Staggering Decline: Asia's Venture Funding Dips to a 10-Year Low

Venture funding in Asia has reached a significant low, totaling $13.2 billion in Q3, marking the smallest amount since Q1 2015. This represents a 13% decline from Q2 and a staggering 44% drop from last year’s total of $23.8 billion.

Deal Flow Dwindles

The deal flow also continued its downward trend, with only 1,509 deals announced in Q3, reflecting an 8% decrease from Q2 and a 23% drop year-over-year.

AI Startups Struggle

Even the ongoing AI craze failed to bolster funding, as AI-related startups in Asia raised just $2.1 billion, down 20% from Q2 and the same as last year.

Late-Stage Rounds Plummet

The late-stage growth rounds faced the most significant decline, totaling only $5.8 billion—a 30% drop from Q2 and a 62% decrease from last year’s $15.3 billion. Notable funding rounds included:

• Baichuan Intelligence (China) - $390 million Series A
• XLMEC (China) - nearly $344 million
• Zepto (India) - $340 million Series G
• Moonshot AI (China) - $300 million

Early-Stage Funding Stagnates

Early-stage funding also showed a decline, with startups raising $5.6 billion, a 12% increase from Q2 but a 17% decrease from last year. Deal flow remained stagnant with 508 deals.

Seed Rounds Show Mixed Results

Seed and angel rounds fell 9% from Q2 to $1.8 billion, although this is a 6% increase from the previous year. However, deal volume was significantly down, with only 862 rounds closed in Q3.

Country Breakdown

China’s venture decline heavily influenced Asia’s overall funding, raising only $6 billion, a 61% drop from last year. Conversely, Japanese startups raised $1.3 billion, a 95% increase from Q2.

What It Means

While Asia is not alone in experiencing a drop in venture funding, its decline is particularly notable compared to other regions. The AI sector has not provided the expected boost in Asia, with AI startups comprising only 16% of the funding in Q3.