asia remains a mixed bag: high consumer engagement and digital adoption, but spotty access to follow-on capital, especially for startups outside Singapore or Jakarta.
Emmanuel Oyedeji
When you put it all together, Asia’s funding slump mirrors what we’ve seen in Africa. A few bright spots, but no breakthrough quarter just yet. And while both regions saw early-stage resilience, it’s the absence of late-stage confidence that’s capping growth.
Still, it’s hard to ignore the latent potential. With nearly 60% of the global population, large domestic markets, and surging demand for AI, fintech, and logistics solutions, Asia's startup ecosystem isn’t short on opportunity. It’s short on risk appetite, for now.
The real question heading into the second half of 2025 is whether we’ll see a return of growth rounds and strategic M&A activity to unlock some of that potential. If Q2 was the floor, Q3 and Q4 could finally bring the lift. But if big checks stay sidelined, it might be a long year of trickle-over-torrent funding patterns — across Asia and beyond.
