SEA of Startups

In the first nine months of this year, startups in Southeast Asia raised more than $13 billion. A record. Depending on whose tracker you believe, that is somewhere between a 120% and a 170% jump on last year.

Hold on to that range for a second. Two serious data providers, looking at the same region over the same nine months, cannot agree on the number. That is not an accident, and we will come back to it.

Here is the second number, and it is the one I want you to actually feel. Of that $13 billion, seed and angel rounds, the first real cheque a brand new company gets, came to about $270 million. Spread across roughly 90 companies.

Sit with the gap. $13 billion at the top of the page. Ninety founders at the bottom, splitting $270 million between them. The money in this region has never been bigger, and it has almost nothing to do with the founder in Manila, KL or Bangkok trying to make payroll this month.

I have watched the money here change shape about four times in a decade. Every time, it arrived looking like the boom had finally come. Every time, the headlines said we had arrived. And every time, when you followed the money to the end, it was not here to build a Southeast Asian company at all. It was here for something else.

So this week I want to follow the money through all four of its disguises. Then, at the end, I will tell you why, after taking a blowtorch to all of it, I am more bullish on this region than I have been in years. I mean that. This is not a sad story.

One. The headline is the trick

Thirteen and a half billion dollars, nine months, a record. If that is the only line you read, the drought is over and it is time to go out and raise again.

Here is what the line does not tell you. Three deals were 54% of that number. Three. Widen the lens to every round of a billion dollars or more, and four deals were about 63% of all the money raised in the entire region this year. Before we have even started, nearly two thirds of Southeast Asia’s record year is a handful of enormous cheques going to a handful of enormous companies.

So here is the one habit that will protect you from almost every misleading funding headline about this region. When a number says funding hit a record, your first question is never how much. It is how many. How many companies? Here, more than almost anywhere, one or two giant transactions can carry the whole number and make a starving market look like it just ate a feast.

Look at where the money actually sat. Late stage, the Series C and beyond, the pre-IPO money, more than tripled to over $10 billion. Early stage, the seed and Series A, the part of the market where companies are actually born and where the next decade here gets decided, barely moved.

Data centres alone were about 35% of all the money. I would love to know when we started counting data centres as startup funding. Video generation tools took another big slice on top.

Think about what a data centre is. Power, concrete, cooling, and rack after rack of servers. It is a real estate and energy play with a technology label on the front. Perfectly good business, and we need them. It is just not a Southeast Asian founder with an idea and a laptop. The single biggest category in our record year is, quite literally, buildings.

So the record is not founders getting funded. The record is a small number of very large, very late cheques going into physical infrastructure and a couple of foreign technology giants, sitting on top of an early stage market running on fumes. That is not a recovery. That is a costume. A big, shiny, $13 billion costume.

To understand the costume, you have to understand the waves that came before it, because each one taught us a bad habit. We are still paying for all of them at once.

Two. The hype money

Most of you lived through this one. Rates were on the floor, capital was effectively free, and it flooded into Southeast Asia from big global funds that had made a fortune in China and were hunting for the next one.

The instruction attached to that money was simple. Grow at all costs. Buy the users, buy the market share, buy the headline. Worry about a business model later, or frankly never.

For a while it worked the way a sugar high works. Valuations went vertical. Everyone was a soonicorn. The pitch stopped being “here is a company that makes money” and became “here is a rocket, get on before it leaves the ground.” Burn was no longer a warning sign. Burn was the strategy. You were supposed to lose money faster than the next guy, because that proved you were winning the land grab.

I sat in rooms where a founder losing $10 million a year was treated as more investable than one quietly making $1 million, because the one making money was clearly not thinking big enough.

Then the free money ended. Rates went up, the global funds pulled back, and reality walked in through the front door and turned the lights on.

You know the wreckage, because some of it made headlines around the world. eFishery in Indonesia, the poster child for aquaculture meets technology, hundreds of millions raised, a genuine darling until it was not. According to reports, a very large share of its revenue turned out not to be real, inflated to feed a valuation that had become the whole point. Zilingo raised enormous money, scaled hard across the region, and came apart on governance and burn before it could grow into the price tag it had been given.

Underneath those two famous names sits a long, quiet graveyard. Companies that raised a monster round at a monster number, then went silent. Shut two or three country offices. Laid off most of the team. Then did a down round so brutal, or a bridge on such ugly terms, that they simply stopped sending press releases. You only find out when you check the cap table a year later.

But here is what I think wave one really did, and it is worse than the billions it burned. It rewired a generation of founders. It taught them that the core skill of building a company was fundraising, not building. That the most important customer was the investor, not the human being using the product. It trained people to run their companies like they were preparing to sell them to a greater fool, because for about five years the greater fool kept showing up on schedule with a bigger cheque.

When the greater fool stopped showing up, a lot of those founders did not know what to do next, because nobody had ever asked them to. I have watched genuinely talented people spend three years becoming world class at exactly one thing, raising money. When the market turned, that skill was worth nothing, and there was nothing underneath it.

That is the quiet tragedy of wave one. Not the companies that died loudly. The founders who were patiently taught the wrong trade, and the LPs, angels and fund managers who walked away with a damaged view of the whole region. Disguise number one: money that came to inflate a story into a bigger story and flip it before the music stopped.

Three. The grant money

Wave two is gentler, and in some ways it did more lasting damage, precisely because it showed up wearing the nicest costume of all. This money came to help.

When the hype money left a crater, two kinds of capital stepped into the gap. Both arrived with genuinely good intentions and genuinely terrible incentives. Hold both ideas at once.

The first is grant money. To be clear, this is everywhere, not one country: the US, Europe, Seoul, Japan, right across Asia. Governments decided they could build a startup scene by writing cheques directly to startups. Grants, matching funds, innovation programmes, disbursements tied to milestones. On paper it sounds wonderful. Free, non-dilutive capital for founders. What could go wrong?

Here is what goes wrong. That money does not select for the best company. It selects for the best grant application.

Think about who approves these grants. Usually a panel. Often very few of the people on it have ever built or sold a piece of technology. They sit in a room with a scoring rubric, and they are not really assessing whether the thing is viable, whether the commercial plan makes sense, or whether a single customer on earth will pay for it. They are ticking boxes. Does it hit the criteria? Does it use the right words from this year’s policy priority? Does it score high enough on the technology readiness scale?

So founders learn to build for the rubric. Privately, most people in this industry have a name for them: the grantrepreneur. Brilliant at the form. Fluent in whatever this quarter’s programme wants to hear. Deep tech when the deep tech window is open. Green when the green money is flowing. AI on everything the moment the AI fund opens, whether or not there is any AI in the building. They are not building a company. They are building a company shaped like an application, optimised for a committee that has never once had to find a paying customer itself.

It gets worse, because the money usually arrives in tranches tied to milestones. Now the founder is not building toward a customer. They are building toward the next disbursement. The company starts running on the rhythm of the grant calendar instead of the rhythm of the market. I have watched founders quietly delay shipping a real product because the paperwork for the next tranche was due that month, and the paperwork paid better than the product did.

Four. The corporate money

The second kind of help was the corporate venture arms. On paper, strategic investment. The big incumbent takes a stake in the promising young company and everyone talks about synergy, partnership and the future.

In practice, a lot of it was much narrower. A big, slow company looking for a captive supplier, or buying a cheap option on a technology it was too slow or too internally tangled to build itself. Come in, take a stake, take a board seat, and quietly insert a right of first refusal.

That last part is the killer. Once a corporate holds a right of first refusal and a board seat, the startup can no longer freely sell to that corporate’s competitors. In most markets here, that is most of the market.

They called it validation. The founder got a logo for the website and a nice press release. What they often actually got was a slow, polite smothering. They lost the one thing an early company needs more than money: the freedom to sell to anyone who will take their call. You cannot grow when half your potential customers see their competitor sitting on your board.

So that is wave two. Money that came to help, and taught founders to perform for a scoring panel and to hug a corporate parent instead of chasing a customer. Best intentions, exactly the wrong incentives. Of all the disguises, it is the one that looks most like kindness.

Five. The passport money

Which brings us to now. Wave three, the money making this year look like a record, and the one almost nobody is willing to name out loud. So let me.

Go back to the deals that made up more than half of Southeast Asian funding this year. Do not read the label on the box. Open it.

· DayOne, the data centre business. Billions of dollars. Spun out of GDS, a Chinese company, now sitting in Singapore and lining up to list.

· Kling, the video generation tool. Dutifully counted by the trackers as Southeast Asian funding. It is a Kuaishou product, and Kuaishou is Chinese.

· Ant International. A $1.2 billion round this year at a $10 billion valuation. It is the overseas arm of Ant Group, and when you look at who actually put money into the round, it was Ant Group and Alibaba. A Chinese parent wrote a billion dollar cheque to its own Singapore subsidiary, and we booked it as Southeast Asian venture funding and put it in the record.

· Sharpa, the robotics company. Founded by co-founders of Hesai, a Chinese LiDAR company. A Singapore address, a Shanghai lab, and a cap table with Alibaba, Tencent, Meituan and JD.

To be completely clear, because this is the easiest thing in the world to get wrong: I have no problem with any of these companies, and I think more of them should look at Singapore. If Singapore is where the best firms in the world want to set up, that is a compliment to Singapore, and it is good for the whole region that they choose to be here rather than somewhere else.

That is not my point. This is not about geopolitics, this side or that side. My point is about what we are counting, and what we quietly tell ourselves when we count it.

There is a name for this now: Singapore washing. A company that is Chinese in origin, capital and leadership puts a Singapore address on the door so it can reach global investors who are nervous about country of origin, and list somewhere that is not caught in the crossfire between Washington and Beijing. It is a real, well documented strategy. Not a conspiracy, not a secret. And it is already starting to come undone, as Meta’s acquisition of Manus showed. Both governments have figured out the trick, and both are tightening their grip.

So here is the uncomfortable truth about the record. When three or four companies that are Chinese in everything but their postcode make up more than half of Southeast Asian funding, the league table is not measuring Southeast Asia building anything. It is measuring spin-outs and re-domiciling. The money showed up wearing our postcode. The region is the venue, not the destination.

I want to be fair about the data centre money in particular, because it will keep getting counted. Those builds are real. They bring power, some jobs, and capacity this region genuinely needs. But a global hyperscaler pouring billions into concrete and cooling is an infrastructure decision. Counting it as Southeast Asian venture funding makes no sense to me.

The people most fooled by that number are not the journalists who print it. They are the founders and fund managers on the ground who read “record year for Southeast Asia” and feel like the party has restarted for them. It has not. Strip off all the disguises, the hype, the help and the passport, and what is left for a real Southeast Asian founder is the sliver from the top of this piece. $270 million. That is the real market. And unlike the first two disguises, this one is happening right now, in the number you will read this week.

Six. Why I am still bullish

That is the rant. Now the other half, the part I believe most of all.

The constraint in this region was never talent. I sit across the table from founders every week, and the quality of the people building right now, after the hype washed out and the tide went all the way down, is the best I have seen in a decade of doing this. They are not chasing a soonicorn headline, because they watched that game die with their own eyes. They are building with less money, more discipline, and actual paying customers, because that is the only option the market left them. That is not a weakness. That is exactly the founder you want to back with real money.

The opportunity was never the problem either. The problems worth solving here are bigger than ever. Hundreds of millions of people coming online, formalising, moving money for the first time, buying, selling, borrowing and building, in markets the global giants still do not understand from the inside. The opportunity is not shrinking. It is growing while everyone is distracted by the headline number.

The only thing that has ever been missing is the right kind of money. Look at the four waves again. Hype money that came to flip a story. Grant money that came to feed a committee. Corporate money that came to capture a supplier. Passport money that came to borrow an address. Four waves, and not one came here to build a Southeast Asian company and hold it long enough to matter.

That is the wave we are waiting for. Patient, honest capital. Money that prices risk instead of chasing a headline. Money that backs a founder to go and find a real customer, and is perfectly happy to be boring and early and local while it does.

Seven. What the right money asks

Here is the good news, and the reason I do this at all. That money is starting to show up. Some of it, honestly, is me and the people I work alongside, writing seed cheques into exactly this moment on purpose. The valuations are finally sane, the founders are finally serious, and almost nobody else is bothering to look.

What that kind of money does differently is not complicated.

· It asks who is paying you. Not who else is on your cap table.

· It is comfortable with a company growing at a sane speed instead of a reckless one.

· It does not need a logo for a press release. It needs a business still standing in ten years.

It is a little boring. After the decade this region just lived through, boring is the most exciting thing I can imagine.

The bow

The talent is already here. The opportunity is already here. The missing piece was the money, and it is starting to turn up. When the right capital finally meets the founders who survived all of this, this region is going to surprise a lot of people who only ever read the top line of the report.

So the next time someone forwards you a breathless headline about a record funding year, do two things. Ask how many companies, not how much money. And ask where the backer actually flew in from.

If you are a founder sitting in that seed sliver right now, building the unglamorous thing at a sane valuation with one real customer who actually pays you, and you feel like you somehow missed the party: you did not miss it. You are early for the one that is actually going to count.

If this changed how you read the funding numbers, forward it to one founder who needs to hear the last section. Then reply and tell me where I am wrong. The pushback is usually where the next episode comes from.

This piece accompanies this week’s episode of SEA of Startups. Real. Raw. Relatable. Listen on Spotify, Apple Podcasts, or YouTube, and subscribe here so the next one lands in your inbox.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Let me describe a company to you. Real revenue. Customers who pay every month, on time. A product that works and a team that ships. By every standard that mattered three years ago, this is a fundable company. Three years ago it raises a Series A without breaking a sweat. Today it cannot get a second meeting.

Nothing about the company changed. The bar moved underneath it while the founder was busy building. That is happening everywhere, in San Francisco, London and Bangalore. But if you are building in Southeast Asia, here is the part almost nobody says out loud. The bar did not move once here. It moved twice. And the second move is one no venture podcast in San Francisco will ever explain to you, because none of them has had to raise a round across six countries at once.

So this week I want to walk all the way through it. Why your next round is harder than your last one had any right to be. What it costs in months and in cash. And what I would do on Monday morning if I were sitting where you are.

One. The seed mirage

The headline going around is that seed funding in Southeast Asia is up this year. On paper, true. DealStreetAsia’s half-year numbers have seed dollars up 128% year on year to $328 million. Read only the top line and you would think the taps are open and the hard years are behind us.

Now look at who got the money. In the first half of 2026, 63 companies in the entire region received their first institutional cheque. Sixty-three. Across six countries, 680 million people and six months. That is not a wave of new founders getting funded. That is a number you could seat on one decent coworking floor in Singapore.

Here is the part that should make you suspicious. While the seed total went up, the number of deals across the region fell to its lowest level since at least 2018, and the typical seed cheque got bigger. Hold those two facts together. Bigger cheques, fewer of them than in nearly a decade. That is not money spreading out to more people. That is money piling up on fewer of them.

Who gets the fat cheques? Overwhelmingly AI and deep tech. A normal software seed in this region is still one to three million dollars. The AI rounds run at roughly double that and climbing, and they are the ones dragging the average up and making the chart look healthy. The chart is not lying exactly. It is letting you believe something that is not true. When you hear “seed is back,” the honest follow-up is “back for whom.” The honest answer is: for a small number of companies that probably do not look like yours.

One more number, same story at a bigger scale. The region raised $7.25 billion in the first half, the strongest half since 2022. Almost all of it was one data centre raise, DayOne’s $4.5 billion Series C. Take that single deal out and the region raised about $2.75 billion, down on the half before and below the same period a year earlier. One deal, one building full of servers, is doing the work of making an entire half-year look like a recovery. I made the same point about exits a week ago. The discipline never changes: how many deals?

So here is where we stand. The money that exists is real. It is also concentrated, going to a narrow slice of companies, and the breadth a healthy early stage is supposed to have is not there. The costume says boom. The body underneath says something much tighter.

Two. The bar moved, and the Americans admit it

Now the thing that actually decides your future: the bar for your next round.

Listen to the American shows, 20VC, SaaStr, the ones every founder here has on in the background, and the same confession comes up every few weeks. A partner gets comfortable in the chair and says the quiet part out loud. The bar to raise a Series A today would have been a Series B three years ago. They say it the way you mention the weather, and then they move on.

Here are the numbers behind the anecdote. The revenue a company needs to clear a US Series A has roughly tripled. A few years ago, about $1 million of annual recurring revenue got you a serious conversation. In early 2026 the figure doing the rounds is closer to $3.5 million. Not double. More than triple.

Graduation fell off a cliff too. Carta, which sees a huge slice of American cap tables, tracks the share of seed-stage companies that go on to raise a Series A within two years. For companies that raised seed in early 2018, that was about 31%. For the early-2022 cohort it was about 15%. One in three became one in six. And it takes longer. The median walk from seed to Series A is now past two years, against roughly a year and a half in the late 2010s.

Put those together and you understand what people mean when they say a stage of the market got deleted. Seed became the new Series A. Series A became the new Series B. The old Series A, the round you raised on promise and early traction, quietly stopped existing. The companies standing on it got no warning. They raised their seed, hit the milestones that used to be enough, went out for the A, and found the floor had moved while they were heads down. Pre-seed founders are discovering the same thing one step earlier: the seed bar is far higher now unless you are spinning out of a frontier lab.

That is the American story. It is brutal on its own, and it is the story your foreign investors carry in their heads whether they say so or not, because the serious players read the market globally. Hold onto it. Now the Southeast Asian version, which is worse.

Three. One company, one raise

Numbers in the abstract do not land, so let me walk you through a raise.

Invent a company. Call the founder Mei. She is in Kuala Lumpur, where I am based, and she has built B2B software for mid-sized logistics operators. It is good. Two years in, she is at about $1.5 million of annual recurring revenue, almost all of it in Malaysia. Her customers renew. Her churn is low. Her team is lean. By the standard of 2021, Mei is a textbook Series A. She did everything the playbook told her to do.

So she goes out to raise. Meeting by meeting, here is what happens.

The local funds take the meeting, because they know her, they are polite, and they like the business. But the ones who would have led her A two years ago are either not raising a new fund right now or have quietly moved upmarket, chasing bigger, later, safer deals. They tell her she is a little early. Early, at $1.5 million of revenue and two years of history. That word is the sound of the bar moving.

Then the regional funds out of Singapore. The first serious question is not about her revenue. It is about her map. How many markets are you in? When she says one, Malaysia with a little spillover, she watches the temperature in the room drop. What they are really asking is whether she is a Malaysian company or a Southeast Asian one. A Malaysian company at $1.5 million is not a regional Series A. It is a nice local business they no longer know how to underwrite, or no longer want to.

Then, if she is lucky, a foreign fund. Now she is being measured, silently, against the American number. $3.5 million, growing fast, in a market the investor understands. She is at $1.5 million in a market they would need a fourteen-hour flight to visit. She does not lose that meeting because her company is bad. She loses it because she is graded on a curve drawn in another part of the world.

Mei, who did everything right, walks away from a month of meetings with no term sheet, a lot of “keep us posted,” and a dawning understanding that the round she was told to raise does not exist for her at her size. That is not a failure of the company. That is three versions of the bar stacked on top of each other, all moving, and she walked into all three at once.

Four. The border tax

The second move of the bar, the one San Francisco never has to explain, is what I call the border tax.

A software company in San Francisco proves one market. The United States is one language for business, one currency, mostly one set of rules, one enormous wallet. A founder there can reach $3.5 million of revenue without leaving home. They could reach $100 million without leaving home.

A company here gets asked to prove three markets. That is the real test gating a regional Series A: not just revenue, but evidence you can cross borders. The whole thesis of a Southeast Asian company is that it is regional, and an investor writing a Series A cheque is buying the regional story, not the single-country one. So the question is never only how much revenue. It is how much revenue, in how many markets, and can you do it again in the next one.

Here is what nobody puts on a slide: what market number two actually costs.

• A local entity, which means lawyers and a registration process measured in months, not weeks.

• Local payment rails, because money moves differently in Indonesia, the Philippines and Thailand, and your billing has to speak all of them, e-invoicing mandates included.

• Localisation that goes well past translating the buttons: tax rules, invoice formats and compliance quirks that differ in every single country.

• A first hire on the ground who actually knows the market, because selling into Jakarta from Kuala Lumpur over video calls does not work, and everyone who has tried it knows it.

Add it up and entering one new market properly is a 12 to 18 month project that swallows a serious chunk of your round and a serious chunk of your attention. The Series A test asks you to have done it two or three times before anyone writes the cheque.

Look at what that does to Mei. The American founder gets to $3.5 million by going deep in one market. Mei is asked to go wide across three, each one more than a year and a large pile of cash, on a seed round that was never sized for it. That is the border tax. It is invisible in the headline numbers, and it is the single biggest reason a good regional company stalls between seed and Series A. Not product. Not revenue quality. Geography, and the cost of crossing it.

Five. The missing middle, and the bridge trap

The third wall catches you even after you clear the first two.

Say Mei does it. She grinds into a second and a third market, lifts her revenue, builds the regional story. Who writes the cheque that takes her from there to real scale? Right now, in this region, almost nobody local.

Chua Kee Lock runs Vertex, one of the most established investors in this part of the world, and he is not a man who reaches for drama. In late September he told DealStreetAsia that “not only has the early-stage VC market dropped significantly, but that whole middle layer of this stage is essentially hollow.” He called it a breakdown. Regional firms, he said, now look as far as Japan, Hong Kong and mainland China for growth co-investors. The late-stage money chases a handful of megadeals. The seed money is small and getting more selective. The growth capital in between, the money meant to catch a company between its first cheque and its scale, has thinned to almost nothing locally. The same reporting has the median Series A in the region shrinking to $8 million from $11.6 million in late 2025.

Watch what the smartest early investors are doing in response, because it tells you they see it too. Peak XV, the firm that used to be Sequoia’s arm out here, raised the ceiling on its Surge seed programme from $3 million to $5 million per company at the end of September. Rajan Anandan said it plainly: the bar for a Series A has gone up significantly. Read that honestly. They are putting more money in at seed precisely because they know how long and how lonely the walk to the next round has become. Extra supplies for a longer trek, because the resupply station in the middle may not be there.

Now the trap that catches founders in exactly this spot. The bridge round.

When the Series A does not come and runway is short, the tempting move is a bridge. A little more from existing investors, same terms or close, to buy another year. Sometimes a bridge is a genuine bridge to a real milestone and a real round. Very often in this market it is a plank extended over the same gap, and at the end of the plank is the same Series A that was not there before, except now with more investors, more dilution, more pressure and less time. A bridge makes sense only if you know exactly what milestone sits on the other side and you have evidence someone will fund it. If you are raising one because you ran out of road and hope the market turns, you are not buying time. You are borrowing it at a terrible rate.

If you are an angel or an emerging manager reading this, the flip side is the opportunity. The mispricing in this region is not at seed, where everyone is crowding into the same AI deals. It is in the abandoned middle: companies that did everything right, with real revenue across real markets, and nowhere local to land. If you have the capital and the patience to be the one who catches them, that is where the returns are hiding. Everyone is standing at the shiny end of the room. The value is in the part they walked past.

Six. The AI objection

If you have been reading closely you have the obvious objection ready. Kevin, you keep saying the money is going to AI. I am building in AI, or I could be. Is that not the way through?

Honest answer: partly, and less than you think.

Yes, the AI rounds are where the big cheques are, here and everywhere. If you are genuinely building something hard, you can raise a bigger seed than a normal software company, and some of that capital reaches this region. That is real. I am not telling you to ignore where the money is.

Two things to be clear-eyed about. First, most of the enormous AI cheques are not coming here at all. They go to a small number of labs and model companies, overwhelmingly in the US and China, founded by people with very specific pedigrees. When you read that global AI funding is at a record, you are mostly reading about a dozen companies you could name, and none of them is in Jakarta. The odds your AI seed looks like theirs are genuinely low.

Second, and this is the part founders here miss, a thin layer around somebody else’s model is not a defensible company, and the investors who matter know it now. Eighteen months ago you could raise on “AI for X” and a demo. That window has closed. There is value in a wrapper, but the wrapper itself has to carry a value proposition that is more than a user interface on someone else’s model. If anything, the bar for an AI company is higher than for normal software, because everyone can see how fast a feature gets copied when the model does the heavy lifting.

So, the exception stated honestly. AI is a real lane if you have genuine depth, a real wedge, and something that gets better with use in a way a competitor cannot instantly clone. For most founders here it is not an escape hatch from the three walls. It is the same three walls with more competition and a more skeptical room. Build in it because you have an edge, not because that is where you heard the money was.

Seven. Two founders

I think in people more than in charts, and I suspect you do too.

The first founder reads the American playbook literally. They hear $3.5 million, they hear three times a year, and they decide the answer is to burn hard and chase the metric. They raise a seed and spend it fast on sales and marketing to force the curve up. They stay in one market because that is where the quick revenue is, and they bet that if the number gets high enough the Series A will come. Sometimes it works. Usually, here, it does not. They hit the border question with an empty tank, one market deep and out of money, having optimised for a number priced somewhere else. They built for a room they were never going to be in.

The second founder accepts the terrain they are standing on. They raise a seed and treat it like it has to last, because it does. They pick their two or three markets deliberately and early, and start the slow, expensive work of crossing borders while they still have cash and calm to do it properly. The revenue curve looks less exciting on a slide, because the money went into entity setup and local hires instead of a growth spike. But two years in, they hold the one thing that actually gets a regional Series A written: proof the model travels. Not the flashiest company in the batch. The one still standing when the flashy ones ran out of road.

This is not an argument for less ambition. The disciplined, multi-market, capital-aware founder is the one who survives the three walls. The burn-to-a-foreign-metric founder becomes the cautionary story at a conference. The terrain rewards patience and punishes imitation. Build for the terrain you are on.

Eight. What I would do on Monday

Enough diagnosis. If you are building here right now, this is what I would actually do.

1. Raise your seed for 30 months of runway, not 18. It sounds conservative. It means raising more or spending slower, and both hurt. Do it anyway. The walk to a Series A stretched past two years in the best-funded market on the planet. Assume it is longer here, and give yourself room to arrive without a desperate bridge. Runway is not caution. In this market, runway is strategy.

2. Pick your two or three markets on day one, and make crossing into the second an explicit milestone of the seed round, not a someday ambition. Budget the entity, the payment rails and the local hire from the start. One market deep is a lifestyle business here, and there is no shame in that, but it is not a venture Series A story. Three markets working is.

3. Do not run your company against a San Francisco revenue number. A foreign investor will quote $3.5 million at you like it is the law of gravity. Know the number exists so you are not surprised in the room, but do not let it set how you spend. Customers in Kuala Lumpur, Manila and Bangkok do not pay like customers in San Francisco, and pricing your burn as if they do is the fastest way to set your runway on fire chasing a target that was never yours.

4. Be honest about the bridge. Before you raise one, write down the single milestone it gets you to, and the name of the investor who has told you they will fund that milestone once you hit it. If you cannot write both down, you are not raising a bridge. You are delaying a hard decision with other people’s money and your own equity.

5. Pick the AI lane only if you have a real edge in it. Not because that is where the headlines are. The headlines are about a dozen companies that are not you.

The bow

Everyone is calling this a Series A crunch, as if it were weather. It rolls in, ruins a season, passes, and all you have to do is wait it out. In San Francisco, maybe. Maybe it is cyclical there, and the floor they deleted gets rebuilt when the mood turns.

Here it is not weather. Here it is the building. We never built the stage of the market that is supposed to catch a company between its first cheque and its scale. Seed has always been thin. The next layer has always been thinner. The thick layers sit at the very end, around a handful of megadeals. So when the hot money comes back, and it will, because it always comes back for whatever is shiny that year, it will not rebuild a middle that was never really there. It will chase the next shiny thing and leave the same gap behind.

Which means the founders who make it through the next two years will not be the ones who raised the biggest seed or chased the loudest metric. They will be the ones who understood the terrain, planned for a longer and lonelier walk, spent their money like it had to last, and could stand in front of an investor and prove they had crossed a border while everyone around them was still quoting a San Francisco number at a Southeast Asian cap table.

Seed is booming. Not here. Pretending otherwise is how good companies quietly run out of money in month 19.

If you are sitting on a seed round right now, or about to raise one, I want to know two things, and I read every reply. How long is your runway, really, not the optimistic version? And have you started on market number two? Tell me where you are. I want to know who is still standing.

This piece accompanies this week’s episode of SEA of Startups. Real. Raw. Relatable. Listen on Spotify, Apple Podcasts, or YouTube, and subscribe to the newsletter at seaofstartups.substack.com.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

There are two ways out of a company in Southeast Asia.

One of them is loud. On 20 October, GCash will ring the bell at the Philippine Stock Exchange in the biggest listing that country has ever done. Cornerstone investors with names like BlackRock and T. Rowe Price. A valuation that starts with a number most Filipino founders will never see in their lifetime.

The other is quiet. A few weeks earlier, on 8 September, private equity firm Navis Capital closed the sale of a chain of premium Malaysian supermarkets, Village Grocer, Ben’s Independent Grocer and a few others, to a Thai retailer. No bell. No cameras. Just a wire transfer and, reportedly, around five times the money they put in more than a decade ago.

For years the complaint about this region was that there were no exits. Great companies, nowhere to sell them. That complaint just stopped being true. The door is cracking open. But before anyone pops the champagne, walk through it with me and look at who is standing on the other side. Because it is almost never a Southeast Asian.

One. Six and a half times the money, four more companies

Here is the number that made me put this on the docket. In the first half of this year, venture-backed companies in Southeast Asia returned $5.65 billion in exits, per DealStreetAsia. Trade sales, listings, the lot. In the first half of last year, that figure was $856 million.

Call it a six and a half times jump in twelve months. Hear only that and you would think the drought is over, and the region has finally figured out how to give investors their money back.

Here is the part that gets buried. That $5.65 billion came from twelve exits. Twelve. The year before, it was eight. The value went up more than six times. The number of companies actually getting out went up by four.

Sit with that, because it is the whole story of this market right now. The money is real. The breadth is a mirage. Twelve companies is not a wave of liquidity. Twelve companies is a handful of very large outcomes, and everybody else is still sitting in the waiting room.

We saw the same trick with funding. The region raised $7.25 billion in the first half, the strongest since 2022. Sounds fantastic, until you notice that deal volume fell to its lowest level since at least 2018, and a single data centre deal carried the headline. Strip that one out and regional funding actually fell. The median Series A cheque shrank. The average founder is not living in the record. The average founder is living in the drought.

When you see “exits are back” or “funding hits a record,” your first question is always the same. How many deals?

Two. The loud door, and who already has a key

The public market. The listing. The dream. And in the Philippines, that dream is about to come true in a very big way.

GCash, the wallet on almost every Filipino phone, is going public through its parent, Mynt. The offer could raise around 80 billion pesos, roughly $1.4 billion, and closer to $1.6 billion with the overallotment. At the top of the range, Mynt is worth 669 billion pesos, about $11.5 billion. It is the largest listing in the history of the Philippine Stock Exchange, and it beats the old record, Monde Nissin, comfortably. More than 20 cornerstone investors are in, BlackRock and T. Rowe Price among them. The offer period opens on 6 October. Trading starts on the 20th.

I want to be genuinely positive here, because this matters and I am on record as bullish on the Philippines. For a decade, the knock on Manila was that it could not host a listing like this. Any serious technology company would have to go to Singapore or New York to find money deep enough. GCash is proving that wrong on home soil. That is a real milestone, and Filipino founders should take a moment with it.

Then I put the investor hat back on and read the cap table out loud, because Real. Raw. Relatable. means I do not just clap at big numbers.

GCash is not a scrappy startup three friends built in a Makati garage. Mynt is a joint venture between Globe Telecom and the Ayala group, one of the most powerful families in the country, and Ant Group, the fintech affiliate of China’s Alibaba. The anchor buyers flying in are the giant American asset managers. So the biggest technology listing in Philippine history is, honestly described, a telco and a Chinese fintech giant selling a slice of their joint venture to Wall Street.

That is not a criticism of the deal. It is a great deal, and GCash is a great company. It is a question about the pattern. If the only way to a landmark listing is to already be owned by a conglomerate and a foreign tech giant before you start, what exactly does that prove for the founder with no conglomerate behind them?

Across the region in the first half, there were 47 listings raising about $3 billion. Healthy on paper. But reliable public liquidity for a venture-backed technology company still exists on a very short list of exchanges. Malaysia will point out that Bursa has been busy, and SkyeChip showed a local chip designer can list at home. Fair. It is still the exception. For most of the region, the loud door is not actually on offer.

The public door is open. Just notice how narrow it is, and who already has a key.

Three. The quiet door is a grocery aisle

Most exits here do not happen with a bell and the start of public trading. They happen with a strategic buyer writing a cheque and quietly absorbing your company. Trade sales are the workhorse. And the clearest picture of this entire market I have seen is a story about groceries.

Back to Navis. More than a decade ago, they started putting together a group of premium Malaysian supermarkets under a company called The Food Purveyor: Village Grocer, Ben’s Independent Grocer, BSC Fine Foods and a couple of others. This month they closed the sale for about RM1.66 billion. Good outcome, clean exit, the kind of return that keeps a fund alive.

The buyer? CP Axtra, the Thai company that runs Lotus’s. And this is where one deal stops being one deal and starts being a pattern, because this is not the first time CP has gone shopping in Malaysia.

Rewind to 2020. CP Group bought Tesco’s entire business in Thailand and Malaysia for $10.6 billion, one of the biggest deals in Asia that year. The Malaysian piece alone was valued at around $3 billion. Seventy-four Tesco stores were rebranded as Lotus’s.

Follow the timeline. In 2020, CP buys the value end of the market, the big hypermarkets. In 2026, CP buys the premium end, the shops where the affluent city crowd does its weekly run. Put them together and one Thai conglomerate now has more than 120 outlets across Malaysia, covering everyone from the most price-sensitive shopper to the most comfortable. Top to bottom. The whole aisle.

And it is not only CP. The other big premium chain in Malaysia is Jaya Grocer. Grab bought a majority of it at the end of 2021, in a deal reported at RM1.5 to 1.8 billion, roughly $400 million. Grab is a Singapore company. Some Malaysians will argue that point with me, and I am going to keep calling it Singaporean anyway.

So let me say the thing plainly. Malaysia’s two leading premium supermarket chains are now both foreign-owned. One Thai, one Singaporean. Malaysian operators and Malaysian investors built these businesses into category leaders, and when it was time to sell, the buyer flew in from Bangkok or Singapore. Each time.

That is the exit market in one shopping trip. You build it here. You sell it there.

Four. The pattern holds in tech

Widen out from groceries and the data backs it up. In the first half, technology M&A in the region fell to 41 deals, down 37% on the year before, according to DealStreetAsia. So even while exit value went up, the number of tech deals went down. Fewer transactions, bigger cheques. The same concentration we started with.

And who did the deals that did happen? Foreign buyers completed 30 of the 41. Nearly three in four. Domestic acquirers managed eleven. Japanese corporates, Chinese groups, regional conglomerates like CP: they are the ones clearing the market while local buyers sit on their hands.

One more piece, the least glamorous and the most telling. A growing share of what gets counted as an exit here is not really an exit at all. It is one private equity fund selling to another. By some estimates, secondaries are now around 30% of exit value in the region. Funds are getting older. Their LPs want some money back. There is no strategic buyer and no open listing window. So the asset goes to the fund down the street, and everyone calls it liquidity.

That is a perfectly respectable strategy. Secondaries are a well-worn path in more mature markets. But put the whole board together. Exit value is up, yes. But the deals are few, they skew large, they are increasingly bought by companies headquartered outside the region, and a big chunk of what is left is just capital rotating between funds.

Five. The constraint was never capital

The old complaint was that Southeast Asia had no exits. That was never quite right. The truer version, the one I want you to take away, is this: the constraint here was never capital. There has always been money. The constraint is liquidity, the ability to actually turn a company into cash.

And the person most able to give you that liquidity today does not live here.

Six. What I would actually do with this

I do not like diagnosing and walking away. So if you are a founder or an early investor in this region, here is what I would do.

1. Build for a specific strategic buyer, and be honest with yourself about who they are. If you are building a consumer brand in Malaysia or Indonesia, your most likely exit is a regional conglomerate or a foreign strategic, not a listing. Know that on day one. Know their names. Build the thing they will eventually need to own, because buying you is faster than building you.

2. Stop worshipping the listing. The GCash IPO is a beautiful, rare event. It is not your path. For almost every company here, the realistic door is a trade sale, and there is no shame in that. A five times return in a quiet sale to a Thai retailer spends exactly the same as a bell on an exchange.

3. Sit with the uncomfortable question. If you care about this region beyond your own cheque, the grocery story should bother you. When the value end and the premium end of an entire national category both end up owned from outside the country, where is the domestic champion ever supposed to come from?

The bow

Foreign capital validating our companies is a good thing. Foreign capital owning every company that gets good is a different thing. I do not have a clean answer for that. But we should stop pretending it is not happening.

The headline this quarter is that exits are back. They are, and the value is real. Just remember, every time you see that number, to ask two things. How many companies? And where did the buyer fly in from?

Twelve doors, mostly foreign on the other side. That is the market we are actually in.

So tell me where I am wrong. If you think foreign buyers are the best thing that ever happened to this region, I genuinely want to hear it, because the pushback is usually where the next episode starts. And if you know a founder quietly assuming an IPO is their ending, send them this. They probably need to hear about the quiet door.

This piece accompanies this week’s episode of SEA of Startups. Real. Raw. Relatable. Listen on Spotify, Apple Podcasts, or YouTube, and subscribe to the newsletter at seaofstartups.substack.com.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Somebody is going to stand on a stage in Singapore this month and tell you two things. Southeast Asia now has more than 60 profitable tech startups. And the region is in the middle of a $4 billion AI boom.

Both numbers are true. Both are also lies. Not made up. Lies the way your uncle lies at dinner, where every word checks out and the whole thing is still nonsense.

So I am going to tell you up front where this lands. The most profitable AI business in Southeast Asia is not building the model. It is not even the thing people are calling the AI boom. It is teaching people how to actually use it. That is a services business. It gets paid on day one, or net 30. And it is the one lane where being a follower is not a weakness. It is the strategy.

I am writing this from KL with the haze back, the Twin Towers invisible from three streets away and a throat that sounds like I gargled a satay grill. We cannot see through the sky this week. We can still see through the press releases.

One. The 40 people who never logged back in

This did not start with a report. It started with watching the same movie play out across my portfolio and my network.

A company I am close to spent good money last year buying every AI tool you can name. Seats for the whole team. I did the same thing myself. I had so many subscriptions I lost count, and I justified every one as my R&D budget.

Fast forward to today and ask how it is going. Past the slides, the honest answer is this. A handful of people went fully red-pilled and got the lift. The rest logged in once, maybe twice, felt a bit confused or a bit silly, and quietly went back to doing the job the way they already knew how.

Nothing was wrong with the tools. The tools are incredible. What was missing was the boring part. Nobody sat down with 40 people and taught them, in plain language, for their actual job, how to make the thing useful before nine o’clock on a Monday.

Once you see it, you see it everywhere. Startups, SMEs, corporates. The gap is not the model. The gap is the person in the chair who was never taught, and was too embarrassed to say so.

Multiply that person across 680 million people and you do not have a technology problem. You have the biggest teaching job this region has ever faced. And where there is a job that big that nobody has done yet, there is money.

Two. Take a wrench to the headline numbers

First, the 60-plus profitable startups. It comes from a single list, quoted everywhere, and nobody says who is on it or how profitable is defined. I sanity-checked it against my own portfolio and I would apparently be a meaningful chunk of the region’s total. I am a good solo GP. I am not that good.

Here is what I will concede. Directionally, it is right. I sit across from early-stage founders every week, and genuinely profitable venture-backed companies are less rare than they used to be. The capital drought forced it. Treat the number as a direction, not a fact.

The second one is worse. Native AI startups in the region raised about $4.1 billion so far this year, roughly double all of last year. Pop the champagne.

Now pull the thread. Kling AI, the video generation unit of Beijing’s Kuaishou, raised a $2.8 billion Series D. That one round is about 68 percent of the entire “boom.” Strip it out and you are looking at a fraction of the headline. The number of rounds actually fell, from 41 last year to 23 this year. That is not a boom. That is one cheque and a thinner deal count.

Of what is left, almost all of it lands in Singapore. With the usual caveat I will keep repeating until it stops being true: half the region is incorporated in a Singapore holdco, so the geography in these tables is partly an accounting artefact.

So put both numbers down. Neither tells a founder in Manila or Bangkok where to make money in AI this year. Here is the rule I want you to carry for the rest of this piece:

Do not count logos on a slide. Do not count dollars in one giant round. Count who sells a thing and collects cash.

Three. AI projects do not fail. They stall on people.

We have all seen the MIT-style reports on enterprise AI projects that never deliver a return. I do not think most of them fail, exactly. They stall. And not because the model is not smart enough, or the tool is badly designed. They stall because nobody knows how to use it, nobody trusts it, and the pilot dies quietly in a slide deck.

If you have ever rolled out a CRM at a growing company, you know this movie. The software was never the hard part. Changing the daily habit was.

Research on the roughly $400 billion corporate learning market lands on the same point: workforce readiness, not technology, is what blocks most enterprise AI. One survey has three in four companies saying they cannot keep up with their own demand for new skills. They have the tools. They have the budget. They do not have the drivers.

That flips the story. If the model is not the moat and the model is not the blocker, the bottleneck in the entire AI economy is human. It is a teaching problem. A change management problem. A get-accounts-payable-to-trust-the-tool problem. That is not a San Francisco problem. That is an on-the-ground, local, human problem. And being close to the ground is one of the few things we are genuinely good at.

Four. Sell shovels, not a prayer

The AI training and enablement slice of corporate learning is somewhere in the six to seven billion dollar range today, heading toward something like 18 by the end of the decade. Estimates vary and I am not going to pretend to precision. Every serious forecast points the same way: up and to the right, fast.

Here is why I care. Teaching people is a services business, and services get paid differently. No eight-year burn. No praying you hit an inflection before the money runs out. A company signs a purchase order, you deliver, you invoice, you get paid. Assuming a good payer. We have all met the other kind.

This is the picks and shovels trade of the AI era. You can run at the hills and maybe strike gold. Or you can sell shovels to everybody running, and get paid whether they find gold or not. You do not need a frontier lab or a $200 million round. You need expertise, a curriculum, a customer and a purchase order.

That is a business. Not a bet.

Five. Three kinds of buyer, all moving at once

Demand for this is not spread evenly around the world. It is concentrated here. Surveys have roughly 96 percent of Southeast Asian employers prioritising upskilling, against around 85 percent globally. Young workforce, fast adoption, hundreds of millions of people who came online mobile-first and now have AI in their pocket from day one. The instinct that let this region skip the desktop and skip the credit card is now pointed at AI.

And this is not a prediction. Two of these moves landed this month while most people were not looking.

Individuals. On 16 September, Singapore rolled out more than 200 AI courses under SkillsFuture, and citizens who take one get six months of a premium AI tool for free, so they can actually practise. A government putting shovels directly in people’s hands.

Educators. ASEAN education officials endorsed AI Ready ASEAN, backed by Google.org and the ADB, moving from awareness into applied learning with a target of more than 1.7 million students and teachers by the end of 2028. That is not a webinar. That is a regional workforce being built on purpose.

Governments. Here at home, Malaysia’s national AI skilling push with Microsoft, Microsoft Elevate, has already reached 80,000 learners from its pilot. The part I like is who it includes: educators, small business owners, civil servants, even retired servicemen and women. That is a whole-of-country bet that the bottleneck is people and the fix is teaching.

A word to my friends in the Philippines, because this one is yours to win. The youngest population, the strongest English, and a workforce that already trains and supports the rest of the world for a living. You have done the BPO. You have done the data annotation. If any country here is built to become the place that teaches the region to use AI, it is you. Do not let anyone tell you that is a small ambition.

Demand is not the question. Demand is the one thing we are not short of. The only question is who supplies it, and whether that supplier is one of us.

Six. What it looks like as a company

Take Gnowbe out of Singapore. AI-powered microlearning for enterprise. The client list is not hopeful startups. It is General Mills, Shangri-La, MetLife. Blue chips paying real money.

The clever bit: they are SkillsFuture-accredited, so corporate clients can get up to 90 percent of the training cost co-funded by the government. Malaysia has its own version in HRD Corp. Employers pay into the levy whether they like it or not, and a lot of them genuinely struggle to spend it. There is cash sitting there. Smart operators build straight on top of it.

What I respect is that this is a capital-light business. Nobody raised nine figures and set it on fire. It is a book of blue-chip customers, government co-funding pulling demand through the door, quietly compounding. That is what a healthy company looks like when the hype leaves the room.

And it is not one company. A business in our portfolio has started running AI training in India and has landed some very large contracts. Someone in my network doing the same in the Middle East tells me they have more demand than they can possibly supply. Corporate bootcamps are running week-long intensives for executive teams. None of it shows up in that $4 billion number, because nobody is counting it. Which is exactly why there is still room.

Seven. The plumber is now worth more than the engine builder

There is a job title that barely existed three years ago and is now the hottest role in AI: the forward-deployed engineer. The idea is simple. Instead of selling a company a model and wishing them luck, you send an engineer to sit inside the customer and make the thing work in their actual mess.

It is the Palantir playbook, now going mainstream, and at the top labs the people who make it work have become the people who close the deal.

Why? Because the project dies on the unglamorous stuff. The AI cannot talk to the customer’s ancient database. It cannot get through their login system. It hits a data rule that says this information cannot leave the country. None of that is intelligence. All of it is plumbing. And the person who does the plumbing is now worth more than the person who built the engine.

A one-week course for a bank’s back office and an engineer embedded for six months in a factory are the same business: get the thing to work for real people in a real building in this region. Teaching at one end, deployment at the other, and every dollar in between is a dollar for making AI useful, not inventing it. That entire line, from the classroom to the server room, is ours to own, because it is won on the ground, in local context and local language.

Eight. Now take a wrench to the word “trained”

I opened by taking apart “profitable.” Fair is fair, so let me do the same to “trained.”

1.7 million learners. 80,000 reached. 200 courses. Big, impressive numbers. And a lot of what sits underneath them is a two-hour awareness webinar and a certificate of attendance. Sitting through a webinar does not make you a skilled worker any more than watching a cooking video makes you a chef. When you hear a giant training number, ask the boring question. Trained to do what, exactly? And can they still do it the following Monday?

Second, a lot of these programmes are funded by the American giants: Google.org, Microsoft, AWS. That is genuinely generous. It is also not charity. Free curriculum is a demand funnel. Teach a million people to build on your cloud and a chunk of them pay you cloud bills for the rest of their careers. The training is real, and it is also a customer acquisition cost. Hold both.

Which is actually the whole opportunity. The free, generic, awareness-level stuff is covered. The giants have it. What they do not have, and probably do not care about, is the deep end. Sector-specific, applied training, taught in Bahasa, Tagalog, Thai or Vietnamese, for the way business actually gets done here. Teaching a bank’s compliance team, a hospital’s admin staff or a factory floor to use AI in their actual workflow, with their actual rules.

Do not just hand out the shovels somebody else made. Own the part that teaches people to dig.

Nine. If you wanted to build this on Monday

Let me stop being the analyst and be the investor who would write the cheque. Here is how I would tell you to do it.

1. Pick a lane you already know. Do not sell generic AI literacy, it is crowded and much of it is free. Sell AI for insurance underwriters, for property agents, for hospital admins. Narrow is where you can promise a real outcome and deliver it.

2. Sell the outcome, not the attendance. The moment you can say “we cut this team’s reporting time in half, and here is the measurement,” you are not a trainer anymore. You are a consultant, and consultants charge ten times more.

3. Stand on the government’s money. Get accredited under SkillsFuture, HRD Corp or the local equivalent, so the state picks up a big chunk of the bill. You are not competing with free. You are riding the subsidy that makes your deal an easy yes.

4. Win one logo, then never let it go. Land one respected enterprise in your lane, do the work so well they put their name to it, and use that name to walk into the next ten. In services, one great reference customer beats any funding round.

5. Stay capital-light on purpose. Customer cash funds the growth. That is the whole point of the model. Do not turn into a burn machine to impress somebody on a stage.

It will probably not get you on the cover of anything. It will get you paid every month for solving a problem the entire region has at the same time.

The bow

The conference circuit is going to sell you 60 profitable startups and a $4 billion AI boom. One is a list with the definition deleted. The other is mostly one company. Neither is where the money is.

Remember the 40 people who never learned to use the tools the boss bought them. That is not one company’s problem. That is the whole region, at once. Enterprise AI does not fail on the model. It fails on the people. So every worker, every boss and every government is trying to fix the same human problem at the same time, and they are all holding a cheque.

We are probably not going to build the smartest model. We are not going to out-Anthropic Anthropic. I have made peace with that, and so should you. If one of the crazy ones out there can actually do it, I would love to find and back them.

But we are going to teach 680 million people how to use it. We are going to send an invoice for that teaching, and we are going to get paid. Followers who teach can beat innovators who burn.

So here is my question for you. Look at your own team. How many of the people you bought AI seats for are actually using them? And if the answer embarrasses you, who is going to fix it: you, a free webinar, or a local founder who just found their business?

This piece accompanies this week’s episode of SEA of Startups. Real. Raw. Relatable. Listen on Spotify, Apple Podcasts, or YouTube, and subscribe to the newsletter at seaofstartups.substack.com.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

This week a guy who, as far as anyone can tell, had never posted anything in his life put up a thread about artificial intelligence and got 170 million eyeballs on it in five days.

A former Anthropic employee, or so the byline says. Within 48 hours you had Senator Bernie Sanders talking about banning superintelligence, market people calling for a bloodbath on Monday morning, and half my group chats forwarding the same screenshot to each other.

Then, almost on cue, the chief executive of one of the biggest AI labs on earth published an essay saying, and I am paraphrasing, we need to slow this thing down before it gets away from us.

And then China told him to get lost.

So here is the question I want to sit with. Not “is AI going to kill us all.” That is the wrong question, and frankly it is the question everybody wants you asking, because it sells. The question is this. When the most powerful people in the most powerful technology of our lifetime suddenly all agree you should be afraid, or suddenly all agree you should not be, who actually benefits from that?

And the second one, the question that matters if you are reading this from KL, Manila, Bangkok, Jakarta or Singapore. While the big boys fight about the brakes, are we building this future, or are we just being told what the rules are?

One. Where I stand, so you know

Let me put my cards on the table before I say another word, because I am about to be skeptical of a lot of people in this piece, and you deserve to know where I am coming from.

I am an optimist on AI. Full stop. I invest in it. I use it every single day, in my fund, in my other businesses, in how I read the market. I think it is one of the best things to ever happen to a small team trying to compete against a large incumbent. If you are a founder in this region with four people and a good idea, this is the closest thing you have ever had to a fair fight.

So I am not here to scare you.

But optimism is not the same thing as being naive, and this is the part people get wrong. Every powerful technology in human history arrived with bad actors attached to it. Every single one. Fire, gunpowder, nuclear fission, the internet. Even the ATM got used for fraud. Cheques got used for fraud. The tool does not decide. People do.

There will always be rogue states. There will always be criminals. There will always be somebody who wants to take the sharp end of a good thing and hurt someone with it. That is not an AI problem. That is a human problem, and it is as old as we are.

So hold both of these at once, because I am going to keep coming back to it. I am bullish. I am also clear-eyed. Those are not opposites. Anybody telling you that you have to pick one is selling you something.

Two. Panic has sponsors now

Back to our mystery man and his 170 million impressions.

Here is what should bother you about that thread, and it has nothing to do with what he actually said. Multiple outlets that dug into it came away thinking the virality itself was manufactured. An account with basically no history, suddenly spiking on numbers that do not behave the way organic posts behave.

In plain language: somebody may have paid to make you panic.

I do not know that for certain, and neither does anyone else, and that is exactly the point. We now live in a world where the fear itself is a product. Somebody can build it, ship it and sell it. Whether the goal is attention, influence, or moving a stock on a Monday morning, panic has sponsors.

So when a piece of content seems engineered to make your stomach drop, the correct response is not to feel the fear and forward it to the family group chat. The correct response is to ask a boring question. Who wanted me to feel this way, and what do they get if I do?

That is not cynicism. That is media literacy in 2026. And it applies just as hard to the calm, reassuring voices as it does to the scary ones. Keep it in your pocket, we need it in about two minutes.

Three. Sincere and self-serving are not opposites

On 12 September, Dario Amodei, chief executive of Anthropic, published an essay called “We Must Pace the Frontier.” Just under 4,000 words, which by the standards of this genre counts as restraint.

The core argument is reasonable on its face. He is not saying stop, and he is careful about that. He is saying slow the rate at which these models get more capable, so that the safety work and the outside checking can keep up. His worry is recursive self-improvement, which is a fancy way of saying an AI that gets good enough at building the next AI that the whole thing starts accelerating on its own, faster than any human can supervise it. His ask is that each generation gets aligned and checked by independent evaluators before anyone sprints to the next one.

Honestly, as reasoning, that is not crazy. If you were building a bridge and you had a machine that could design the next, taller bridge by itself, you would want to inspect a few of them before you drove your family across.

But here is where you put the glasses back on.

When the leader of one of the two or three companies out in front says we should all slow down, bring in third-party evaluators and regulate this properly, what world is he also describing? He is describing a world where the companies already ahead get to lock in their lead. Where the rules get written around the way the current leaders already do things. Where it becomes a lot harder and a lot more expensive for a challenger to catch up. Regulation is a wall, and walls protect whoever is already inside the castle.

I am not accusing him of dishonesty. This is the nuance I actually want you to take away. He can be completely sincere about the safety risk, and it can also happen to be extremely good for his business. Both of those can be true at the same time. Sincere and self-serving are not mutually exclusive. Grown-ups can hold that.

So I do not clap and I do not boo. I note it. A safety argument from a company that benefits from a safety regime is still worth listening to. It is just not scripture.

And by the way, some of the reporting says other lab bosses nodded along with him. Be careful there. “Signalled agreement” is doing a lot of work in those headlines, and I have not seen anything I would put my name to on exactly who endorsed what. So I am going to leave it alone rather than build a story on a soft source. You should demand the same from anyone reporting this to you, including me.

Four. The paragraph the Western coverage walked past

Here is the part of that essay most of the Western coverage glided over, and it is the part that matters most for us out here.

The same essay that says let us all slow down together for safety also says, and I am being fair to the text, that a Chinese lead in AI would be a grave danger, and that the United States should keep restricting the sale of the most advanced chips and chipmaking equipment to China.

Read those two things back to back. Slow down, everybody, in the name of global cooperation and safety. And also, we should keep choking off one specific competitor’s access to the hardware.

China noticed. Of course China noticed. Their foreign ministry called it fearmongering and said, more or less, that confrontation and vicious competition will wreck any chance of real global cooperation on AI. Global Times called the essay a Cold War playbook dressed up as safety. The commerce ministry said the real game is the US trying to hold a monopoly on the industry.

Now, same rules apply. I am not going to sit here and tell you Beijing is the innocent party and the noble truth-teller. A government framing a safety debate as an anti-China containment plot is also incredibly convenient for that government. It rallies their own industry. It plays well across a developing world that already carries some anti-American sentiment. And it lets them skip straight past the actual substance of whether frontier AI is dangerous. A rebuttal can be fair and strategic at the same time. Again, hold both.

And while we are handing out skepticism evenly, let us not forget Washington. The Trump administration has doubled down the other way, leaning hard into acceleration and winning the race. That is also a position, and it also has a book behind it. Chipmakers, defence contractors, and the simple political value of looking strong.

Nobody in this fight is a neutral referee. Everybody has a jersey on.

Five. The dancing robot and the soldier robot are the same robot

All of this slow down, speed up, contain China material can feel abstract. Percentages, essays, ministry statements. We have been living inside a geopolitical bubble long enough that it all starts to sound the same, and it becomes very easy to tune out.

And then last month the abstract got legs. Literally.

In Beijing, from 22 to 26 August, they held what people are calling the robot Olympics. The official name is the World Humanoid Robot Games. More than 2,000 humanoid robots. They ran, they boxed, they danced, they played football. Three years ago these machines could barely get down a corridor without a spotter.

My first reaction was not fear. It was wonder. I am a bit of a tech nerd, and this is a genuine feat of engineering. A huge chunk of it is coming out of Chinese companies who, by some counts, now ship around 95 percent of the world’s humanoid robots. That is real capability. That is not a PowerPoint and it is not an essay.

But here is where it gets heavy, and here is why it fed straight into the panic cycle. Within days of the games ending, the PLA Daily, the official newspaper of the Chinese military, said the quiet part out loud. It called for accelerating the move of this technology from the laboratory to the military training ground. There is a growing pile of reporting on Chinese defence research into humanoids for urban combat, for reconnaissance, for the jobs you do not want to send a human into. There is a state-backed platform, the Fuxi, described as capable of sentry duty and patrols.

So the dancing robot and the soldier robot are the same robot. That is the uncomfortable truth, and no amount of Terminator jokes makes it less true.

Now watch me apply the same even hand one more time, because it matters. A robot doing a backflip in Beijing is three things at once. It is a genuine leap in capability. It is a soft power flex, a national highlight reel that says look how far ahead we are. And it is a recruiting poster for every hawk on every side who wants a bigger defence budget to counter it. All three are true. The people who want you purely amazed are spinning you. The people who want you purely terrified are spinning you too.

And this is exactly what I meant at the top. Bad actors and rogue uses will always exist. Of course a powerful new tool gets pointed at a battlefield. That has been true of every tool humans have ever made. It is a reason to be sober. It is not a reason to be paralysed.

Six. Put the fear in a box the right size

So people are throwing numbers at you. Two percent. Ten percent. Twenty-five percent chance of catastrophe. Pick your doom figure, there is an expert somewhere with a spreadsheet for each one.

I want to give you a tool for handling those numbers, and it is neither “ignore them” nor “panic.” It is context.

We accept risk numbers every single day and never think about them for a second.

In the United States, your lifetime odds of dying in a car crash are about 1 in 101. One in a hundred and one. Roughly a one percent chance. You got in a car today. You will get in one tomorrow. You did not run a risk assessment, you did not read an essay, you just went.

Being struck by lightning in your lifetime, about 1 in 15,300. Dying from a lightning strike, about 1 in 139,000. And nobody, not one person, cancels a beach day over lightning. But when the clouds come in and you hear the thunder, you get out of the pool and off the golf course. That is the whole skill. Size the risk, then respond to the specific signal.

So when somebody hands you a scary AI percentage, do not swallow it whole and do not laugh it off. Do what you would do with any risk number in the real world. Ask how it was calculated, because most of these are not calculated at all, they are somebody saying “I feel like it is ten percent.” Ask who is handing it to you. And ask what they get if you believe it. A ten percent number from someone whose business improves when you are scared is worth hearing. It is just not the same as a ten percent number you worked out yourself, or one backed by evidence you can check.

And here is the local kicker, the part no podcast in San Francisco is going to give you. Every one of those everyday risks is an American number, because those are the ones that are easy to find. Several countries in this region carry road death rates among the highest in the world, well above the US figure. We live with real, measurable, daily danger. We get on the motorbike. We watch somebody overtake on a blind corner in KL or Jakarta or Ho Chi Minh and we shrug. We cross the road and we function completely fine.

That is the human default setting, and it is a good one. We are extremely good at living alongside risk. So fear AI the right amount. Not zero, because bad actors are real. Not the amount that an engineered viral thread wants you to feel either. Feel it, size it, get back to work.

Seven. Nobody flew to Jakarta to ask

Which brings me to the only part of this whole story we actually control.

Look at where each decision in this week of headlines was made. The pace of the models is being set in San Francisco. The chip rules are being written in Washington and enforced against Beijing. The robots are being built in China. And the emotional weather system around all of it is being managed by people who each have something to gain.

Notice who is not in any of those rooms. Us. 680 million people, the third or fourth largest internet population on the planet, sitting downstream of every single one of these decisions. Nobody flew to Jakarta to ask Indonesia what pace it wanted. Nobody called Hanoi about the chip rules.

So the fair question, the one this show exists to ask, is not whose panic to believe. It is this. Given that we do not control the pace, we do not control the chips and we do not build the robots, what do we actually control?

The honest first answer is uncomfortable. On the frontier, right now, we are not innovators. We are rule-takers. And I think we have to say that plainly before we can say anything useful.

Eight. One law with a snooze button, one testing lab, a few roadmaps

Here is the actual state of play across the region, because it is more interesting than the doom and more mixed than the boosters admit.

Vietnam. Give them real credit. On 1 March this year, Vietnam’s Law on AI came into force. First proper comprehensive AI statute in Southeast Asia. Risk-based, human oversight at the centre, and it arrives with a national AI fund and plans for innovation clusters. That is a country planting a flag.

Now put the glasses back on, because that is the job. The same law comes with long grace periods. Twelve months for most sectors, eighteen for finance, health and education, which pushes real enforcement out into 2027. And American industry groups are already lobbying Hanoi to stretch that timeline further. So “first AI law in the region” is a great headline and, for now, more a statement of intent than a set of teeth. I am rooting for it. I am not going to pretend a law with a two-year snooze button is the same as a law that bites.

Singapore. Completely different bet. Singapore has pointedly not passed a big AI law. Instead there is AI Verify, a testing and governance toolkit they open-sourced, with more than 90 companies signed up last I checked, the big American names included. There is a live regulatory sandbox, work already under way on governing agentic AI, and a line from minister Josephine Teo that I keep coming back to: a strong desire for AI safety does not have to mean pulling up the drawbridge to innovation.

That is an entire philosophy in one sentence. Do not build a wall, build a testing lab. Become the place where the world proves its AI is safe. Very Singaporean, and it fits them.

Malaysia, home turf. We stood up a National AI Office. The posture so far is soft law first, guidelines and roadmaps rather than a big prescriptive statute, with a full legislative framework that has been working its way toward Cabinet. Credit where it is due, during our ASEAN chairmanship Malaysia pushed the regional digital agreement forward. The risk for us is the same as everywhere: an office and a roadmap are easy, enforcement and real capability are hard.

Indonesia is expected to move through a Presidential Regulation rather than a full law, which is faster but also more top-down. And over all of it sits ASEAN, which put out a guide on AI ethics and governance in 2024, added a supplement for generative AI, and is working toward a regional digital agreement meant to close this year, which could finally make some of this binding and interoperable across borders.

So that is the map. One real law with a delay switch. One clever no-law testing hub. A couple of offices and roadmaps. And a regional framework that is still mostly soft.

Nine. Followers or innovators. My answer.

Two halves to this.

On the frontier, the raw race to build the smartest, most capable model on earth, we are followers. I have not seen a frontier lab come out of Southeast Asia. We have seen genuinely interesting hardware work, including one Singapore round we covered recently, and interesting small-model work out of Japan. Good, but not the frontier line. We are not going to outspend San Francisco, outspend Washington or outscale Beijing on compute this decade. Anybody in this region standing on a stage telling you their startup is going to build a sovereign frontier model to rival the giants is, with love and respect, cosplaying.

And here is the tell. When a country in our region starts talking about AI sovereignty, ask what it is actually sovereign over. The chips are imported. The base models are mostly imported. The cloud it all runs on is mostly foreign. You cannot be sovereign on a stack you rent. Say that part out loud before the next press release.

But the frontier is the wrong scoreboard for us.

You do not have to win the race to build the model to win at using it. And that second game, the deployment game, we can lead. I also think the foundation models are going to earn the word foundational over time, which is another way of saying they commoditise. Concrete is essential and concrete is cheap. Plan for that.

So think about what we actually hold. We hold the users, hundreds of millions of them, coming online with AI in their pocket from day one. We hold the languages and the local context the San Francisco models are still bad at. Straight translation will get solved, that is coming. The rest of the context, how a Malaysian conversation switches languages inside a single sentence, how people here actually pay, what they will and will not trust, is a much longer moat than people think.

And we hold neutrality. Singapore can run a chunk of the world’s AI testing precisely because it is not in the American trench or the Chinese trench. Vietnam can write workable, pragmatic law precisely because it is not trying to win a superpower fight. Being not-in-the-fight is an asset, if we are smart enough to use it.

So my answer is this. Stop trying to be a frontier innovator, because that is a race we lose and a story that wastes our money. Become the best place on the planet to deploy AI, to govern it sensibly, and to build the applications that work for the way people here actually live and pay and speak. A fast, useful, trusted follower beats a broke, pretend innovator every day of the week.

Let billions of dollars flow into the foundation models. Then use what comes out the other end.

That is not settling. That is strategy. The Gulf states worked out they were never going to invent the technology, so they became the place capital and infrastructure went instead. We can do the equivalent with deployment and trust, and with genuinely understanding how this gets absorbed into business and daily life here. That lane is wide open.

The bow

The doomers want you scared. The accelerationists want you charging. The labs want you regulated in a shape that suits them. Washington wants you picking a side and Beijing wants you picking the other one. And a mystery man on the internet with 170 million impressions may have wanted nothing more than to amplify the fear, or move a stock.

Everybody in this story has a motive. Your job, as a founder, an investor or an operator, is not to pick the loudest voice. It is to keep your head, size the risk like the adults we are, and keep building.

Because here is where I land, and it is the same place I started. I am an optimist. Used well, this is the best tool a small team in an emerging market has ever been handed. The threats are real. Bad actors are real. Rogue states are real. None of that is new, and none of it is a reason to sit this out.

We do not control the pace. We do not control the chips. We do not build the robots. But we control whether Southeast Asia shows up to the next decade as a passenger or as a builder.

I know which one I am betting on. I am betting on us as builders.

If this made you think differently about who is really setting the rules, do two things. Send it to one founder who needs to hear it, and send it to one policymaker who needs to be challenged by it.

This piece accompanies this week’s episode of SEA of Startups. Real. Raw. Relatable. Listen on Spotify, Apple Podcasts, or YouTube, and subscribe to the newsletter at seaofstartups.substack.com.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Last week one of the firms that taught this region what seed capital even looks like quietly admitted that it will not raise another Southeast Asia fund.

500 Global showed up in KL, in Jakarta, in Bangkok more than a decade ago, when honestly almost nobody in the Valley could find these cities on a map, let alone wire money to them. They ran the accelerators. They wrote the small early checks that nobody else was writing at the time. For a lot of founders here, a 500 check was the first time a real Silicon Valley name said yes.

DealStreetAsia reported on 31 August that they are not raising another dedicated Southeast Asia fund. Future bets here come out of the global pool. A smaller local team, mostly managing and winding down what they already own.

To be fair, and I am going to try to be fair the whole way through this, Khailee Ng pushed back a few days later. Still committed to the region, still managing the existing funds, still looking at new mandates. I believe him. He is tied to this place far more than I am, because I was not born here. And both things can be true at once. You can be genuinely committed to a region and still decide you will not raise a dedicated fund for it.

Hold that thought, because the gap between what people say and what they will actually write a check for is the entire point of this piece.

And this is not a 500 story. That is just the way in.

One. Two canaries, one coal mine

Rewind and look at Y Combinator, the most famous accelerator on the planet. In 2021 and 2022 their batches swelled to something like 400 companies. Founders from everywhere, checks everywhere, the whole world invited.

Then under Garry Tan they cut the batch back to roughly 100. They stepped back from late stage. And they pulled back from the rest of the world. The Winter 2023 batch was about 21% international. The batch right before it was 42%. Cut in half. Today something like 80% of the batch is an AI company, which surprises nobody.

Now look at what those two decisions have in common. The biggest early stage machine in the United States, and one of the most important funds this region ever had, a decade apart, looked at the whole wide world and reached the same conclusion. Smaller. Closer to home. Pointed straight at AI.

That is the tide going out. Two canaries in the same coal mine, singing the same note. This piece is about what the tide leaves behind here.

Two. The boom is four companies wearing a trench coat

Start with the number everybody is celebrating, because that number is part of the tell.

Global venture capital just had a record six months. Around $510 billion in the first half of 2026. That is more than all of last year in half the time. If you only read that one headline, you would think we are living through the single greatest funding boom in the history of the industry.

Put your skeptical hat on with me, because here is the number that actually matters. Artificial intelligence took roughly 77% of all global venture dollars in that half year. Two companies you already know, OpenAI and Anthropic, raised somewhere around $217 billion between them.

Say that a different way so it lands. Two companies, essentially in California, took about 43% of all startup funding on planet Earth. The US on its own was about $412 billion, and 86% of that went to AI.

Now the caveat, because I promised I would and because the whole brand of this show is that I do not read you a number without telling you what is wrong with it. These figures move depending on who is counting and what they choose to count. Different reports land on slightly different numbers, so treat them as directionally correct rather than precise. And the definition of an AI company right now is extremely generous. Anyone with an API wrapper and a login screen qualifies. Out here we are throwing data centres and chip companies into the same bucket, and it is a fair question whether hardware belongs in an AI funding total at all.

Every version of the number tells the same story anyway. The money is concentrating into the US. Inside the US it is concentrating into AI. Inside AI it is concentrating into about four companies, mostly the two I just named.

So when a fund manager gets on a stage and tells you venture is back, ask the simple question.

Back where?

Strip out those few mega rounds in San Francisco and the rest of the planet is not in a boom. Some markets are recovering. That is not the same thing. The oxygen got pulled into one room, and we are not in that room.

Three. This time they have something better to do at home

Here is the part that should sting, because it is a change from the old story.

This is not the usual complaint where American money ignores us because it does not understand us. This time the US money has something better to do at home. So ask yourself honestly: why would capital that has that choice get on a 14-hour flight to underwrite a logistics startup in Kuala Lumpur, when it can walk three blocks from the office and put a check into a frontier lab that might be worth a trillion dollars?

It would not. It is not. That is not a slight against Southeast Asia. That is gravity. The returns moved, so the money moved. Capital is not loyal and it never was.

Even the money that does show up in our numbers is not always what it looks like. You will hear that Singapore now captures something like 78% of all Southeast Asian startup funding. Seventy-eight percent, one city. Be careful with that figure too, because a chunk of it is not activity, it is address. Companies born elsewhere domicile a holding company in Singapore for the tax and the safety, and the raise gets counted as Singapore.

Strip out the holding company effect and the infrastructure deals, and the amount of genuine early stage, founder-led money landing across the rest of this region is thin. Thinner than the conference panels will tell you.

Four. Nobody is funding the funds

Which brings me to the question the rest of this is really about. If the tourists have gone home to chase AI, and the money that stayed is huddled in one city, who is actually left to fund the next founder in Manila, in Ho Chi Minh, in Kuala Lumpur, in Bangkok?

So I went looking at who is raising money to invest in this region. Not investing. Raising. That is the leading indicator, and almost nobody talks about it, because a lot of it is non-public by regulation and quite a lot of it is non-public by design. A fund that cannot raise cannot write checks next year, no matter how confident it sounds or how good the website looks.

Here is what you find, and it should stop you.

In the first half of 2026, I could not find a single dedicated Southeast Asia fund that reached a final close. Not one. Only one Southeast Asia focused venture fund closed at all in that window. And as of August, no Southeast Asia headquartered venture manager had reported a final close for the year.

My data set may well be incomplete. Some of the paid sources I do not subscribe to will show something I cannot see. But the word on the street matches the numbers I can get to. It is tight.

Let me translate that out of finance language. The machine that raises the money, that then funds the founders, has basically stopped for the year.

Think about how a fund actually works. A general partner goes to family offices, pension funds, high net worth individuals, sometimes corporates, and at the larger end the sovereigns. That is the raise, and it takes a year, two, sometimes three. Then they spend the following years deploying it into startups.

So if nobody is closing a fund in 2026, that is not a bad year. That is a hole in the checks founders will feel for the next several years. Regional deal value is already down, and the tank that is supposed to refill it is running close to empty.

Keep that one in your pocket for the next time somebody at an event talks glowingly about this region’s bright future. Bright futures are funded in advance, and right now almost nobody is funding the funds.

And before you tell me this is just the small tourist players washing out and good riddance, look at the biggest name of all. Peak XV, formerly part of Sequoia, generally well regarded, announced $1.3 billion in February. Genuinely good news. But it is an India fund and an Asia Pacific fund. Not a Southeast Asia fund. The biggest name that ever carried this brand in this part of the world raised money and pointed almost none of it specifically here. India gets its own dedicated vehicles. Asia Pacific, the big blurry bucket, gets one too. Southeast Asia as its own thing, with its own fund and its own partners? Apparently not.

That is what I mean by the herd thinning. It is not always a dramatic exit and a farewell blog post. Sometimes it is just a fund quietly taking the words Southeast Asia off the label and hoping nobody notices.

I noticed. And I am guilty of a version of it myself. We added Japan, and to make that work we swapped Southeast Asia for APAC.

Five. The three letters that decide who keeps their job

So why did the money that was so in love with this region a few years ago go quiet? I am not going to let us off the hook here, because a big part of this we did to ourselves.

The answer is DPI. Distributions to paid-in capital. In plain English: of the money the investors gave the fund, how much did the fund actually give back? Not on paper. Not in a markup. In the bank account, in real dollars, returned to their own investors.

The honest answer in Southeast Asia is not much, and not lately. Exit value fell about 32% last year, to something like $4 billion for the entire region. Almost every good exit this region ever produced is still clustered back in 2021 and 2022. Since then it has not been slow. It has been quiet.

Put yourself in the shoes of a limited partner. You are a pension fund, a family office, a sovereign wealth fund. You put money into Southeast Asia venture in 2019. In 2021 you were told with a straight face and a beautiful deck that this was the next China. It is 2026. Where are your distributions?

For a lot of them the answer is still trapped inside companies that cannot go public because the local markets are too shallow, and cannot find a buyer because the strategic acquirers are not there. Or companies still burning cash, right-sizing, growing slower than the deck promised. The money is technically alive. It is just not coming home.

Do that to an investor once and they call it bad luck. Do it across a whole region, across multiple vintages, and they remember. When they sit down to decide where the next allocation goes, they do not come back to the market that locked up their money for ten years and sent them a newsletter about potential. They go where the exits actually happen.

Which is exactly what is happening. Capital is rotating into what people now call developed Asia. Japan is leading it, and a lot of money is going there. Korea and Australia are picking up attention. Why? Clearer exits, better governance, stock markets that function and let an investor get the money out. There is real nuance to the Japan story that deserves its own episode, but the direction of travel is not in doubt.

So follow the whole picture. US money went home to chase AI. Chinese cross-border money got fenced off by geopolitics. And the LPs still committed to Asia are drifting north and east, toward liquidity, toward the places that pay them back.

Now, it would be very easy to stand at this microphone and sound like a victim. We are not victims. This region sold a growth story for a decade and did not build the plumbing to get the money back out. Shallow public markets. Thin strategic buyers. Growth at all costs, which worked right up until the music stopped. Founders and funds that optimised for the next round instead of the eventual exit, because the next up round felt great and the exit felt far away.

The tourists did not only leave because AI got shiny. They left because we did not pay them back. That is a much harder sentence to say out loud than blaming San Francisco. It is also the true one, and if we cannot say it we will never fix it.

Six. The three doors the survivors walked through

Here is the part I hope is genuinely useful if you are building or investing here right now.

The funds that stayed did not calmly keep doing early stage Southeast Asia the way they used to. Almost none of them did. They each walked through one of three doors, and you need to know which door your investor walked through, because it tells you whether they will ever fund a company like yours again.

Door one. They moved up the stage curve. Late stage is quietly reviving, because late stage is where the perceived safety is. More numbers, more traction, an established business that is unlikely to go to zero next quarter. It resembles stock picking. The flip side of that safety is brutal for an early founder: if the money moves up, you now have to prove more, earlier, for a smaller check, at a lower valuation than the person who raised two years before you. The bar went up and the check went down at the same time.

The clearest example is not a tourist. Monk’s Hill, Singapore based, a firm that spent more than a decade preaching the gospel of early stage, restructured this year. They closed the Jakarta office, ending more than ten years on the ground there, pulled the team back to Singapore, and moved toward growth.

Sit with that, because it is this entire argument compressed into one firm. A respected local name, not a fly-in fly-out fund, did two things at once. They moved up and away from the early stage founder, and they retreated geographically to the safe city. When the people who spent ten years telling you early stage was the future decide the future is actually growth, that is not California losing interest in us. That is the herd thinning from the inside, right here at home.

Door two. They went physical. If the money is not going into your app, it is going into concrete and steel and cooling systems and power. Data centres in Johor. EV fleets, ports, warehouses, chips. This is the real story hiding behind a lot of the big headline numbers pouring into Southeast Asia. It is not venture capital backing a founder with an idea. It is infrastructure money backing assets with twenty-year contracts. It absolutely counts in the regional funding total, and it does almost nothing for a software founder here trying to raise a seed round. Two completely different kinds of money dressed up as one number.

Door three, and this is the big one from where I sit. They started deploying the government’s money against the government’s map. Sovereign and state capital, spending on industrial policy. Malaysia is putting real money behind a sovereign AI cloud, and the Prime Minister has just topped up small business lending. Indonesia has Danantara. Singapore has Temasek and its subsidiaries, including the recent Vertex commitment we covered. Khazanah has its own orbit.

This is capital that answers to a ministry and a five-year plan, not to a founder with a strange idea and a prototype. Some of it does go downstream into funds, but those funds are usually there to apply a specific policy, and they do not stray far outside those bounds.

I am not knocking state capital. In a drought, the state stepping in is genuinely a good thing and I would much rather have it than not. But be honest about what it is and what it is not. Government money is good at survival. It is good at working capital, at infrastructure, at keeping small businesses alive through a hard year. It was never designed to be patient, slightly crazy, high-risk equity backing a founder building something that does not yet exist. It is not good at the off-the-cuff, the outside-the-box, the grey area.

The moment we start pretending state lending and venture capital are the same thing, we get a region full of subsidised companies that survive forever and scale never.

So put it on the slide in bold. A microfinance top-up is not a seed round. A sovereign infrastructure fund is not an early stage investor. Let us stop blurring those lines.

Seven. Rented money was never going to stay

Let me pull this together, because I do not want it to sound like a eulogy.

The tide of global capital went out because AI at home offered a better return than a flight to Southeast Asia ever could. The LPs who backed this region did not get paid back, so many rotated to Japan, Korea, Australia, or straight back to the US and Europe. The funds that stayed climbed up to growth, or moved into concrete, or picked up the government’s checkbook. And the early stage founder, the person this whole show exists for, is left standing on the beach wondering where everybody went.

Here is the reframe I want you to carry out of this.

The money that just left was renting. It was never building. You cannot build a durable home for founders on rented money. We spent a decade optimising this entire region for capital that was never truly committed to it, capital that was always going to leave the second something shinier appeared back home. Hot money. Something shinier appeared, and it left.

That is not a tragedy. That is information. Painful, useful information about who was ever really here for us.

The trap now is to sit on that beach and wait for the hot money to come back. To keep copy-pasting the Silicon Valley playbook, running the same growth-at-all-costs script, hoping the tourists return with their checkbooks. They are not coming back on your timeline. And even if they do, they will leave again the next time California has a better idea. If your entire plan depends on other people’s money staying interested in you, you do not have a plan. You have a hope.

The opportunity, and I mean this as someone still writing checks here on purpose, is that a smaller, more patient, more locally owned base of capital might actually be healthier than the tourist money that just walked out the door. Money that is here because it believes in this place, not because the place was briefly fashionable at a conference. Founders who build for real revenue and a real exit from day one, because there is no other option, because there is no giant growth round coming from San Francisco to bail out a business that does not work.

That is a harder region to raise money in. I will not pretend otherwise. It is a far better region to build a real company in.

This is exactly why I keep saying what I say about the Philippines and the markets everybody overlooks. When the easy money leaves, the advantage shifts to the people who never had easy money in the first place. The founders who learned to grow on their own cash flow in a market that was never fashionable. Those are the ones still standing when the tide is out. That is not a consolation prize. In this environment, that is an edge.

So back to where we started. 500 stepping back. YC going home. Monk’s Hill moving up to growth. Peak XV taking our name off the fund. When the tourists leave, the question is not who is sad to see them go. The question is who is still standing here, willing to write the first check into a founder that nobody in San Francisco will ever get on a plane to meet.

That is the whole game now, and honestly it is the game I would rather be playing. Because the people who stay, and the founders they back through this, are going to own what gets built here next. Not rent it. Own it.

If this made you think differently about who is really funding this region, do two things. Send it to one founder who needs to hear it, and send it to one investor who needs to be challenged by it.

This piece accompanies this week’s episode of SEA of Startups. Real. Raw. Relatable. Listen on Spotify, Apple Podcasts, or YouTube, and subscribe to the newsletter at seaofstartups.substack.com.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Three of the biggest companies this region has ever produced just did something they had never done before. They made money.

Sea, the Singapore company behind Shopee and Garena, posted a net profit of 487 million US dollars in a single quarter, on 7.8 billion dollars of revenue. GoTo, the Indonesian giant behind Gojek and Tokopedia, booked its second profitable quarter in a row. And Grab, maybe my most hated company in Southeast Asia but the ride hailing app none of us can avoid, is now profitable for a full year and buying back its own stock.

If you are a founder, the obvious temptation is to take one lesson from that. Burn. Burn hard, burn big, buy the market, and the profit comes later. That is what the superapps did, and look at them now.

I want to talk you out of it. The real story of Southeast Asian tech in 2026 is not that burning worked. It is that Southeast Asia grew up. And the strategy that got these three to profit is the single most dangerous thing a normal founder can copy.

THE SHORT VERSION

· The burn is not what made them profitable. Discipline in the last two or three years did. The burn is just what they survived.

· Two ingredients made it work, and you have neither. A once in a generation land rush, and a backer deep enough to outspend everyone until they died.

· Read past the adjusted number. Sea still carries a 6.6 billion dollar hole. GoTo’s real quarterly profit is about 15 million dollars. Grab trades at under a third of its listing price.

· Payments is becoming a loss leader for lending. Which means the profit engine of regional fintech is a bet on the credit cycle.

· The funding window is not shut. It got selective. That is good news, if you are building something that actually works.

1. The scoreboard nobody reads past the headline

Start with the good news, because it is genuinely good.

For a decade the knock on Southeast Asian tech was simple. These companies do not make money. They set investor cash on fire to buy growth, and one day the music stops and there is nothing underneath. I said versions of that myself. A lot of us did. Well, the music got quieter, and they adapted.

Sea is the cleanest win. Full year 2025, just under 23 billion dollars of revenue and about 1.6 billion dollars of net income. Not adjusted, not massaged. Actual net income. The stock ran from around 102 dollars in late July to about 130 on the back of the quarter. If you held Sea through the pain, you got paid.

Now read the fine print, because the fine print is the whole point.

Sea

The headline: 487m US dollar net profit in the quarter. 1.6bn net income for FY2025 on about 23bn of revenue.

The fine print: Accumulated deficit still around 6.6bn dollars. Two great years have refilled a bit more than 2bn of the hole they dug.

GoTo

The headline: Second straight profitable quarter. First time crossing 1 trillion rupiah of adjusted profit.

The fine print: Actual bottom line net income for the quarter was about 252bn rupiah, roughly 15m US dollars, on a company that size.

Grab

The headline: Just under 1bn dollars of quarterly revenue, up 22 percent. Adjusted profit up more than half. 750m dollar buyback.

The fine print: Trades around 3 dollars and change against a listing price near 11. Day one shareholders are still deep underwater.

The number the headlines love is adjusted, and adjusted quietly removes things like share based compensation and financing costs before it shows you the shiny figure.

The burn was vindicated at Sea. It was survived at Grab. It is still being paid off at GoTo. Three outcomes from one strategy, and only one of them is the fairy tale.

2. Why the burn worked, and why you have neither ingredient

Even for Sea, burning only worked because two things were true at the same time. You need both. You almost certainly have neither.

One, this was a genuine land rush. A region of more than 600 million people came online, on mobile, all at once, in categories that really are winner take most. Ride hailing. E commerce. Food delivery. When the prize is a whole region and the market collapses to one or two winners, spending to be that winner can make sense. Most businesses are not like that. Most markets have room for several healthy players, and there, buying share with subsidies just trains your customers to leave the moment you stop paying them.

Two, and this is the one people forget. The burn was funded by a capital pipeline almost no founder on earth can access. Sea had Tencent. Grab had SoftBank. GoTo had SoftBank, Alibaba and the biggest names in Indonesia. These companies did not out innovate their rivals. They out funded them. They raised so much, from backers so deep, that they could afford to lose money for longer than the competition could stay alive. The capital was the moat, not the app.

So when a founder tells me they are going to run the Grab playbook in their category, I ask one question.

Who is your SoftBank?

If you do not have a backer willing to fund losses all the way to the horizon, and a market that pays exactly one winner and kills the rest, you are not running the Grab strategy. You are running the part of the Grab strategy that bankrupts everyone who is not Grab.

Here is the quiet irony in the numbers. What actually turned these three profitable was not the eight years of losses. It was the last two or three years of doing the opposite. Cutting the burn. Killing the vanity lines. Focusing.

For 99.9 percent of founders here, growth at all costs is not a strategy. It is a faster way to die.

3. The same pitch is back, with AI on the label

I am banging on about a decade old strategy this week for a reason. It is being sold again, right now, with AI on the front. Same pitch. There is a land grab, get big fast, spend whatever it takes, profit is a later problem. Globally the frontier labs are raising tens of billions for the model race. In this region the AI funding year is basically one giant cheque.

For a lab with a bottomless backer, fine. Maybe that is a real land rush, and there is going to be a lot of lost capital when the winner take most reality arrives. But if you are a founder in KL, Manila or Bangkok, building a product on top of somebody else’s models and burning your seed round on compute to grow before you charge, hear me clearly. You are copying the one part of the playbook that only ever worked for a tiny handful of companies with sovereign sized money behind them. That is land grab cosplay without the balance sheet to survive it.

The lesson from Sea, Grab and GoTo is not burn to win. It is get disciplined and survive long enough to matter. Bank that one. Throw the other one away.

4. Payments finally makes money. Just not from payments.

The most useful signal in the whole quarter, read properly, is where GoTo’s profit came from. Not ride hailing, which is now under pressure from pricing regulation anyway. It came from fintech. GoTo’s fintech arm overtook the on demand business to become the single biggest profit contributor in the company, with adjusted profit in that unit up more than 400 percent year on year. Law of small numbers, sure, but the direction is clear.

It is not just the giants. In the Philippines, PayMongo hit breakeven early this year with gross profit up 240 percent, a company that was bleeding cash a couple of years ago and turned itself into a real business under new leadership.

Easy headline: fintech is booming, payments won. Here is the trap inside it.

The actual fee on a payment in this region is collapsing, by design. In Indonesia the QR standard, QRIS, charges a merchant about 0.3 percent, and the central bank waived the merchant fee entirely on transactions under 500,000 rupiah at the end of 2024. Compare that to a Visa or Mastercard swipe at one and a half to three percent. Governments across the region, and globally, are building payment rails that are near free on purpose, because they want financial inclusion, not fee income. Add stablecoins. Add cross border interoperability, my Maybank QR working in Thailand, the Philippines, Singapore. The squeeze only gets worse.

So how is anyone profitable? Because the payment is not the business anymore. It is the hook. The money sits on top of it.

· Lending. GoTo’s profit engine is credit.

· The float. Interest earned on balances sitting in the system, especially with central bank rates where they are.

· Cross selling. Credit to the merchant and to the consumer. PayMongo’s growth product is literally called Capital, and it lends merchants money against future sales.

The payment gets you the customer and the data. The loan makes you the margin.

And the caveat I cannot skip, because this is not all sunshine. A profit engine built on lending in emerging markets is a bet on the credit cycle. It looks fantastic while rates are high and everyone is paying their loans back. It looks very different in a downturn, when the same loan book that made you profitable turns around and bites. We have watched that movie in peer to peer lending, in fractional purchases, in every iteration of consumer credit that got ahead of itself.

So when someone tells you fintech is the new profit machine of Southeast Asia, the right response is: great, now show me the loan book, and show me what happens to it when things get hard.

If you are building a pure payments startup charging a fee per transaction, be worried. That is a race to zero, and the state is the one pushing it there.

5. The money did not leave. It got smart.

Last one, for the founders who have been told all year that the funding window is shut. It is not shut. It got selective. And selective is good news if you are building something real.

Late in August, a Vietnamese company called M Village, now rebranded Modern Village Lifestyle, raised 26 million dollars led by Japan’s Mizuho with Trip.com adding on, at a valuation north of 120 million dollars. More than double its last round. An up round, in this market.

Underneath it: a proven operator, a physical business, 53 locations already open, backed by strategic money at a rising price. Notice what that is not. It is not a frontier AI lab. It is not a blitzscaling app lighting money on fire to buy users. It is a real business priced up because it is working.

Full disclosure, I do not do consumer, so the next cafe or quick service chain was never going to be my cheque. But you can feel the pendulum swinging back toward the physical world. Physical goods, physical experiences, businesses where cash flow is back in vogue.

Fewer deals. Healthier deals. Better founders funded at fairer prices. That is not a drought. That is a market coming to its senses.

If your startup cannot raise right now, the uncomfortable possibility is not that the money left. It is that the money got smart, and it is finally asking the questions it should have asked all along. Do people pay you. Do they come back. Can this ever make money without a miracle. Those questions were suspended for a decade. They are back.

It even changes the kind of investor you end up with. Fewer awkward board meetings with someone who helicopters in, demands you quintuple revenue by next quarter, and helicopters out. Big hairy goals are fine. Unreasonable pressure from a tourist is not.

The money did not leave the building. It got disciplined, the same way the survivors did.

The through line: grew up, not blew up

Southeast Asia grew up. The superapps proved this region can build durable, profitable, globally relevant companies, and we should be proud of that. They played the rules of the game as they were, rode the land rush, survived, and survived long enough to find the discipline.

But take one ingredient away, the timing, the first mover position, the seemingly endless capital behind them, and the same strategy is just arson on money somebody handed you.

Read the fine print every time. Adjusted is not the same as actual. Interest income is not the same as a moat. A lending book that looks brilliant today is a bet on tomorrow’s credit cycle.

So if you take one thing from this week, take this.

Do not copy the burn. Copy the discipline that saved them from it.

Especially now. Especially with everyone waving AI around and telling you to spend first and ask questions later. The token maxing came, and it left. That pitch built a handful of great companies and buried a thousand more you have already forgotten.

Build the kind of business the smart money is paying up for. Proof over hype, every single time.

If this made you rethink a slide in your deck, good. Send it to the founder in your life who needs to hear it.

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SEA of Startups is written and hosted by Kevin Brockland. Real. Raw. Relatable.

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As you read this, thousands of people are in a convention hall in Bangkok. Techsauce Global Summit, 26 to 28 August, at the Queen Sirikit National Convention Center. Three hundred sessions, hundreds of exhibitors, and one word on every lanyard and every panel title. The word is next. The race to the next model, the next unicorn, the next Thailand.

So I want to be a little contrarian this week and not talk about next. I want to talk about what Thailand has already won, because it has won real things and nobody on that main stage is going to say them plainly. And then I want to ask the only question that actually matters when the music is this loud and the capital is this cheap.

Not what is next. Next, owned by whom?

Because here is the number I cannot get out of my head. This year Thailand pulled in more than two billion US dollars of AI data centre money. Microsoft, Google, ByteDance, the whole parade. Thai AI startups, the actual companies with founders and cap tables, raised about four million.

Same country. Same year. Two billion and four million.

Say those back to back and you barely need the rest of this piece. But stick around, because the gap between them explains almost everything about Thai tech right now.

The country is the host, not the guest of honour

Start with the money, because a lot of it is real. Microsoft has committed over a billion dollars to Thai cloud, AI and data centres running from 2026 through 2028. Google opened a Bangkok cloud region in January and put a number on it, forty billion dollars of economic value over five years. ByteDance is building too. National IT spend this year is heading toward 1.1 trillion baht.

If you are the Thai government, this looks like winning. The photos are great. Prime minister, hard hats, ribbon, a rendering of a big grey building with a lot of cooling on the roof.

I want to be fair, because this is not nothing. Data centres mean construction, power upgrades, some high-skilled jobs, a reason for engineers to stay in the country. Real assets get built. That matters.

But I have been doing this long enough to have one reflex when a big number lands on the table. I ask who owns the thing the number is attached to. So let us do that. Who owns the compute in those buildings? Microsoft, Google, ByteDance. Who owns the models running on it? The same names. Who owns the margin, the recurring, high-fat software margin that compounds for twenty years? The same names again.

And what does Thailand own? The land. The power lines. The water. The local joint venture partner who helped with the permits. The electricity bill.

There is a phrase for this and it is not AI hub. It is compute arbitrage. Thailand is renting out cheap power, cheap land and a plugged-in population of seventy million to companies headquartered eight thousand miles away. The country is the host. It is not the guest of honour.

Now hold that against the four million dollars that actual Thai AI founders raised this year, per DealStreetAsia data. A country can host the entire weight of global AI on its soil and fund almost none of its own.

Capex or equity: the question to ask all week

Here is the part I want founders to hear, because it is where this gets useful and not just cynical. When you are at Techsauce this week, or reading about it afterwards, and somebody says Thailand’s AI investment hit record levels, stop and ask them one thing. Capex or equity?

Data centre capex is offshore-owned infrastructure. Startup equity is Thai-owned companies. They are two completely different things, and this week they will be blended into one flattering headline every single time.

Capex builds someone else’s asset on your land. Equity builds your asset. Full stop.

The win for Thailand is not the ribbon cutting. It is the day a Thai company owns a real layer of this, something above the substation and the security fence. Until then, be honest about what you are celebrating. You are celebrating being a very good landlord.

There is nothing wrong with being a landlord. Ask Singapore. But a landlord does not get wealthy the way the tenant does, and the tenants here are trillion-dollar American software companies. Just know which side of the lease you are on.

The champion, and the question underwriters will circle

If the hyperscalers own the infrastructure, where is the Thai champion? Where is the homegrown AI company we can actually point to? There is one. It is called Amity.

And it is genuinely impressive, which is what makes this interesting. I am not here to knock it. I am here to hold it up to the light.

Amity raised a hundred million dollar Series D in March, one of the largest generative AI rounds in all of Southeast Asia. Revenue over a hundred million a year, up more than tenfold since 2022, targeting two hundred million by the end of this year, and lining up an IPO in 2027. Enterprise AI, chatbots and agents for big organisations: banks, government, retail. By any measure this is a real company. Not a deck and a dream. Revenue.

Now here is the detail that tells you a lot about how Thai tech actually works. Amity was founded by Korawad Chearavanont, grandson of the founder of CP Group and son of CP Group’s current chief executive. CP is the largest private company in Thailand. It owns 7-Eleven across the country. It is the majority owner of True, one of the two big telcos. It is in food, agriculture, retail and property, and basically everything you touch in a Thai day.

So picture the founding conditions of this startup. You are building an enterprise AI company, and your first potential customers include the biggest convenience store operator in the country, one of the two largest telcos, and a web of banks and companies that all sit inside or next to your family’s group. CP All, the 7-Eleven operator, True and PTT all show up as Amity clients.

I need to be precise here, because the lazy version of this take is wrong and I do not want to do the lazy version. The lazy version is that it is just selling to daddy’s companies. That is not accurate. Reporting is clear that only about 35 to 40 percent of Amity’s revenue is generated in Thailand at all, and the company says the majority of its revenue and customers are now outside Thailand entirely. So it is not a captive shell. It has gone and won business in other markets.

Credit where it is due, and the accurate version is more interesting than the lazy one anyway. Amity may have been born captive and then grown out of it. A family conglomerate handed a young founder the one thing no other founder in Bangkok can get at any price: a guaranteed home market. Banks, state enterprises, 7-Eleven and True as your first reference points, all while you are still figuring out the product. In enterprise software, a trusted first customer who will not churn while you learn is extremely valuable. He got a whole portfolio of them at the birth of the company.

And look, if I am the investor writing that Series D cheque, I do not hate this. A de-risked launch market is a feature. It is plausibly why the thing scaled from ten million to a hundred million of revenue in two years, after taking almost a decade to reach the first ten. The family base was the launch pad.

But here is the question I would put on the table if I were sitting across from them, and it is the question underwriters are going to circle before that 2027 IPO. How much of that hundred million plus is arm’s length, won on the merits from customers who could have picked anyone? And how much is related party, business that flows because of the name on the building?

That is not an attack. That is diligence. It is the single most important number in the whole story and it is the one that never makes the press release. If most of it is arm’s length, Amity is a genuine Southeast Asian software champion, and I would love to say that loudly. If a big chunk of it is the family buying from the family, then the valuation is telling you a story the revenue quality does not back up.

I do not know the answer. Neither do you, and neither does most of that convention hall. But now you know the question. When a Thai founder tells you their startup is crushing it with enterprise logos, the first thing to gently ask is: whose enterprise?

And for the ninety-nine percent of Thai founders who do not have a billionaire relative, the lesson is brutal and important. Your hardest first year is finding a customer who will trust you before you have proof. Amity basically skipped that year. You will not. Plan for it.

First to adopt is not the same as first to win

Here is where Thailand genuinely leads, and where the lead is thinner than it looks.

Thailand has the highest AI adoption in ASEAN. Not second, first. An AWS report this year puts it plainly: 43 percent of Thai businesses now use AI consistently, up from 32 percent a year ago. Ninety percent of Thai students use generative AI. The country took to this faster than anyone else in the region.

If you only read the headline, Thailand looks like it is running away with it. Then you read the next line, and the next line is the whole story in one statistic. Seventy-four percent of those adopters are stuck at what the report calls the basic stage. Off-the-shelf chatbots, ready-made tools, someone in the office with ChatGPT open in a tab. A few people paste things into it. The actual work, the workflows, the decisions, the output, has not really changed.

Longtime listeners will remember Tiwa York on this show calling this exact thing the level 1.5 trap. A company where AI is bookmarked, mentioned in the strategy deck, played with by a few keen people, and yet nothing downstream is different. He called it adoption theatre. Thailand has just gone and proven you can run adoption theatre at the scale of an entire nation.

I want to be careful, because first to adopt is not worthless. It means the workforce is not scared of these tools. It means a founder in Bangkok is selling into a market that already says yes to AI instead of flinching at it. That is a real tailwind and I would not throw it away.

But adoption is not advantage.

Bookmarking ChatGPT is not a moat, it is table stakes. If the whole country is at level one and a half, then the whole country is standing at the same starting line and the race has not actually begun.

Which is exactly where the opportunity is, and it may be the best applied AI opening in the region. The gap between 43 percent are using it and 74 percent of them are stuck at basic is a market. That gap is thousands of Thai businesses who have already said yes to AI and have no idea how to go from playing with it to running on it.

They do not need another chatbot wrapper. They have twelve of those. They need someone to rebuild an actual workflow in Thai, on Thai documents, Thai regulation, Thai customer behaviour. The unglamorous, deep, vertical work. Take one industry, one painful process, and move a Thai company from level one and a half to level three.

That is not going to be the Techsauce keynote. It is a boring, valuable, defensible business, and the demand is already sitting there, pre-warmed and waiting. A country that adopts the fastest and builds the least is leaving the entire middle of the value on the table. If you are a Thai founder, that middle is yours to take. Nobody in that hall is really talking about it, because it does not sound like the future. It just prints money.

Bet on the boring strength

Now let me stop being the skeptic, because this is the part where I am genuinely bullish.

Thailand keeps trying to win a race it is not built to win, the pure software, pure model, out-innovate Silicon Valley race. And it keeps quietly sitting on top of a thing it already dominates and barely talks about. Thailand makes things.

Thailand is the largest automotive manufacturing hub in Southeast Asia, more than 1.8 million vehicles a year, with Toyota, Honda, BMW, Mercedes and a deep, decades-old base of Japanese tier-one suppliers. It is basically the Detroit of Asia, and for once the nickname is earned.

And where you have factories at that scale, you have robotics. Thailand’s industrial robot density is somewhere around 70 to 90 robots per 10,000 manufacturing workers. Treat that as directional rather than gospel, but it puts the country second in Southeast Asia behind Singapore and inside the global top fifteen or so for installed industrial robots. This is a country that already runs automation at national scale on the factory floor.

Here is why that matters this year and not in the abstract. Two things are happening at once. One, a huge part of that robot base is old, ten to fifteen years old, installed for the old way of building petrol cars, and due for replacement. Two, Thailand has a plan called 30 at 30, thirty percent of vehicle production electric by 2030, and a wave of Chinese EV makers is pouring in to build there.

Put those together and you get a full retooling of the most sophisticated manufacturing base in the region. Old lines ripped out, new lines for EVs going in, automation rebuilt from the floor up. That is not a data centre gold rush Thailand watches from the sidelines. That happens inside Thai factories, on Thai shop floors, with Thai engineers who have been running robots for twenty years.

This is where a Thai founder has an unfair advantage that a founder in San Francisco could never buy: proximity to the machine. Physical AI, industrial automation, retrofit robotics, the software layer for the tier-two and tier-three suppliers who are being squeezed to modernise. That is a real category, and Thailand is standing right on top of it.

There is a hint that it is starting. Amity Robotics, and yes, the same Amity family of brands, closed a seven million dollar seed round in July backed by East Ventures, building physical AI concierge robots. Seven million is small next to the other numbers in this piece, but it is a meaningful round in this part of the world, and it is a signal. Physical AI built in Thailand for a world that runs on a lot of Thai-made hardware.

I would argue that seven million dollar seed is a more important sentence about Thailand’s future than the whole billion dollar data centre announcement, because one of them Thailand owns and the other one it rents.

Now the honest risk, because I am not going to sell you the bull case without the catch. The same Chinese EV makers bringing the capital are also bringing their own automation stacks, their own robots and their own software. If Thailand is not careful, it ends up doing what it has done before: assembling other people’s cars with other people’s robots, running other people’s code. Busy, employed, and not owning the valuable part.

The next move, the one that actually builds Thai wealth and not just Thai employment, is Thai companies owning the automation layer, not just the assembly line. The intelligence on top of the assembly line. That is the startup I want to see pitched. Not another generative AI copywriting tool. A team that walks onto a factory floor in Rayong, looks at a fifteen-year-old robot cell and says, we can make this thing think, and we are Thai, and we are cheaper and closer than anyone you would fly in. That founder can win. That founder will own something. That is the version of next worth racing for.

Next, owned by whom?

So here is where I land. Techsauce is going to be a fantastic event. It is every year. The energy will be real and the rooms will be full, and much of it will have a layer of hype over a layer of truth.

But the question that hall is not asking, the one I want you walking around with all week, is not what is next.

Thailand has the users, the highest adoption in the region. Thailand has the factories, the best manufacturing base in Southeast Asia. Thailand has the infrastructure, billions of dollars of it going into the ground right now. What Thailand mostly does not have yet is Thai ownership of the value sitting on top of all three.

The founders who fix that are not going to be the ones building the shiniest thing for the main stage. They are going to be the ones putting real applied AI into a back office, or a factory line in Rayong, or a boring workflow inside a Thai bank that has said yes to AI and has no idea what to do next.

Bet on the boring strength. Own the layer above the thing everyone else is renting.

If you are at Techsauce this week, go find the founder no one is putting on the keynote stage. The one solving something unglamorous and Thai and real. That is who I would be writing a cheque to.

Real. Raw. Relatable.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

There is a company in Singapore that has raised close to half a billion US dollars and has never sold a single thing. Not a small amount of revenue. None.

It has a chip. It has a box. It has a founder story, a serious set of engineers, and one of the bigger names in Singaporean venture writing the cheque. What it does not have is a customer you can name or a price you can look up.

And here is the part that should make you sit up. That is not a scandal. In 2026, that is a business model.

So this one is about a Singapore chip company called Acrab. But Acrab is really just the door. Behind it sits the question every founder and every investor in this region needs an answer to. When a company raises hundreds of millions before it has a product in the market, is that smart money seeing the future early, or is it the dumbest money in history dressed in a lab coat? And underneath that, something more practical. This whole idea of running powerful AI on a small box on your desk instead of in the cloud. Is it real, or is it a slide in a deck?

The box

On 6 August, Acrab closed a $130 million Series B led by Vertex Ventures SEA and India, together with Vertex Growth. Hold that name, Vertex, in your head. We are coming back to it, and it turns out to be the most interesting thing in the whole story.

That round took Acrab past $480 million in total funding. The company was founded in 2024 and only came out of stealth this year. By its own description it has visible paths to industrial deployments and expects revenue within 2026. Read that last part again. Expects revenue within 2026 is a very polite, very well lawyered way of saying we have not made any money yet.

So what did they build? This is where it gets genuinely interesting, and I do not want to be cynical about the engineering, because the engineering looks real. The chip is called GELIX 1. It is a system on a chip built on a 5 nanometre process, which is a serious modern manufacturing node, pairing a 20 core Arm CPU with a dedicated neural processing unit and 273 gigabytes per second of unified memory bandwidth. If none of those words mean anything to you, here is the translation. This is a real piece of high end silicon, not a science project.

Around it they built a product called Agent Box. Think of it as a small computer that sits on your desk and runs AI models locally, on the device, without sending your data off to a data centre somewhere. Acrab says it is designed to support models in the 100 billion parameter class, with persistent memory, multimodal input, and agents that actually do things, all running on the box in front of you. That is the pitch.

Now let me do the part I actually get paid to do, which is not believe the pitch.

The headline number is a benchmark. Acrab claims its chip processed a prompt at 1,416.8 tokens per second, against 188.9 on a Mac Mini with an M4 Pro. Roughly seven and a half times faster than a high end Apple machine. Sounds incredible. It might be. But let me tell you what that number actually is, because this is where you earn the right to have an opinion.

That measurement is something called prefill. Prefill is the speed at which the machine reads and digests your question before it starts answering. It is the reading phase, not the writing phase. It is genuinely useful, and it is exactly one half of the job. The other half, where the machine generates the answer token by token, is called decode.

Acrab has not published its decode rate. It has not published time to first token. It has not published power consumption. It has not published thermal data. And crucially, nobody independent has verified any of it. Every one of these numbers comes from Acrab. Even the tech press covering the launch flagged this openly. The claim is prefill only. It is not proof the chip is seven and a half times faster at everything. It is proof it is fast at one specific thing, in one specific test, that the company designed.

And the 100 billion parameter claim, the one doing the work in every headline, notice the wording. Designed to support. Not runs. Not we measured it running a 100 billion parameter model at this speed while drawing this many watts. Designed to support is a target, not a result.

I am not saying anyone is lying, and I want to be clear about that. I am saying that as of today, GELIX 1 is in validation. It is chasing its first industrial adoption. The first market is the smart cockpit inside cars. No named customer, no public price, revenue as a forecast.

So here is your honest scorecard on the product. Real chip, real team, one genuinely fast benchmark on the reading half of the task, and the entire set of numbers that would tell you whether this actually works quietly missing.

Half a billion for nothing is now normal

Before you laugh at half a billion dollars for a company with no revenue, look at what is happening everywhere else. Acrab is not the strange one. Acrab is the small one.

San Francisco. Safe Superintelligence, founded by Ilya Sutskever, formerly chief scientist at OpenAI, raised $2 billion at a $32 billion valuation. Around 50 employees. No product. No published research. And it has said out loud, on purpose, that it does not intend to ship anything until its mission is complete. Nvidia is one of its backers. Two billion dollars, fifty people, nothing to sell, by design.

Thinking Machines, founded by Mira Murati, formerly chief technology officer at OpenAI, raised roughly $2 billion at a $12 billion valuation, then another $5 billion at $50 billion. To its credit it did finally ship a model in July. But it raised the first two billion on a founder name and a thesis, not on a product.

And this is not fringe. In 2025, OpenAI and Anthropic between them absorbed around 14 percent of every venture dollar invested anywhere on earth. Anthropic was valued at $965 billion by May this year. The money is not spread out. It is piling into a handful of bets on faith.

That is America. Here is where I actually wanted to take this, because Asia is running the same playbook with local accents, and almost nobody here describes it that way.

Tokyo. Sakana AI raised $135 million at a $2.65 billion valuation, making it the most valuable startup in Japan. And here is the elegant part. Sakana’s entire philosophy is small. Cheap, efficient models trained on small datasets, tuned to the Japanese language and Japanese business. One of its founders, Llion Jones, co-wrote the original research paper that created the modern AI boom. Rich valuation, thin revenue, sold on pedigree and a thesis that says bigger is not always better. Sit with that, because it is the same bet Acrab is making. The anti-giant bet. Do more with less.

Beijing. Moonshot AI raised $2 billion at a $20 billion valuation and is reportedly chasing $30 billion. But here is the twist, and this is the one that should sting. Moonshot is not pre-revenue. Its annualised recurring revenue passed $200 million in April. Its rivals Zhipu and MiniMax already listed in Hong Kong in January. The Chinese champions are not raising on faith. They are raising, making money, and ringing the opening bell.

Bangalore. India has decided AI is a sovereignty question. Sarvam raised $234 million at a $1.5 billion valuation, led by the Indian IT giant HCLTech. And Ola’s founder Bhavish Aggarwal is building Krutrim, which is not just making models but building its own chips and its own computing infrastructure. That is a direct echo of what Acrab is doing, wrapped in the flag of national self-reliance.

Put the map together. Silicon Valley is doing pre-product on pure faith. Japan is pricing efficiency on pedigree. China is already making money and ringing the bell. India is treating this as national security. And Southeast Asia’s entry into the contest is a box from Singapore that runs AI models on your desk.

Pre-revenue is not pre-product

One distinction, and it is the difference between a lazy take on this and a correct one.

Pre-revenue is not the same as pre-product. Safe Superintelligence has literally nothing to ship, deliberately. Acrab has a chip and it has a box. And a chip company is not a model company. Silicon costs a fortune before you make a single dollar, because you have to design it and manufacture it long before anyone can buy it. That is the nature of hardware, not a warning sign.

So if you are going to judge Acrab, do not judge it against a software lab in California. Judge it against Sakana in Tokyo and Krutrim in Bangalore. Judge it against the other people trying to build hardware and sovereignty in Asia. That is the fairer fight.

Where the engine was built

So who runs it? The chief executive is Dr Ken Phua, the former co-chief executive of Arm China. He spent two decades at Arm and stepped in to co-run its China business in 2020, during a very messy boardroom fight.

Let that land. The technical spine of this Singaporean deep tech contender was built at the top of Arm China.

I want to be careful and fair here, because this is exactly the kind of thing this show exists to say out loud without turning it into a smear. That is a real, world class credential. It is not a red flag on its own. But it is the same thread we pulled on with Manus and with DayOne. When something is wearing a Singapore jersey, it is always worth asking where the engine was actually built. Here, the engine has an Arm China lineage.

There is also a small mystery I could not fully close. A couple of outlets name someone called Tian Qi as the 2024 founder, and that name appears almost nowhere else, while Phua is the public face. I am flagging it, not asserting it. If you know who else is in there, tell me.

So is edge AI real, or is it a slide?

Now the question the whole thing hangs on, in the plainest language I can manage.

Edge AI just means running the model on the device in front of you, instead of sending your request over the internet to a giant data centre and waiting for the answer to bounce back. On the box, not in the cloud. That is the whole idea.

Why would you want that? Four reasons, and they are all real. Speed, because there is no round trip to a server. Privacy, because your data never leaves the building. Cost, because you are not paying a cloud bill every time you ask a question. And it works when the internet does not.

This is a real market, not a fantasy. Edge AI chips are worth somewhere around $4.4 billion this year, growing more than 20 percent a year. Nvidia already holds close to 40 percent of edge AI compute revenue, and it went and bought Groq, one of the most interesting inference chip companies going, to own more of it. Serious people are putting serious money here.

But here is the crack in the Acrab story that no press release is going to point at.

The sweet spot for running AI on a device is small models. The industry even has a nickname for it, the Goldilocks zone: roughly seven to thirteen billion parameters, with a bit of clever compression. With four bit quantisation, a four billion parameter model fits in under a couple of gigabytes and runs on your phone. And these small models are shockingly good. There is a documented case of a fine tuned model with under three billion parameters beating a model more than two hundred times its size on a narrow enterprise task. Gartner expects that within a couple of years companies will use small, task specific models around three times more than giant general purpose ones.

So the direction of travel is clear. On device, small and specialised beats big and general.

Now look back at Acrab’s headline. One hundred billion parameters, on a box. That is an order of magnitude beyond where the rest of the field says the sweet spot sits.

So one of two things is true. Either Acrab has a genuine architectural edge that lets it do something the rest of the industry cannot, in which case show me the decode rate, show me the watts, let someone independent test it, and I will be the first one standing up and clapping. Or the 100 billion number is marketing running out ahead of the physics. Right now, on the numbers they have released, I cannot tell you which. And neither can they.

Why this region is the right market for it

Let me make the constructive case, because I do not want to leave you with only the skepticism.

Southeast Asia might be the best market on the planet for edge AI, for reasons that have nothing to do with Silicon Valley.

Data sovereignty is becoming law here. 89 percent of Indonesian enterprises now say keeping their data in their own country is a key factor in technology decisions, and you hear the same thing in Malaysia, the Philippines and Thailand. ASEAN is actively pushing on it. Meanwhile the region runs on patchy connectivity and expensive cloud bills.

Put those together. Data that must stay onshore, internet you cannot always trust, and a cloud invoice that hurts. Running the model locally on a box stops being a gimmick and starts being the obvious answer. That is not a California idea imported here. That is a genuine regional fit.

The tell is on the cap table

Which brings me back to the name I told you to hold on to. Vertex.

Vertex, the venture firm leading this round, is a wholly owned subsidiary of Temasek. And Temasek is owned by the Government of Singapore. Peel back one layer and the marquee backer of this deal is effectively the Singapore state.

And the state is not being shy about it. In this year’s budget Singapore committed S$800 million specifically to semiconductor research, sitting inside a S$37 billion national research plan, and it is merging its investment arms to fund deep tech.

So let me reframe the whole thing as bluntly as I can. Acrab is not really a startup story. It is industrial policy wearing a startup jersey.

Singapore has looked at a world where AI is a matter of national power and chips are the new oil, and it has decided it wants to own a piece of the silicon. So it is putting state money, through a state owned fund, into a chip company run by the former co-chief executive of Arm China, at the exact moment it is pouring billions into semiconductors nationally. This is a country building a strategic asset and calling it a Series B round.

And honestly, once you see it that way, it is a better story and a more defensible one. This is not foreign intellectual property quietly routing through Singapore to dodge the geopolitics and sell to American buyers, which is a pattern we have criticised here before. This is the opposite. This is Singapore deliberately hiring Arm China talent to build something it intends to keep.

So the honest question stops being is Acrab a real startup. It clearly is a real engineering effort. The honest question becomes this. Is it a smart sovereign bet, or is the state paying startup prices and startup multiples for a national champion it wants for reasons that are not purely financial?

My actual take

For whatever it is worth, from someone who writes small cheques for a living and not state sized ones.

The category is very, very real. Small models on real devices work today, and Southeast Asia has better reasons to want them than almost anywhere else. So I am not bearish on the idea.

What I am cautious about is the specific claim and the specific price. Half a billion dollars, no revenue, a benchmark that measures half the job, a flagship number sitting well outside where the rest of the field says the physics work, and a cap table that traces back to a government. None of that is disqualifying on its own. All of it together means you keep your applause ready and your hands still until the independent numbers show up.

Applaud that Southeast Asia finally has a serious hardware bet with real talent and real ambition behind it. Then ask them for the decode rate, the power draw, and the name of one paying customer. If those show up and they are good, this is one of the most important companies in the region. If they keep not showing up, what you have is a very expensive, very well credentialed box that a government wanted to exist.

Here is the one line I want you to take into your next investor meeting or your next board call. Pre-revenue is not pre-product, and a benchmark you cannot reproduce is not a benchmark. It is a poster.

The whole world, from San Francisco to Tokyo to Beijing to Bangalore to right here in Singapore, is spending enormous amounts of money on artificial intelligence before the revenue shows up. Some of that will look like genius in five years. A lot of it will look like the most expensive lesson a generation of investors ever paid for. Your job, and my job, is to tell the difference before the money moves, not after.

Acrab might be the real thing. The Singapore government clearly thinks the category is worth owning. I just want to see the other half of the numbers before I call it a winner.

If this was useful, send it to one founder or one investor who needs it. And if you know who actually founded this company, tell me. I read every reply.

A benchmark you cannot reproduce is a poster.

Real. Raw. Relatable.

... --- ...

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In 2022, at the Vietnam Venture Summit, forty one funds stood up and pledged one and a half billion dollars for Vietnamese startups. The pledge covered the three years from 2023 to 2025.

Through May of this year, Vietnamese founders raised twenty eight point eight million dollars. Ten rounds.

And next month, on the twenty first of September, FTSE Russell reclassifies Vietnam from a frontier market to a secondary emerging market. FTSE’s own estimate is that about six billion dollars of passive index money follows it in.

Six billion dollars, arriving on a scheduled date, into the stock exchange. Twenty eight point eight million, across five months, into companies.

So I do not want to hear that Vietnam has a funding problem. Vietnam is about to be soaked in money. It is just the wrong money.

I will defend this next line anywhere. Vietnam has the best engineering talent base in Southeast Asia. It also spent recent years being told it was the next China, then the next India, then the next Indonesia, then whatever the next thing was that year. Every one of those labels pulled in capital. Not one of them pulled in the kind of capital that funds a company and then hangs around for eight or ten years to find out whether it worked.

This is not about how much money there is. It is about what kind. The amount was never the problem.

* * *

One. Four taps, and the one that is off

There are four ways money flows into Vietnam right now. Three of them are running hard. One has been turned off. Almost every story you read about the country confuses them.

Tap one is venture capital, and that is the one that is off. Through May, Vietnamese startups raised twenty eight point eight million dollars across ten equity rounds. In the same period last year it was two hundred and twenty seven million across fifteen rounds. Deal count barely moved. Deal value fell about eighty seven percent. Those are Tracxn numbers and they run through May, not through the full year, and I am going to keep saying that, because a five month figure is not a year.

Let me be fair about the baseline, because this is where people overcook the story. Vietnam was never a billion dollar a year venture market. Full year 2024 was four hundred and ninety four million dollars across sixty eight deals. So this is not a collapse from a great height. It is something more boring and more serious. Sixty eight deals a year became ten deals in five months. That is roughly one venture round every two weeks, in a country of a hundred million people, with the deepest engineering talent pool in the region.

And Vietnam is not alone in it. Across Southeast Asia the first half was thin. The regional dollar totals held up because people keep stuffing them with data centre deals that should never have been in a startup funding report in the first place. Strip those out and it is down across the board. Vietnam is the sharpest version of a regional problem, not a Vietnamese peculiarity.

Tap two is index money, and it is running hard. In April, FTSE Russell confirmed the upgrade, effective the twenty first of September and phased into the global index series through next year. FTSE estimates about six billion dollars of inflows from passive trackers. The World Bank puts near term flows at about five billion and says the long term potential could reach twenty five billion by 2030. Those are their numbers, not mine, and both institutions have an interest in the story being good, so hold them loosely. Even at half those figures it is the largest single capital event in Vietnam’s modern financial history.

Here is the part nobody says out loud. Ask what passive money actually does.

It buys the index by a pre-designed weighting. It does not read a deck. It does not take a meeting. It does not care who the founder is or what the product does. It buys the listed companies in proportion to their weight, which in Vietnam means banks, property and retail. And when it leaves, it leaves the same way, by weight, on a rebalance date, regardless of how good your quarter was.

Not one dollar of that six billion is available to a founder with a working product and eighteen months of runway. Not one. It is not that kind of money.

Tap three is borrowed retail money, and it is running very hard. Margin lending at Vietnamese brokerages hit about four hundred and forty five trillion dong at the end of the second quarter, roughly sixteen point nine billion dollars. At the start of 2023 it was one hundred and twenty five trillion. Three and a half times more borrowed money in three years.

This is the bit that should make you sit up. That borrowed money is now the main thing absorbing foreign selling. When overseas funds sell Vietnamese stocks, it is domestic retail investors, on credit, taking the other side.

The counterargument is a real one. The prevailing view among Vietnamese analysts is that this is not yet a problem: brokerages have strengthened their buffers, July’s margin calls were localised, forced selling did not spread. That is the majority position, held by people who know that market far better than I do.

My read is simpler. When the buyer holding your market up is borrowing to do it, your market is not deep. It is propped. Contained and safe are different words, and the gap between them is where people lose money. Borrowed positions unwind faster than anyone models them.

Tap four is public listings, and it is reopening hard. Four Vietnamese IPOs raised more than eight hundred and thirty million dollars in the first half of this year, at a combined market value just under seven billion. I am going to hold that one, because tap four tells you the most and it deserves its own section.

Put the four side by side. Vietnam has built a functioning machine for turning domestic savings into listed equity. It has built almost nothing for turning savings into new companies. Both get called a capital market. Only one of them compounds into industries that did not exist before.

Think about what that does to a talented twenty seven year old in Hanoi who wants to build something. The shortest path to capital is not a seed round, because there are ten of those a year. It is a salaried job at a multinational, a role inside a listed group, or a family business with a balance sheet. Every one of those choices is rational. Individually they are all the right call. Collectively they are how you end up with a country that has world class engineers and no company anyone outside the country can name.

* * *

Two. The world found Vietnam’s engineers and decided to rent them

Vietnam has more than eighteen thousand four hundred specialised AI engineers, the largest pool in Southeast Asia. Demand for them is running at about two and a half times where it was in 2023. On technical and system design assessments, the top tier score within about eight percent of their American peers, at sixty to eighty percent lower cost.

Disclosure on those figures, because it matters. Most of them come from recruitment firms and offshore advisory shops, which are businesses that exist to sell you a Vietnamese engineering team. Take the direction as real and the decimal places as marketing. Even discounted heavily the picture holds. This is a deep, cheap, genuinely excellent engineering base, and the world knows it. Vietnam is an exporter of talent.

Look at what the world is doing with it. Nvidia has been expanding its hiring in Vietnam across manufacturing and operations roles tied to high end GPUs, with Foxconn reported as a possible partner, and it keeps AI model development roles in Hanoi and Ho Chi Minh City.

Be careful here, because this is exactly the kind of story that gets inflated in a group chat by Friday. Nvidia has not announced a factory in Vietnam. What is reported is hiring, in roles consistent with more advanced work. That is a signal, not an announcement. But take the signal seriously, because it tells you the whole story in one move. The world found Vietnam’s engineers, and it decided to rent them.

Nobody in this story is the villain. Nvidia hiring hundreds of engineers in Hanoi is good for Hanoi and good for those engineers. Hard currency, frontier work, none of the risk. A twenty nine year old with a mortgage and a kid who takes that job over a startup salary is making the correct choice, given the options in front of them.

The failure is that nobody local ever put a competing offer on the table.

And I want to be even handed about whose fault that is, because it is not only the money’s fault. Investors in this region got risk averse and clustered around whatever was already working, which is how you get ten rounds in five months. Founders own a piece of it too. Plenty of Vietnamese founders spent the last few years priced for a market that stopped existing in 2022, holding out for a valuation that was available once and is not available now. A round that closes is worth more than a valuation you are still defending. That is not investor propaganda. That is arithmetic about runway.

The reporting around Vietnam’s funding reset names constraints that are unglamorous and real: reluctance to hire foreign expertise, language barriers, and legal and foreign exchange rules that make a Vietnamese entity harder to fund than a Singapore one. Some of that is business culture and takes a generation. Some of it is paperwork and could be fixed inside a year. In fairness, the government has made real moves on the rules, and the direction of travel is good.

But underneath all of it sits one sentence, and it is the sentence I would put on the wall of every ministry in the region, and every university.

A salary is not ownership.

When an engineer in Hanoi builds something excellent on an offshore contract, the value of what they built shows up on somebody else’s cap table, in somebody else’s currency, in a company listed on somebody else’s exchange. They get a good wage, which is not nothing, especially if you remember what a good wage in Vietnam bought fifteen years ago. They do not get the asset.

There is a serious counterargument to all of this and it is called India. India’s services industry created enormous wealth, built a professional middle class, and produced the management layer that now runs a large share of global technology. Some of the people who left came back to fund the next generation through angel networks. Nobody should sneer at that.

But look at the shape of it. That wealth accrued slowly and mostly to a handful of very large firms. The product companies came a generation later, out of a domestic market big enough to fund them. Vietnam is being offered the same deal thirty years later, with a smaller domestic market, and with AI compressing the window in which cheap excellent engineering is a durable advantage.

I invest at seed across this region, and I will tell you what I actually see in the pipeline. Vietnamese technical teams are frequently the strongest engineering we look at. What is missing is not ability. It is that fewer of them are choosing to own the outcome, because the local machinery for owning an outcome barely exists.

* * *

Three. Sixty funds for a chain of electronics shops

At this point somebody tells me the money is simply gone. Hard market everywhere, rates are what they are, nobody is writing cheques. That is not false, but it is not fully true either. And you do not need to leave Vietnam to prove it.

Go back to tap four. Four Vietnamese IPOs in the first half of this year, more than eight hundred and thirty million dollars raised, a combined market value just under seven billion.

The one to look at is Dien May Xanh. Its offering raised about five hundred and forty five million dollars. Ninety three percent of the shares on offer were taken up. Around sixty domestic and foreign investment funds turned up for the book. It has been cleared to list and starts trading in Ho Chi Minh City, aiming at a market value of roughly three point eight billion dollars.

What is Dien May Xanh? It is a chain of electronics shops. It is the retail arm of Mobile World Group, which is itself already listed in Ho Chi Minh City.

Sixty investment funds, for a chain of electronics shops carved out of a company that was already public. Ten venture rounds, for the whole country, in five months.

Same city. Same year. Substantially overlapping pools of money.

There is a cheap version of this section and I am not writing it. Dien May Xanh is a real business with stores, revenue and staff. It deserves to be able to raise capital. A working IPO market in Vietnam is good news, and it is good news for venture too, because a functioning exchange is the exit that makes venture possible at all.

But look at the shape of what got funded. An established business, attached to a listed parent, with audited revenue and a decade of trading history, at the very safest end of the risk curve. That is where Vietnamese capital showed up in size, and it showed up in numbers that would fund the country’s entire startup base for the next fifteen years.

So here is the whole argument in one paragraph. Vietnamese savers will put sixteen point nine billion dollars of borrowed money into buying existing shares. Vietnamese and foreign funds will put five hundred and forty five million into one carve-out of a listed retailer. Passive index funds will put six billion into the exchange next month because a committee in London changed a classification. And the total that went into new Vietnamese companies, over five months, was twenty eight point eight million dollars.

Nobody in that chain is doing anything wrong. Every one of those decisions is defensible on its own. Collectively they add up to a country that will fund almost anything except a founder.

* * *

Four. The Singapore number, and an honest caveat about it

There is one more number that explains the gap. Of the venture deals that do get done in Vietnam, Singapore based investors account for about thirty nine percent. Domestic Vietnamese investors account for just under twenty percent.

Now the caveat, because I do not think that figure means quite what it looks like. A Singapore domicile is often just a legal jurisdiction. Most venture funds in this region are domiciled in Singapore because there are only a handful of jurisdictions that are globally recognised and acceptable to institutional backers. Unless you are a government vehicle or a corporate arm, that is where the fund gets set up. So the Singapore share is probably inflated by structure rather than by geography.

What I take from it is different. The domestic number is small enough that whatever genuine local participation exists is likely concentrated in emerging managers, seed and pre-seed funds, and angel networks. That is exactly the layer a country needs to be thick, and in Vietnam it is thin.

So the risk capital that reaches a Vietnamese founder is mostly foreign and mostly arrives through Singapore, while the domestic capital, which is vast, stays parked at the safe end. Which means Vietnamese founders get judged against foreign comparables, on Singapore timelines, in Singapore governance formats, by people flying in. And the most common piece of advice those founders receive is to reincorporate in Singapore. As long as the operations and the founders stay put, a holding company on top is mostly a tax and fundability structure rather than an exit from the country. But it does slowly move where the value sits.

Nobody in that arrangement is paid to be first. And being first is the entire job of seed capital.

* * *

Five. Four things I would actually do about it

If you are building in Vietnam right now, and you have been reading me describe your funding market as a set of taps pointed somewhere else, here is what I would do with this. None of it is comfortable.

One. Assume there is no local lead investor coming. Not as pessimism, as planning. Ten rounds in five months means the odds of a domestic lead finding you in time are close to zero. Build to the point where a foreign cheque is a decision somebody makes on numbers, rather than a favour somebody does you after an introduction.

Two. Price to close, not to signal. A five hundred thousand dollar round that closes in March beats a ten million dollar valuation you are still explaining in November. Your valuation is not your scoreboard. Your runway is.

Three. If you take state money, read carefully what the milestone actually measures. If it measures customers, revenue or retention, take it and be glad. If it measures headcount, local presence or filings submitted, you have been handed targets that have nothing to do with whether anyone wants your product. Not a reason to refuse it, because money is money and you need it to survive. A reason to keep two sets of numbers: the ones the grant wants, and the ones that tell you the truth.

Four. On the reincorporate in Singapore advice, which you will get from every investor you meet. It is often the right call, and it is often the right call across most of Southeast Asia. Just be clear-eyed about what it does. The company becomes fundable, and over time the brand and the value start to detach from Vietnam. Do it because it solves a real problem for you, not because somebody told you it is what serious founders do.

And to be fair to the money for a second, none of this is unique to Vietnam. I would say most of it in Kuala Lumpur, Manila or Bangkok.

* * *

Six. When private capital thins out, the state sets the price

So what fills the hole? The same thing that always fills it.

Ho Chi Minh City is setting up a municipal venture fund, roughly sixty percent private capital and forty percent state, with target allocations across semiconductors, AI, biotech, green technology and robotics. Credit where it is due: the state money only pays in after the private contributions are complete. To be eligible, a company has to be established in Vietnam and commit to operating in the city for at least five years. Alongside it, Vietnam has stood up an International Financial Centre, inaugurated in Da Nang in January and in Ho Chi Minh City in February.

Last week I made almost exactly this argument about Malaysia. Different country, same quarter, same conclusion. I am not apologising for the repetition, because the repetition is the story. Across Southeast Asia right now, private venture is thin enough that the state has become the marginal buyer of startup equity. When that happens the state sets the price, and whoever sets the price sets the behaviour.

The design here is better than most. State money following private money instead of leading it is the correct way round, and somebody in that department understood the problem. The open question is who runs it and what they have actually done before, because we have watched that part go wrong elsewhere in the region.

Two places I would push back. First, the five year local presence requirement. I understand why a city asks for it, and it is still a constraint on a company that needs to go and live where its customers are. Second, and this is the trap I flagged in the Malaysian numbers, an allocation is a target, not deployed capital. A budget line is not money in a founder’s account.

There is a quieter risk that nobody puts in a press release. When the state is the buyer of last resort for equity, companies reorganise themselves around milestones instead of customers. You can hear it in a pitch when it happens. The deck starts answering a scoring rubric. The roadmap starts matching a sector allocation. And a company built to satisfy a rubric is very hard to turn back into a company built to satisfy a market.

* * *

What all of this says together

Vietnam was the next China. Then the next India. Then the next Indonesia. It should be allowed to be the next Vietnam.

Every one of those labels brought in money that wanted the story. Hot money came in, hot money went out, and every time the story got difficult it left faster than it arrived. The talent survived all of it, which tells you the talent was never the problem.

So here is the test, and I think it is a fair one. Six billion dollars of index money arrives in September. A state backed fund is being assembled in Ho Chi Minh City. Ask again next August whether any of it produced one company that somebody outside Vietnam can name.

If the answer is no, we can stop calling this a funding gap. The money was here. It was just never designed for founders.

If you are a Vietnamese founder who has raised in the last twelve months, I want to hear who actually wrote the cheque, and where they were sitting when they wrote it.

* * *

This piece accompanies this week’s episode of SEA of Startups. Real. Raw. Relatable. Listen on Spotify (

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