SINGAPORE Trends and Developments Contributed by: David He, Benjamin Teo, Kinnari Sahita and Binh Vong, Gunderson Dettmer Singapore LLP
Overview Singapore continues to solidify its status as the most reliable destination for investors seeking exposure to South-East Asia’s start-up eco - system, accounting once again for more than two-thirds of all venture dollars deployed, and a significant majority of venture financing trans - actions, among start-ups operating in ASEAN. According to Enterprise Singapore, Singapore is home to more than 4,500 start-ups, 400 VC firms and 220 incubators and accelerators, and ranks among the top five cities globally in total venture dollars invested into VC-backed com - panies, behind only Silicon Valley, New York, London and Beijing. The past year was by all accounts another challenging year for regional VC fundraising by start-ups and funds alike. Nearly all key met - rics – aggregate dollars raised, aggregate deals closed, median valuations, median check sizes, and the number of new funds announced and closed – continued to experience a year-on-year decline that started in 2023. By contrast, more mature markets such as the USA experienced a gradual recovery in VC funding, fuelled by the enthusiasm surrounding AI and AI-focused tech - nologies. Nevertheless, there were some positive develop - ments in the market over the past year, as inves - tors began to shift their focus from mainly sup - porting existing portfolio companies to showing a greater willingness to allocate capital toward new opportunities. These investments were generally accompanied by increased scrutiny, stricter governance terms, and carefully crafted downside protections.
Continued Decline in Regional Start-Up Fundraising The region’s recovery from the funding winter continues to face global macroeconomic and geopolitical challenges. Persistent inflation and elevated interest rates in some of the world’s largest economies have depressed capital mar - kets activity and led to increased stock market volatility. Wars, elections, political tensions and tariffs have continued to disrupt global supply chains and trade, resulting in further uncertainty for investors and operators alike. Many large multinational corporations and insti - tutions opted to focus on cash preservation and organic growth of their core businesses rather than pursuing acquisitions and outbound investments. Meanwhile, traditional institutional investors, including pension funds, endowments and sovereign wealth funds, chose to allocate their capital into private credit and public equi - ties instead of venture funds. The lack of exits in South-East Asia also led crossover funds and hedge funds – which had previously provided numerous secondary exit opportunities for early- stage investors like VCs – to reduce their expo - sure in private companies. Finally, many global investors with an emerging markets mandate chose to redirect their capital to countries like India, where capital markets activity remained robust. According to DealStreetAsia, approximately USD4.5 billion was invested into South-East Asian start-ups in 2024, representing a 42% decline from 2023. The total number of success - ful deals in South-East Asia tracked by Deal - StreetAsia also fell more than 10% from 2023, to just 633. Pitchbook reported slightly higher overall figures, tracking 980 successful deals totalling USD7.6 billion in the region, represent -
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