AI Startups Keep Raising as Southeast Asia’s Funding Drought Drags Into 2026

Southeast Asia's startups raised $2.81 billion across 98 equity deals in the first quarter of 2026, the lowest quarterly deal count in at least eight years, according to DealStreetAsia DATA VANTAGE's Southeast Asia Deal Review for the period.

The headline funding figure looks healthy on paper. It marked the highest quarterly total since the fourth quarter of 2022. But one transaction did most of the work. Singapore data centre operator DayOne raised a $2 billion Series C, accounting for more than 70% of all capital deployed in the quarter.

Strip out that outlier, and the picture stays bleak. Deal flow remained well below pre-downturn levels that prevailed before late 2022. The report describes a market settling at a lower base rather than recovering.

Where the money still flows

Investors have not stopped writing cheques. They have become more selective about who receives them. Capital remains available for specific themes and large outlier rounds, while broader deal activity stays thin.

Data analytics and AI/ML climbed to second place by deal volume with 13 transactions, trailing fintech at 16 and ahead of health tech at 12. That ranking reflects a shift in how the region's AI money gets allocated.

For years, Southeast Asian AI funding concentrated on enterprise software, analytics tools and conversational AI. The current wave favours agentic and generative AI: startups that automate workflows and execute tasks with limited human input.

The largest AI round went to Amity, a Thailand-founded enterprise AI and conversational software company that raised a $100 million Series D. Singapore generative AI platform Video Rebirth raised $30 million, and AI model developer Sapiens AI raised $20 million.

Amity plans to use the capital to expand its agentic AI roadmap, strengthen its research centre, and pursue acquisitions in Europe and Southeast Asia. Founder and executive chairman Korawad Chearavanont said the company secured the round by demonstrating execution in a tight market.

"By transforming these high-potential companies into AI-first businesses, we can expand our global footprint," Korawad said, describing the firm's strategy of buying recurring-revenue software businesses.

Video Rebirth founder Wei Liu framed the raise as a bid to stay ahead on research spending. "Our investors backed us because they understand that in this space, the teams that invest aggressively in R&D today are the ones that will define the industry standard tomorrow," Liu said.

Singapore widens its lead

Concentration remains the defining feature of the region's capital flows. Singapore captured 91.5% of total funding in the quarter. Its share of regional deal volume has stayed above 50% since the second quarter of 2022.

The city-state's depth of later-stage companies, regional headquarters and institutional investors lets it absorb a disproportionate share of capital when risk appetite is low. Investors gravitate toward larger, more mature ecosystems during downturns.

Malaysia provided the quarter's clearest surprise. It ranked as the second most active market with 18 deals, its highest tally since the third quarter of 2024. Most of that activity came from seed and earlier-stage rounds, supported partly by NEXEA Venture Capital's accelerator programme.

The Malaysian uptick suggests early-stage company formation continues in selected markets, even as larger rounds grow harder to close. It also exposes a widening gap between markets where seed activity holds up and those where momentum has collapsed.

Indonesia's governance overhang

Indonesia recorded just five deals, the lowest figure in the dataset. The slump runs deeper than thin capital. A series of fraud scandals has weighed on investor confidence in what was once the region's largest startup market.

The most prominent case involves eFishery. Founder Gibran Huzaifah was sentenced to nine years in prison over inflated financial reports, according to the report. Such cases reinforce the broader demand from investors for stronger governance and clearer paths to profitability.

Not every founder is retreating. Rama Suparta, co-founder of eyewear startup Saturdays, which raised $6.3 million in January, said he remains confident in the Indonesian opportunity, citing the country's large population and rising demand for vision correction.

"Indonesia remains our primary focus, while we are also exploring regional expansion," Suparta said.

The quarter leaves the region in an uneven place. Capital is flowing, but to fewer companies, fewer markets and a narrower set of themes. The recovery signals that appeared in March have yet to translate into sustained improvement across the broader ecosystem.