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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On the twenty seventh of July, in a bank tower in Petaling Jaya, the Malaysian government announced more than five billion ringgit of financing for Malaysian startups.

It has been a week. I still cannot tell you who is giving it.

Not because it is a secret. Because nobody published the list. The minister said fifteen organisations. The fullest account any newspaper ran named twelve, and it introduced them with the word “among”. So somewhere out there are three institutions holding a share of five billion ringgit for Malaysian founders, and not one outlet in the country can tell you their names.

Now, I am not going to spend this piece telling you Malaysia has no money. That is the lazy version and it is not true.

Malaysia has enormous amounts of money. Thirty billion ringgit sits in committed venture and private equity funds, according to the Securities Commission. A hundred and sixty billion ringgit of data centres is going up in Johor. And two weeks before that press conference, Malaysian retail investors queued up with one point four billion ringgit in cash to buy shares in one small AI company on the ACE Market.

One point four billion. For a company raising about twenty million.

So the money is here. The appetite for risk is here. Malaysians will absolutely gamble. What almost nobody in this country will do is write a two million ringgit cheque into a company with no revenue and then wait eight years to find out if they were wrong.

That is not a funding gap. That is a temperament gap. And you cannot fix a temperament gap with a press release.

One. Fifteen organisations, twelve names

Start with what was actually announced, because the detail is better than the headline.

The event was called TechnoMART Malaysia: High Tech Financing 2026. It was run by MOSTI, the Ministry of Science, Technology and Innovation, and launched by the minister, Datuk Chang Lih Kang, on the twenty seventh of July at Menara MBSB Bank in Petaling Jaya.

His words, and I want to be fair and quote him properly: “We have connected fifteen organisations, including funding agencies and financial institutions. Together, they provide funding worth about five billion ringgit to support our startups and innovators.”

Four things about that sentence.

First, the verb. He said connected. Not allocated. Not committed. Not budgeted. Connected. And he was straight about it when a reporter pushed him, because a reporter did ask whether the five billion was for this year alone. His answer was that it is an aggregated funding pool from the participating organisations, covering about a year and a half.

Aggregated is doing a lot of work there. It means nobody created a fund. Fifteen institutions added up the financing capacity they already had on their books, over eighteen months, and someone put the total on a banner. Not one ringgit changed hands on the twenty seventh of July.

Second, and to his credit, the minister said the quiet part himself. He said the financing is not distributed automatically, and that it is subject to each institution’s own eligibility requirements. That is an honest caveat and he did not have to offer it. Credit where it is due.

But sit with what it means. There is no single door. There are fifteen doors, and behind each one is a different credit committee with a different form, a different collateral test, and a different definition of the word startup.

Third, TechnoMART is not new. It has been running since 2018 and has delivered more than thirty programmes. It is a matchmaking platform. It puts technology companies in a room with financiers. That is a genuinely useful thing to do, and I want to say so plainly, because the commercialisation gap in Malaysia is real. The minister called it the valley of death, and he is right that it exists.

It is just not a new pot of money. It got reported like one.

Fourth, the list. This is where it stops being funny.

New Straits Times named three participants: MRANTI, MBSB Bank and EXIM Bank. Business Today added MIDF. Malaysia Tribune ran the longest list and named twelve: Cradle, SME Bank, Malaysia Debt Ventures, Permodalan Negeri Selangor, MRANTI, Bioeconomy Corporation, ADFIM, EXIM Bank, MTDC, Venture Tech, Kumpulan Modal Perdana and PMB Tijari.

Put every outlet together and you get fourteen distinct names, and not one of those reports claims to be the complete list.

Look at what is on it. SME Bank. EXIM Bank. Malaysia Debt Ventures. MBSB. MIDF. Those are lenders. Development banks. Institutions whose entire discipline is getting the principal back.

There is real equity in there too, and I am not going to pretend otherwise. Cradle, MTDC, Venture Tech and Kumpulan Modal Perdana are equity vehicles. The minister himself listed the instruments: grants, equity, debt, guarantees, blended finance and working capital. Equity is in the mix.

What nobody has published is how much of the five billion is equity. There is no split. Not by instrument, not by institution, not by stage. You are told the total and asked to be impressed.

And one of the fifteen is ADFIM, the Association of Development Finance Institutions of Malaysia. It is a trade body. It represents lenders. It does not lend.

So we are already at fourteen funders and a members’ club.

Two. The bank in the lobby

Here is the part that actually changed how I read this story.

Five days later, the same New Straits Times reporter filed a second piece on a different subject. MBSB Bank, the bank that hosted the event in its own tower, announced it is committing four billion ringgit to what it calls high growth, high value industries. One billion each for rail, aerospace, automotive and renewable energy.

And the chairman gave that quote, in the paper’s own words, “on the sidelines of the TechnoMART Malaysia: High Tech Financing 2026 event”.

Same room. Same day.

I want to be careful here, because this matters and I am not going to overstate it. Neither article says MBSB’s four billion is part of MOSTI’s five billion. No source links them. I chased this and could not close it, because MOSTI never published a breakdown.

So there are two possibilities, and you can pick either one.

Possibility one. The four billion is inside the five billion. In which case eighty percent of Malaysia’s headline startup financing pool is one bank’s sector lending strategy, and the startups in question are rail suppliers and solar farms.

Possibility two. It is separate. In which case MOSTI’s five billion is spread even thinner across the other fourteen institutions than it already looked.

There is no third possibility where this number means what the headline said it meant.

And one more detail, because it is the most telling sentence in the whole story. MBSB described this push as diversifying beyond its traditional strength in property financing.

A property lender is moving into industrial lending. That is a perfectly sensible corporate strategy and I have no quarrel with it. It is just not startup capital, and it got filed under startup capital.

Three. Thirty billion committed, 2.8 billion out the door

So much for the announcement. Now ask what happened last year, with the money that already exists.

The Securities Commission published its capital market masterplan in March. In it is a number that should be the headline of every Malaysian startup story for the next twelve months, and I have seen almost nobody use it.

At the end of 2025, Malaysian venture capital and private equity together held thirty point one billion ringgit in committed funds.

In that same year, venture and private equity together deployed two point eight billion ringgit, across a hundred and seventeen deals.

Thirty billion committed. Two point eight billion out the door. That is under ten percent.

And be careful with that two point eight, because I am going to be careful with it. That is venture and private equity combined. The venture slice on its own is smaller. Of the thirty billion committed, only about six billion is venture at all. The other twenty four is private equity, which buys profitable companies. Different animal, different risk, different sport.

So when a minister stands up and says Malaysia needs more financing for startups, the honest response is: does it? There is thirty billion ringgit sitting in committed funds in this country and it moved two point eight billion in a year. Adding a fifteen door lending pool to that does not solve the problem. It is the wrong end of the pipe.

If you want the sharpest version of this, look at Jelawang Capital.

Jelawang is Khazanah’s national fund of funds. It was set up specifically to fix this. One billion ringgit, mandated to back Malaysian venture managers so they can back Malaysian founders. Exactly the right instrument. Genuinely the right idea. I have no criticism of the design.

In February, Khazanah reported the results for the year to the end of December. Its first five fund managers had backed more than ten startups, and crowded in about thirty million ringgit.

Thirty million. Ten companies. From a one billion ringgit national fund of funds.

Fund of funds are slow by design. First five managers, early days, capital calls take years. That is all true and I will defend it. But hold that thirty million next to a five billion ringgit banner and tell me which number describes Malaysia today.

Four. Fifty billion of debt, under a billion of equity

You can see the same shape in the budget.

Budget 2026 raised the combined equity allocation across KWAP’s Dana Perintis and Khazanah’s Jelawang to seven hundred and fifty million ringgit. Cradle got fifty five million for equity programmes. The co-investment fund got two hundred million.

In that same budget: over fifty billion ringgit in loans and guarantees for entrepreneurs.

Fifty billion of debt. Under a billion of equity. That is the Malaysian capital stack in two numbers.

And I understand why. Debt is politically easy. A guarantee costs nothing until it is called. A loan comes back, in theory, and the minister who announced it is retired by the time it does not. Equity means a civil servant has to sign off on losing public money on purpose, seven times out of ten, and then explain that to the Public Accounts Committee.

Nobody in Putrajaya is getting promoted for a portfolio that is down seventy percent on the way to one winner. So nobody builds one.

That is not corruption. It is not even incompetence. It is an incentive structure working exactly as designed, and producing precisely the wrong thing.

Five. Three hundred and twelve times oversubscribed

Here is where I changed my own mind, and I want to walk you through it, because I came into this story ready to write the usual piece about Malaysians being risk averse.

That piece is wrong.

On the ninth of July, a company called SRKK AI listed on the ACE Market. Small company. Microsoft partner, digital transformation work, AI services. The kind of business that would struggle to raise a Series A from a regional venture fund.

The retail tranche of that IPO was oversubscribed three hundred and twelve point three times. Twenty nine thousand four hundred and twenty eight applications. One point four billion ringgit of retail money, chasing fourteen point two million shares.

It nearly doubled on its first day.

Read those numbers again, because they demolish the risk aversion story. Nearly thirty thousand ordinary Malaysians put one point four billion ringgit in a queue to buy a slice of an unproven AI company. Not a bank. Not a plantation. An AI company.

And it was not a one-off. Bursa had thirty three new listings by the middle of June, twenty two of them on the ACE Market. Pentech raised thirty four million. Sum Technology, thirty three. MM Computer, twenty six. In July alone, Stratus Global raised two hundred and eighty five million ringgit at a valuation near a billion.

Compare that to the venture side. Through April, Malaysian startups had raised about ninety four million US dollars across eleven equity rounds. Call it four hundred million ringgit, for the whole country, for the year to that point.

Malaysian retail investors put three and a half times that into the queue for one small-cap listing. In a fortnight.

So no, Malaysia does not lack risk appetite. Malaysia has ferocious risk appetite. It is just extremely specific about the terms. It wants a ticker. It wants a prospectus. It wants a regulated exchange, a listed price, and the ability to be out by Thursday.

What it will not do is lock money up for eight years in something illiquid, unpriced and probably worthless.

And honestly, that is a rational preference. If I could get exposure to a Malaysian AI company with daily liquidity and a regulator standing behind the disclosure, or the same exposure through a ten year fund with no distributions and a manager I have never met, I know which one my auntie is picking.

The same pattern shows up at the other end of the scale. Malaysia’s data centre market in Johor is now worth about a hundred and sixty billion ringgit. It has the largest incoming pipeline in the Asia Pacific, over eight and a half thousand megawatts. Colocation vacancy is zero point seven percent. In the first half of this year, a single Australian operator committed twelve point seven billion ringgit for two facilities.

Twelve point seven billion. From one company. For two buildings. That is more than double what fifteen institutions took a press conference to announce for every startup in the country over eighteen months.

When Malaysia is asked to fund a building, it finds a hundred and sixty billion. When it is asked to fund a listed share, it finds one point four billion in a fortnight for one company. When it is asked to fund a founder, it holds an event.

The constraint was never capital. It was never appetite. It is that this country has not built the one thing that converts appetite into a term sheet, which is a class of people whose actual job is to be early, be wrong most of the time, and get paid for the few times they are not.

Six. The leak, and the scoreboard

Three more things before I land this.

First, the leak. On the sixteenth of July, a study by Oxford Economics modelled what Malaysia’s digital regulation is doing to private investment. Under the restrictive path, it projects venture investment falling twenty six percent by 2035. That is roughly seven hundred and ninety two million ringgit a year, and about twenty two thousand fewer startup jobs.

The survey underneath it is worse than the model. Eighty one percent of startups report higher compliance costs. Thirty nine percent now spend more than fifteen percent of their operating costs on compliance. And sixty seven percent say money has come out of research and development to pay for it.

The rules in question are the amended data protection act, the Cyber Security Act, the Online Safety Act code that came into force on the first of June, and the AI Governance Bill that went to Cabinet in June.

Now the honest caveat, and I am giving it to you because I could not resolve it. I could not establish who commissioned that study. It has the shape of industry-funded research, and industry-funded research about the cost of regulating industry deserves a raised eyebrow. So weigh it accordingly. I am not asking you to take the number as gospel.

But even discounted heavily, the direction is the point. One ministry called a press conference to announce five billion ringgit over eighteen months. Another ministry is writing rules that could quietly remove seven hundred and ninety two million a year. One of those requires a stage and a photographer. The other happens in a gazette on a Tuesday.

Second, the scoreboard. In April 2024, Malaysia held the inaugural KL20 Summit. Twelve international venture firms, Sequoia and Accel among them, pledged to set up funds and offices in Kuala Lumpur. Three sovereign and semiconductor funds pledged three billion ringgit. It was a genuinely impressive day.

Two years on, the published scoreboard is five thousand and five startups registered on the MYStartup platform, and more than twenty four thousand people benefiting from KL20 programmes.

Those are attendance figures. Registration is not capital. A beneficiary is not a company.

The next summit was announced for June this year, with, in the government’s own framing, the greatest emphasis on venture capital. I went looking for a recap of what came out of it. I could not find one.

I want to be careful, because I cannot find it does not mean it did not happen, and I am not going to claim otherwise. But set against the volume of promises made in 2024, the silence is doing some work.

Seven. Where I actually land

Third, and this is the one that should sting. Look at who actually wrote the equity cheques into Malaysian companies this year.

Respond.io, out of Kuala Lumpur, raised sixty two and a half million US dollars in June. Thirty five million in annual recurring revenue, growing a hundred and sixty nine percent, at a thirty percent margin. A genuinely excellent Malaysian company. Led by Camber Partners. American.

PolicyStreet raised twenty one million in a Series C first close. Led by Cool Japan Fund. Japanese.

Decube raised three million. Anchored by Taiwania. Taiwanese.

American, Japanese, Taiwanese.

The good news is real, and I will take it. Malaysian companies are now good enough that foreign funds fly in for them. Respond.io at thirty five million in recurring revenue and profitable is a serious business by any standard on earth. And the larger a round gets, the more global its investor base becomes by nature. That is not a scandal.

The uncomfortable news is that when the upside on these companies gets distributed, it does not get distributed here. The domestic money stayed in the debt column, where it is safe, where nobody gets blamed, and where nobody gets rich.

So here is where I have ended up.

Malaysia announced five billion ringgit for startups, from a list of fifteen institutions it never fully published, in a tower belonging to a property lender that is moving into rail and solar, in the same week that thirty thousand of its own citizens queued up with one point four billion ringgit to buy a small AI company on the open market.

The money is here. The appetite is here. The talent is here, and the minister was right about that part.

What is missing is the person willing to be early and wrong in public. You do not get that person by announcing a number. You get them by building a place where losing money on purpose, most of the time, is a respectable job.

If you are a Malaysian founder who has actually been through one of these fifteen doors, I want to hear how it went. And if you know which three institutions never got named, my inbox is open.

Until then, Malaysia will keep holding events about the valley of death.

And the Americans, the Japanese and the Taiwanese will keep flying in to buy the survivors.

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

or YouTube (https://www.youtube.com/@SEAofStartups), 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

For a decade, Indonesia was not a story about Southeast Asia. It was the story. Two hundred and eighty million people, most of them young, most of them coming online for the first time with a phone in their hand. Gojek, Tokopedia, a parade of unicorns. Every global fund with a Southeast Asia slide put Jakarta in the middle of it, and everybody wanted in.

In 2021, at the peak, Indonesian startups raised about $6.9 billion. Not the region. Indonesia by itself.

Last year, the whole country raised $355.7 million across 91 deals.

That is roughly five cents on the dollar. Indonesia, the giant, the centre of the entire regional pitch, now raises less venture money in a year than Vietnam does, and less in a year than Singapore raises in a month.

The music stopped and the bubble burst. That part is not the interesting part. Bubbles burst everywhere. What is interesting is what comes next, and in Indonesia three things arrived at once. The courts came for the founders. The regulator came for the funds. And the smart money quietly started packing its bags.

That is the reckoning. Let us walk through it.

One. How the balloon got that big

Before we bury this thing, we have to be honest about how it got so big in the first place, because a bubble this size is never one person’s fault. It is a whole system agreeing not to look too closely.

I am going to be honest about my own side of the table, because that is the only way this ends up being fair.

You back a startup. Six months later, twelve months later, eighteen months later, another fund puts money in, hopefully at a higher price. And just like that, on your books, your stake is worth more. You have made money on paper. You did not sell anything. You did not return a cent to anyone. But the number on your page went up.

That paper number is the single most valuable thing you own, because it is what you carry into the room when you go and raise your next fund. A bigger fund. And a bigger fund pays you a bigger management fee, in cash, this year, whether or not a single rupiah ever comes back to an investor.

So let me say the quiet part plainly. These funds spent years marking their own books up to prices that only ever lived on paper, because that paper is what raises a bigger fund and pays a bigger fee. Every asset class on earth plays some version of this game. Private equity plays it. Hedge funds play it. Real estate plays it. Indonesian venture’s bad luck was that here the bubble actually burst, so everyone found out at once.

And when everyone marks everything up, nobody wants to be the person who checks. When eFishery was carried on everyone’s books at unicorn prices, every investor holding it got to wave that markup around and raise more. The number made everyone richer on paper. So who exactly was going to drive out to the fish farms and count the feeders? Nobody did.

That is how a balloon gets this big. Real founders, real ambition, a genuinely enormous market: all of that was true. But wrapped around it was a thick layer of paper valuation that everyone had a reason to believe and nobody had a reason to test.

Then the cheap money went away. Global rates went up, the free-flowing capital dried up, and the next round at a higher price simply stopped coming. The moment the markup stopped going up, the whole thing had to be repriced down to whatever was actually there. Sometimes that is a smaller, real business. Sometimes it turns out there was nothing there at all.

As Buffett put it, when the tide goes out you find out who has been swimming naked. In Indonesia, when the tide went out, the state did not shrug. It reached for a hammer.

Two. The hammer lands on the frauds, and it should

Start with the clearest case.

eFishery, the internet-connected fish feeder company that sold itself as the future of aquaculture, turned out to be one of the largest frauds this region has ever produced. Two sets of books. The company claimed roughly $752 million in revenue when the real number was nowhere close, and claimed a profit while it was losing tens of millions. The founder was sentenced to nine years, reduced to six on appeal. Two of his executives are going to prison alongside him. The investors who got fooled were not amateurs.

Then there is Investree, a fintech lender and at the time one of the respected pioneers, run by a genuine star of Indonesian finance. The regulator says Adrian Gunadi collected around Rp2.7 trillion, about $164 million, from the public without the licence to do it, and routed money through shell companies. When the investigation closed in, he left for Qatar. Interpol red notice, extradition, and he landed back at Soekarno-Hatta in handcuffs in September last year. He faces up to ten years.

So far this is a clean story. Frauds exposed, frauds punished. Good. If that were the whole thing I would be telling you the cleanup is working.

But the hammer did not stop at the frauds.

Three. Four venture capitalists went to prison for a startup that failed

There was a startup called TaniHub, an agritech connecting farmers to buyers. It failed the way startups fail. Two investors had put about $25 million in between 2019 and 2023: MDI Ventures and BRI Ventures.

Here is the detail that changes everything. MDI is owned by Telkom Indonesia. BRI Ventures is owned by Bank BRI. Both parents are state-owned. So in the eyes of the law, the money that went up in smoke was state money. And in Indonesia, a loss of state money can be prosecuted as corruption.

The man who ran TaniHub, Ivan Arie Sustiawan, did divert funds for himself. That was a fraud. He got nine years, plus a fine and restitution, and according to the court record that is a thief getting what a thief gets. No argument from me.

Then the court turned to the investors and convicted them too.

Donald Wihardja, former chief executive of MDI Ventures: five years. Nicko Widjaja, former chief executive of BRI Ventures: three years. Two more investment executives, Aldi Adrian Hartanto and William Gozali: two years each.

Four venture capitalists in prison for backing a startup that failed.

I want to be precise here, because this is the part that made every investor I know, inside the region and outside it, sit up. The court record noted there was no personal gain. These men did not steal. What they were convicted of was approving an investment that lost money. Their own defence was the most basic rule in the whole business: a decision made in good faith that happens to lose money is not a crime, it is the risk you were hired to take. The court did not accept it.

I told you the funds were not saints and I meant it. The markup game, the fee game, all of it. I have called parts of my own industry a grift and I stand by that. We earned plenty of the anger coming our way.

But there is an enormous gap between you pumped your paper numbers to raise a bigger fund and you belong in a prison cell because a startup failed. The hammer stopped drawing that distinction. It came down on the thieves and on the losers with roughly the same force.

Four. And it reached the very top

Then there is Nadiem Makarim, co-founder of Gojek and former Minister of Education. At the time he built it, Gojek was the most successful startup this country had ever produced.

I am going to be exact, because it matters. He was not convicted of enriching himself, and the court specifically found that he did not. The conviction, on 30 June, was for abuse of authority in how his ministry procured school laptops, and for favouring Google, which had been an early Gojek investor. The court put state losses at Rp1.57 trillion, roughly $88 million, on the basis that the Chromebooks could not be used in regions without internet access. He got ten years, a fine, and an order to pay restitution. He says the deal saved money. He is appealing.

I am not going to opine on guilt. That is what the appeal is for, and I have no interest in convicting anyone from behind a microphone. The only thing I can talk about is the picture this makes from the outside.

The founder who built the country’s proudest tech company is in a cell. Two founders who faked the numbers and one who fled the country are in cells. And four investors who simply lost money are in cells too.

Whatever you think of any single case, the message that lands on every founder and every fund in the country is identical. When the boom turns to a bust here, the bust does not end in a spreadsheet and some red ink. It can end in a courtroom. Every founder and every fund manager in Jakarta is now doing that mental maths.

Five. Then the regulator arrived, as it always does

Once the courtroom is in play, the regulator is never far behind, because the other thing a burst bubble always triggers, everywhere, is new rules. The people who missed the fraud on the way up tend to be the most desperate to look tough on the way down.

The financial regulator, OJK, brought in a new regime for venture firms. You now need Rp50 billion, about $3 million, in paid-up capital just to operate a fund. Use your licence within six months or lose it. Full disclosure of who really owns and controls you.

Some of that is a reasonable reaction. After Investree ran money through shell companies, wanting to know who actually controls a fund is fair enough, and I understand the intent.

But be honest about the $3 million floor. It does not stop the next fraud. Fraud does not care what your paid-up capital is. What it does do is price out emerging fund managers, the exact people a recovering market needs most, the ones willing to back a founder before anyone else will. You do not catch the crook. You just clear the room of the honest small players.

And it is not only the private market. Up at the level of the public exchange, MSCI, the firm whose indices steer trillions of dollars of passive money around the world, has put Indonesia under review. It flagged the market for opacity, for murky shareholding structures, for suspected coordinated trading. It has pushed the review out to November and is holding open the option of downgrading Indonesia from emerging market to frontier market.

To be clear, Indonesia has not been downgraded. It is under review. But if that downgrade comes, estimates run as high as $13 billion flowing straight back out of the country almost mechanically, as passive funds rebalance away.

So stack it up. At the startup level, investors going to prison. At the fund level, small players regulated out of existence. At the public market level, the world’s biggest index provider standing at the exit with a hand on the switch.

Every rule, every review, every sentence points the same direction. And the people who move capital for a living can read a compass.

Six. The quietest part, and the one that tells you where this goes

A few days ago the news broke that Monk’s Hill Ventures, one of the better-known names in the region, has restructured. It shut its Indonesia office, pulled its team back to Singapore, and is moving up market toward later, safer, growth-stage deals.

No scandal. No sentence. No headline number. Just a flagship fund quietly closing its door in Jakarta and walking back across the causeway to home base.

Sitting next to everything else in this piece, that is not a coincidence. It is the logical last step. The bubble burst, the hammer came down, the rules tightened, and the smart early money did the only rational thing available to it. It stopped writing early cheques there.

It will not be the last fund to make that move. It is just the most recognisable name to do it so far.

Seven. Where I actually land

I do not want this to read as doom, and I do not want it to read as a defence of my own industry.

The frauds deserve everything they get. Ivan Arie Sustiawan, who looted TaniHub, gets no sympathy from me. Throw the book. Fraud is fraud and it should be punished. And my own industry earned a hard look for the years it spent inflating paper it knew was soft. A reckoning was coming, and a lot of what has landed is fair.

But there is a difference between a reckoning that cleans a market and a reckoning that empties it. Right now Indonesia is doing both at once, and it does not seem to know the difference. It is punishing the fraud, which is right. It is frightening off the risk, which is fatal. And it is doing them in the same breath.

Here is the part worth holding onto, though, because you should not walk away thinking the country is finished. It is not.

It is still the biggest market in this region. It still has the largest population, and it is still full of people who want to build and buy and grow. And remember that something like ninety percent of the peak money was foreign to begin with. A lot of what just fled was never really rooted here. It bought into a story and some honestly fake valuations, and much of it needed to go, or at least needed to recalibrate.

The people are still there. The demand is still there.

The question is whether, when the dust settles, anyone with capital is still willing to stand in a room and take a real risk on a Jakarta founder. Right now they are heading for the door.

The market that figures out how to call them back is the one that wins the next decade.

If you are a founder in Jakarta watching your funding options walk out one by one, or an investor deciding whether to stay, I want to hear from you. My inbox is open.

The tide went out on Indonesia. Now we find out who is still willing to swim.

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

Over the past few weeks, three Malaysia stories hit the news that, on the surface, have nothing to do with each other. A government pension fund answered in Parliament for nearly RM200 million lost in a fish farming startup that turned out to be a fraud. A celebrity founder and her husband sat in a courtroom over money that came from two of the biggest state funds. And a quasi-crypto commune in Forest City had its license pulled by the local council and announced it was leaving.

A fraud, a trial, and a controversy. Three different casts, three different genres. And underneath all three sits one uncomfortable pattern about how Malaysia spends its public money and who actually ends up on the receiving end of it.

Here it is in one line, and the rest of this post is me proving it: when the Malaysian state goes looking for the future, it keeps handing its money and its land to people who are just passing through. And the ones who stayed, who put down roots and built something here, are the ones it keeps overlooking.

One. Four audit firms, and nobody counted the feeders

Start with the pension fund, because this is the one that should make you angriest, and not for the reason you think.

The fund is KWAP. It manages the retirement savings of Malaysian civil servants: teachers, nurses, clerks, the people who keep the country running. About RM195 billion under management, more than RM8 billion in investment income last year. A serious, professional institution.

In July 2023, KWAP put nearly RM200 million, call it US$47 million, into eFishery, the Indonesian startup that made internet-connected fish feeders and sold itself as the future of aquaculture in Southeast Asia. You already know how this ends. eFishery was one of the biggest startup frauds this region has ever produced. The company kept two sets of books. It claimed roughly 400,000 smart feeders deployed in the field. The real number was about 24,000. The fleet was inflated more than fifteen times over, and revenue was inflated to match. The founder was sentenced to nine years in an Indonesian prison, since trimmed to six on appeal.

The story is back in the news because the Prime Minister stood in the Dewan Negara this week to answer for it, and the anti-corruption commission has opened a probe. The easy story, the one a lot of people wanted, is that somebody was lazy or asleep at the wheel. I do not think that is what happened, and the truth is far more useful.

KWAP did not skip the diligence. It was part of a consortium that included SoftBank and Temasek, serious money with serious teams. Between them, the investors hired four separate audit and diligence firms: PwC, Grant Thornton, EY, and KPMG. They hired six more firms to survey the market and validate eFishery’s position in it. They hired Kroll, the corporate investigations outfit, to run background checks on the founders. That is millions of dollars of the most reputable professional diligence money can buy.

Every single one of them missed it. Because all of that diligence was done on paper. Financial statements verified, documents cross-checked, management interviewed, the numbers in one data room matched against the numbers in another. As far as I can tell, nobody got in a car and drove out to the fish farms to count the feeders. If a single one of those firms had spent one week doing what any private equity analyst is taught on day one, go to the site, walk the floor, talk to the actual customers, they would have found 24,000 machines where the company promised 400,000. The fraud was not hiding in the accounts. It was sitting in plain sight in the fields, where nobody bothered to look.

Every founder and fund manager reading this should burn that in: diligence on documents only tells you the documents are consistent. It does not tell you the documents are true. The cheapest, most boring check in the entire toolkit, physically going and looking at the thing, is the one nobody did.

Two fairness notes. RM200 million against a RM195 billion fund is a rounding error, one tenth of one percent. Nobody’s pension is at risk, and when you hear the political noise, keep it in proportion. This is embarrassing, not an emergency. But it is exactly because the money was small that the failure matters. This was not a bet that went wrong. It was a bet that was never really examined, waved through on the strength of who else was in the round. SoftBank is in, Temasek is in, the auditors signed off, so we are in. That may pass in public markets. In private investing it is not investing, it is following. And when a Malaysian pension fund follows a crowd of foreign funds into a foreign fraud, you have to ask the question this whole post is about: what did any of it have to do with building Malaysia?

Two. They bought the face, not the business

I am going to be careful here, because this is a live trial. The founders have pleaded not guilty, and I am not here to convict anyone from a microphone. Everything about the alleged conduct is exactly that, alleged, and the courts will decide in due process. But the investment itself, the money going in and the money coming out, is a matter of public record, and that part is fair game.

The company is FashionValet, the Malaysian fashion e-commerce startup founded by Vivy Yusof and her husband. Vivy was, and is, one of the most recognizable entrepreneurs in the country, a genuine influencer before that word got cheap, with a modest wear brand, dUCk, that people genuinely loved. She became the face of a certain kind of Malaysian success story. In 2018, two of the largest state funds invested: Khazanah put in RM27 million and PNB put in RM20 million. Call it RM47 million of public money into a homegrown fashion brand.

Here is the number that should stop you. When the two funds eventually sold their stakes, they got back a combined RM3.1 million. A loss of roughly RM44 million, confirmed by the Ministry of Finance.

Startups lose money, understood. But the losses were visible before anyone wrote a check. FashionValet lost money every single year it operated, and the losses grew from a few hundred thousand ringgit to more than RM10 million a year. Six straight years of red ink, and the funds looked at that and invested anyway.

So the obvious question is why. I was not in the room, and I arrived in Malaysia around that time without the context to judge it then. But I do not think the honest answer has much to do with the business. I think the honest answer is worse, because it is a pattern rather than a one-off. They did not buy a business. They bought a face. A narrative, a following, the magazine covers, the idea that if you back the most famous young founder in the country, some of that shine rubs off, and the national funds get to say they are backing national icons. It feels modern. It ticks the marketing boxes. It photographs well.

But an icon is not a business model, and a following is not a balance sheet. When the thing you actually bought is a personality, you bought a fragile asset, because the moment public sentiment turns, and in the influencer game it always eventually can, your investment turns with it.

And here is the detail that tells you this is a real lesson and not just hindsight dressed up as insight: Khazanah itself, after the whole thing blew up, publicly warned about the risk of what it called icon-driven businesses. The fund said the quiet part out loud. Betting on personality is a structural mistake.

Now put the two stories side by side, because they rhyme. In eFishery, the funds bought a foreign founder’s story and never checked the fields. In FashionValet, they bought a local founder’s story and never respected the profit and loss statement. One was a fraud, one was just a bad business, and those are very different things. But the investor mistake underneath both is the same: fund the narrative, skip the boring verification that would have told you the narrative was hollow. In both cases, public money went in on the strength of a name, not a capability.

Three. Three names, one machine

Two bad deals is just two bad deals. The reason this is a post and not a shrug is that these are not isolated checks. This is the machine working the way it has always worked.

For more than twenty years, the government has tried to build a venture capital scene by pouring public money into funds and programs. Walk the track record. MAVCAP, the state venture arm going back to the early 2000s: over half a billion ringgit committed over the years, and by last reporting somewhere around RM200 million and change had come back. Roughly 38 sen home for every ringgit out. Allow for liquidity and unrealized positions, it is still a very slow, very official way of setting money on fire, and the local venture scene did not become self-sustaining on the back of it.

Then came 2020 and Penjana Kapital, a fund of funds worth hundreds of millions, launched to kickstart the sector after the pandemic. Big launch, big numbers. Years later, remarkably little of the money had actually been deployed. The government, the local investors, and the foreign partners all wanted different things, and the apparatus seized up.

And after two stalls, it did not stop. It rebranded. The prior attempts were consolidated under the sovereign fund and relaunched in late 2024 under a new name, with a new commitment of capital, as part of an even bigger government mobilization effort. Fresh name, fresh logo, fresh press release, fresh faces.

MAVCAP, then Penjana, then the new entity. Three names, one machine, more than two decades. Fairness again, because it matters: real managers got their first checks from these vehicles, some very good local companies were backed, and many of the people involved are smart and sincere. The new iteration is too early to judge, and I genuinely hope it does better. But the machine, as a machine, has not built the thing it was built to build. There is still no self-sustaining venture scene. There is a state that keeps trying to start one.

Now connect the machine to the scandals, because some of this public money, including pension money, has flowed into foreign accelerator programs operating in Malaysia. One global program, backed in part by that same pension fund, deployed roughly US$2 million here across 19 tiny checks over about a year and a half, and once you net out the program fees the real number is around 40 percent less. Then the global head office reshuffled its strategy, folded countries together, and Malaysia no longer even has a standalone local program. To be clear, nobody did anything wrong there. A global program runs its playbook, deploys small, and optimizes for its own portfolio. Malaysia is one line in a very large spreadsheet.

That is the point. That is the whole point. The local public money keeps flowing to players for whom Malaysia is a line item. A foreign startup that sent the growth story to Indonesia. A foreign accelerator that answers to a global strategy. A fund of funds that returns pennies on the ringgit and gets a new name. In that entire chain, is there anyone whose actual job, whose actual mission, is to build something durable in Malaysia and stay to see it through? The money shows up, the photo gets taken, everyone moves on, and the country is left holding the losses and waiting for the next program launch.

Malaysia does not have a capital problem. It has thrown capital at this for two decades. It has an alignment problem. It keeps giving the money to people who are, in the most literal sense, just passing through.

Four. An island near Singapore

Which brings me to Forest City, because the Network School story is the cleanest version of the whole pattern, and it just ended in the most telling way possible.

Network School was founded by Balaji Srinivasan, the former Coinbase executive and the leading prophet of the network state, the idea that you can build a new society out of people who share beliefs online rather than a shared piece of land. He set up a real-world version in Forest City, Johor: around 400 residents from more than 70 countries, paying US$1,500 a month to live together, code together, and talk about digital sovereignty.

Start with the smallest detail, because it tells you almost everything. From the very beginning, they did not call it Malaysia. The announcement called it, and I am quoting, an island near Singapore. That is how it was sold, over and over. Not Johor. Not Malaysia. The country they were actually living in barely got a mention. They borrowed the neighbor’s reputation and left the landlord’s name off the door. Sit with that for a second. If you will not even say the name of the country you have chosen to live in, you have already told everyone exactly how deep your roots go. Malaysia was never the home. It was the address on the invoice.

Then came the controversy. Viral accusations started swirling, and when they did, immigration and the local council did exactly what they should do: they inspected. Whatever you make of the specific claims, every government on earth, when a public accusation lands on its doorstep, is obligated to look into it. That is not persecution. That is a government doing the one job it owes its own citizens.

And here is the part every foreigner here, myself included, needs to hear plainly. When you live in someone else’s country, you are a guest. You do not get to decide which of their rules are beneath you. The permits, the inspections, the paperwork: they are the price of being allowed to build there. I get the frustration, genuinely. I am a foreigner in this region myself, a founder and an investor, and I know exactly how it feels when the forms make no sense and something that should take five minutes takes five weeks. That friction is real and it can be maddening.

But the response here was an ultimatum, then a shutdown order from the council, and then, while the dust was still settling, a signed deal with another jurisdiction, expedited visas included. If your answer to one inspection is to threaten the country and have a replacement ready by dinner, you were never really here in the first place. You were parked. And the next destination is not a new home either. It is just the next island near somewhere.

I will say this too, as someone who has to make judgment calls like these myself: the ultimatum was a bad tactic even on its own terms. You do not win a dispute with a sovereign by publicly threatening to walk out. You win it by fixing the problem, by working with the country, by delivering value rather than just extracting it. Leading with the threat did not show strength. It showed that the exit was already the plan.

Was there some benefit to Malaysia while they were here? Maybe, at the margins. A lot of sharp, ambitious people in one place, some knowledge rubbing off on the small fraction who were local, a possible magnet effect for others to come and look around. I will not pretend those are worth nothing. But I do not believe for one second that any of that was the actual intention. Knowledge transfer to Malaysians does not seem to have been the mission. The mission, as far as I can tell, was a cheap base with a nice view of Singapore and rules light enough to ignore. Malaysia was the backdrop, not the product. And the instant the backdrop asked them to comply with the rules, they went and found a new backdrop.

Five. Back the ones who already decided to stay

So here is the through line I want to leave you with, because it is much bigger than one commune. Malaysia has a long, expensive habit of rolling out the carpet for the passerby: the person who comes to extract rather than to build something that stays, the fund that flies in, deploys, and flies out, the foreign accelerator lured in with public money that quietly folds its tent when the global theme changes, the brand name that gets the ministerial welcome and the photo op.

And meanwhile, the people who actually stayed get almost none of it. I say this as a foreigner who did stay. There are people in this country who were not born here, who came and put down real roots, who built companies here, hired locals, mentored founders, invested in founders, and made the boring, unglamorous ten-year bet on this place with no exit lined up in their back pocket. Those people do not get a memorandum signed within hours. They do not get the minister at the airport. They queue up, fill in the same forms as everyone else, and wait.

That is upside down. There is dramatically more machinery in this system for luring a brand name than for backing the ones who have been loyal and built roots. And you do not build anything durable by courting the people most ready to leave. You build it by backing the ones who already decided to stay.

Right now, as I write this, the public institutions are putting hundreds of millions more into the semiconductor push. That could be the best decision they make this decade, or it could be the same machine with a new logo. The difference will not be the size of the check. It will be whether, this time, the money flows to the people who are staying, and not to the ones already halfway to the next island.

This one annoyed some of you, I am sure, and it should have. If you run one of these funds, or if you quietly built something real here and watched the welcome party go to a brand name instead, my inbox is open. Come show me what you built.

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

You have seen the number this week, probably five or six times, from five or six people who all copied it from the same report. Southeast Asian tech funding hit 7.4 billion dollars in the first half of 2026. More than double last year. Recovery is here, the drought is over, break out the good coffee.

It is true. It is also one of the most misleading true things I have read all year. Because 4.5 billion of that 7.4 billion went to a single company. One. A data-centre operator. Take that one company out, and on the exact same set of numbers, the region did not double. It went sideways, and depending on how you count, slightly down.

And while we are here: when did we start counting data centres as startup funding at all? That is a genuine question, and it is going to matter more than it sounds.

One landlord, not a region

Here is the full picture, because the detail is where the headline falls apart. First half of 2026, 7.4 billion raised across Southeast Asia, against 3.2 billion in the same six months last year on the same source. On paper, up 130 percent.

Now pull the thread. Of that 7.4 billion, 4.5 went to DayOne, a Singapore-registered data-centre operator, across two Series C rounds to fund a build-out. That is more than 60 percent of everything that flowed into the entire region, in one company, for concrete and cooling and racks.

This is not a knock on DayOne. They did nothing wrong. Raising four and a half billion dollars is not a crime, it is a very good year. The problem is not the company. The problem is that we take their balance sheet and hand it to founders across five countries as if it were their momentum. Strip DayOne out and the region raised roughly 2.9 billion in six months, which is less than the 3.2 billion it raised the year before. The honest headline is not “funding doubled.” It is “one landlord had a great six months, and everything else went slightly backwards.”

It gets worse when you look at where the money sat. Singapore captured 6.9 of the 7.4, over 90 percent, and still climbing. So this is not a Southeast Asian story. It is a Singapore data-centre story. And even that is a little bit of a fiction, because much of the physical build is not in Singapore at all. It is in Johor, across the causeway in Malaysia. The concrete goes up in Johor, the capital gets booked in Singapore, and the statistics tell you Singapore is booming. The map and the money have stopped agreeing with each other.

One caveat to hold onto, because it trips people up. Around the same time, KKR and Singtel bought ST Telemedia’s data-centre business for about 5.2 billion. Huge, and real, but that is mergers and acquisitions. One company buying another. It is not venture funding and it is not in the 7.4 billion. If someone stacks the two and tells you data centres pulled in ten billion, they are double-counting.

The money went into concrete. Whether a founder in KL, Jakarta or Ho Chi Minh City ever sees a cent of it is a separate question, and so far the answer is no.

And here is the part that should sting. Fintech. Payments. The thing this region was supposed to be about, the super-apps and the wallets and the great Southeast Asian consumer story we told for a decade. Fintech raised 685 million dollars in the first half. Not a slow year. A sector that is basically over as the headline act, and nobody held the funeral.

So the founders leave, into a narrower door

Now widen the lens, because the timing matters. The same six months that Southeast Asia congratulated itself on 7.4 billion, global venture funding hit a record 510 billion, a record half driven almost entirely by the AI hype. Of that 510 billion, two companies, OpenAI and Anthropic, raised 217 billion between them. Two American AI labs pulled in 43 percent of all the startup funding on Earth in six months.

Put the numbers side by side. All of Southeast Asia raised 7.4 billion, and ex-landlord, call it 2.9. Two AI labs in San Francisco out-raised our entire region by something like 75 to one. We are a young market, I get that. But 75 to one, two companies against a region, is not a gap you shrug off.

So what does a smart, ambitious founder do with that information? Some of them are already answering it. They are leaving. Founders who launched in Singapore in 2025 packed up in April and May and moved to the Bay Area. This has always happened, but it is becoming a steady trickle, which is worse, because a trickle does not make the news. It just quietly drains the pool.

Here is where I want to be careful, because there is a lazy version of this story. The lazy version is: the money is in San Francisco, so move there and get funded. That is not true anymore. The money in the US has concentrated too, and not just by geography. It has concentrated by story. Look inside that record US number and 86 percent of it went to AI. The same brutal filter is running there, just on a different axis. In Southeast Asia the filter is one landlord. In the US it is one narrative, and if you are not telling it, the cheque book stays shut.

Think about what that does to the bar. There used to be a respectable way to raise. You grew triple, triple, double, double, double. You built a business that compounded, showed durable revenue, and that was a clean Series A. That founder today walks into a room in San Francisco and gets a polite no, because the person across the table is not looking for durable. They want a thousand-x. They want the AI story that eats a category in eighteen months, and a healthy business that doubles every year sounds boring next to it.

You did not escape the filter. You swapped a filter you understood for one that is even harder to clear.

And I want to be fair, because it would be easy to turn this into a loyalty test, and that is not honest. The founders who leave are not traitors. They are moving toward the center of gravity, and San Francisco genuinely is the center of gravity for building right now, especially in AI. But nobody should sell you the fairy tale that the flight to SFO ends with a term sheet. The center of gravity is also the most crowded, most selective room on the planet, and this year it is writing cheques for exactly one kind of story.

Whether the founder stays or goes, the answer is the same shape. Here, the money went to a building, not a founder. There, the money goes to one narrative, not a founder. Either way, the ordinary, good, growing company, the backbone of any real startup scene, is the thing nobody is funding. We built a region that funds the warehouse and exports the talent, and the place we export it to only wants that talent if it can promise a miracle.

Fewer deals, but not better ones

There is a comeback I always get here, and it is a fair one. Deal count is down, sure, but that is discipline. The market matured. Fewer, bigger, better deals. Quality over quantity. This is healthy.

I would love to believe that. In the first half of 2026 there were 127 funding rounds across the region, down from 153 a year earlier. Fewer deals, yes. But look at where the money inside them went. Six billion of the 7.4 went into just twelve rounds of a hundred million dollars or more. Twelve rounds took six billion. The other 115 rounds, every seed cheque, every Series A, every founder not raising nine figures, split roughly 1.4 billion between them.

That is not discipline. Discipline is looking at a hundred good companies and carefully backing the best thirty. This is a hundred companies looking up at twelve giants eating almost everything, and scrapping over the crumbs. When the top twelve deals take 80 percent of the capital, that is not a mature market. It is a bare cupboard with one very full shelf.

And before anyone tells me last year was some golden baseline we have fallen from, no. Last year was the same shape. In the first half of 2025, fintech was carried by three deals that made up more than half of all fintech funding, and Singapore took over 90 percent of the pie even then. The concentration is not new. It is not a one-off. It is the structure. Southeast Asian venture has run on “one or two deals carry the whole region” for at least two years straight. The only thing that changed in 2026 is that the one deal got bigger, so the number got louder, and the lie got easier to tell.

Read the middle of the list

Let me be clear about what this is and is not. This is not doom. I am not telling you the region is dead, or that nobody should build here, or that we should all give up and move to California. Plenty of good companies are being built here right now, quietly, with real revenue, and they deserve better than to be background noise behind a data-centre headline. Which, again, I still do not understand why we file under startup funding at all.

What I am asking for is honesty about the number. Stop reading 7.4 billion as a sign of health. It is not. It is the balance sheet of one landlord plus a rounding error for everyone else. If you want to know how Southeast Asia is actually doing, do not look at the top deal. Look at deal number three, and deal number fifty, and deal number 127. Look at whether a seed-stage founder in Kuala Lumpur can raise a real round without moving to Singapore first. Look at whether the best people are staying or leaving.

Right now, on the honest read, the top of the market is a landlord, the middle is thin, and the sharpest founders are heading to the airport. Until the number without the landlord starts going up, we are not narrating a recovery. We are narrating a story we would like to be true.

Real. Raw. Relatable. If this one annoyed you, good. That means you were paying attention. Tell me where I am wrong.

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 the two biggest stories in Southeast Asian tech were not a funding round or somebody’s ninth super app pivot. They were a government chip program in Penang and 3,600 kilometres of fibre being dropped on the seabed between India and Singapore.

Two boring stories. Laid side by side, they are the most honest picture of this region you will get right now. Both are asking the same question, the one I ask in every partner meeting at Indelible, the one that decides who gets rich over the next ten years and who just gets used:

Who owns the thing that is actually scarce?

Malaysia tries to climb a rung

On 1 July, MTDC, the Malaysian Technology Development Corporation, launched the first cohort of Semicon Start Malaysia. Ten companies picked from 39 applicants. A pot of RM10 million for the first phase, up to RM1 million per company, call it US$250k apiece, with Khazanah money in the mix.

If you have been in this region as long as I have, your first reaction to “government launches program to build high-tech industry” is a small, tired sigh. We have seen this film. Malaysia has a graveyard of these: grand corridors, MOU signings, innovation valleys, state venture funds that wrote checks into slide decks and got slide decks back. Big announcement, ribbon, photo, handshake. Two years later you go looking for the companies and nobody is home.

I had that sigh ready. Then I stopped, because this one has the potential to be different, and the reason why is the whole point of this piece.

This time there is a real industry underneath the program. Penang is not a hopeful press release. Penang has been doing semiconductor assembly and testing for decades. A serious slice of the world’s chips passes through Malaysian hands on the way to being packaged and tested. That is not a pitch. That is payroll. Factories that have run for thirty years, and a workforce that already knows the difference between a good die and a bad one.

So the bet is not “let’s conjure a chip industry out of nothing.” The bet is much narrower, and potentially much smarter: we already own one rung of this ladder. Can we climb one step up into design, where the money actually sits?

The climb has already started without the program. SkyeChip, a homegrown Penang design house doing genuinely hard work (high bandwidth memory, chiplets), listed on Bursa’s Main Market. Before recording this week’s episode I saw a report suggesting Cerebras, the US chip company that also just went public, may be tapping SkyeChip for design work. I have not verified that, so hold it loosely. But the proof point stands either way: a local company has already climbed the exact rung the government now wants ten more companies to climb. Add the National Semiconductor Strategy from a couple of years back, Penang’s own chip design academy, and Selangor standing up a state fund, and you have something rarer than a press release. You have momentum with an industry underneath it.

The timing is as good as it has ever been, too. The world wants to diversify where its chips come from. Nobody wants every advanced part made in one strait that could close on a bad Tuesday. Malaysia is neutral, capable, and already in the supply chain. If there was ever a decade to attempt this climb, it is this one.

Now the hard part, out loud, because that is what this show is for. Money was never the thing missing here. What has been missing, every single time, is patience and expertise arriving in the same envelope as the cash. A million ringgit and a short program do not build a chip design house. Chip design is a long-term sport played by people who have failed at it a few times first. If Semicon Start is a check and a demo day, it joins the graveyard. If it comes with real design mentors, real customer introductions, and follow-on money that does not vanish when the photo op ends, it has a shot.

So the thing to watch is not the RM10 million. It is whether anyone attached to the program has real operating expertise. Money is easy. Knowing what to do with it is the scarce part. Hold that thought.

The cable, and what it actually is

Now to the seabed. This week it was reported that Microsoft, together with Singapore’s Lightstorm, is leading a consortium building a new subsea cable called I2C: roughly 3,600 kilometres of fibre linking India to Malaysia to Singapore, targeted to go live around 2029, built for AI and data centre demand.

Standard disclaimer, because I read these announcements the way I read a pitch deck: this is a 2029 project, consortium details on these things move around, and I have not seen final paperwork, just a news story. Treat the specifics as direction, not gospel.

But the direction is what matters. Every few weeks now there is a story like this. A new cable, a new hyperscaler campus, somewhere with cheap power and a friendly minister. And every one of them gets written up as billions pouring into Southeast Asian digital investment. Celebrations all round.

Here is what I actually see, and maybe I am a bit cynical: the region being wired up as a very good place to host other people’s compute. The fibre lands here. The data centres sit here. They use our power and our seabed. That is real economic activity and I am not pretending it is nothing. But ask the only question that matters. Who owns the compute? Who owns the demand sitting on top of that cable? Generally, not us. The demand is offshore, the models are somebody else’s, and the margin, the part where value actually compounds, is in Seattle and San Francisco, not Johor.

We are the landlord renting out the ground floor, being told to feel grateful for the rent.

I am a capitalist. Rent is not a dirty word. It is a perfectly good business, and Singapore has run that playbook for fifty years. But do not confuse being the landlord with owning the building. A region cannot tell itself it is climbing the value chain when what it is actually doing is leasing the basement to the people who own the value chain.

This is where the cable and the chips rhyme. Same story, pointed in opposite directions. Malaysia’s chip program is a country trying to own more of the building. The cable is the region agreeing to stay one rung down. One is a strategy. The other is a lease dressed up as a strategy.

What is actually scarce

Value flows to whoever controls the scarce thing. It always has, AI or no AI. Find what is scarce, own it, and the money flows to you. Own something abundant and you compete it down to nothing.

So: in Southeast Asia right now, what is actually scarce?

I will tell you what is not. The technology is not scarce. The model is not scarce. Models are commoditizing in front of us, between the big labs’ price war and open source, and they will get cheaper and better every quarter whether you do anything or not. Building your moat on the model is building your house on the tide.

Here is what is scarce. The customer who already trusts you. The physical network that took years and real pain to build. The license from a regulator who does not hand them out twice. Distribution into the towns and small shops that no hyperscaler in the world will ever bother to map. The workflow nuance that took ten years of unglamorous work and cannot be copied in a weekend of clever prompting.

That is the scarce layer. That is the thing worth owning.

Where the winners come from

Look back at the two stories through that lens and they light up. Malaysia is trying to move from an abundant thing (cheap, capable labour, which everyone has) to a scarce thing (design capability, which very few have). Right instinct. Own the scarce rung.

The founder version of the same move: the winner is not the one who owns the AI and goes hunting for a customer. The winner is the one who already owns the customer and quietly adds AI on top. The lending business that already has the borrowers and now underwrites them better. The logistics operator that already owns the trucks and the routes and now runs them tighter. The distributor who already reaches 10,000 shops and now forecasts demand for them.

Those companies will never put AI in the headline. They do not need to. They already own the scarce thing. The AI is just a sharper tool in a hand that already knows the work.

I know that is not a fashionable thing to say in 2026. Every second founder I meet opens with the model they are building on, the AI-native this, the agentic that. The funding tallies love it: somebody counts up the AI startups that raised this quarter, puts out a chart, and everyone nods. But that chart measures ambition, not durable revenue. Those are very different things, and the gap between them is where founders and their investors go to die.

And here is the uncomfortable part I want founders to sit with. Every wave of cheap capital, every shiny new tool, every drop in the price of intelligence does not close the gap between those two kinds of companies. It widens it. When the tool gets cheap and everyone has it, the tool stops being the difference. The only difference left is the position underneath: the distribution, the trust, the scarce layer. Cheap AI makes owning real distribution worth more, not less.

Be honest about what you own

This is where Indelible puts its money, and I will say it plainly so you can hold me to it. We back people who own the scarce layer, or are credibly climbing one rung towards owning it. Not people standing on top of somebody else’s scarce layer with a nicer logo. (None of this is investment advice. It is simply where my money already is.)

So the homework this week, if you are a founder: be honest about what you actually own. Not what is in your headline. What is in your foundations. If the answer is a really good wrapper around somebody else’s model, it is better to know that now. Using a commodity as an input is perfectly fine. Every company will. The question is what you own on top of it.

A chip program in Penang. A cable on the seabed. One country trying to climb a rung, one region agreeing to rent out the basement, and underneath both of them, the only question that has ever really mattered:

Who owns the thing that is scarce?

I write the checks, so I have to be right about this. Come argue with me if you think I am wrong.

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

Since 2017, Southeast Asia has produced exactly one tech IPO that made public investors real money. One. And this week, the Philippines is getting ready to bet its entire year on the next one.

So this week I want to talk about who is buying, who is selling, and which side of that trade you actually want to be standing on.

Four stories, and they braid into one. We open with the good news, because there usually is some. Then we follow the money all the way to the part nobody puts on the deck.

The smart money showed up twice in one week

Start with the hopeful, because it is real and it is specific.

This week two of the most serious institutions on the planet made their first proper bet on Southeast Asia. Not a press tour. Not a memorandum of understanding. Actual money into actual companies.

The first: MIT, the university, joined the cap table of a Singapore company called PVX Partners. Not a flashy name, I had not heard of them before this. They do cohort-based financing for user acquisition. In plain terms, they fund the marketing spend for mobile games and consumer apps, and they get paid back out of the revenue those users generate. It came on the back of a ten-plus-million-dollar round with names like General Catalyst, and I think a DraftKings vehicle in there too. As far as I could find, this is MIT’s first major disclosed startup bet in the region.

The second, and this one landed the day before I recorded: Pfizer Ventures, the drug giant’s venture arm, made its first Southeast Asian startup investment into a Singapore biotech called Engine Biosciences. Engine does AI-driven precision oncology, hunting cancer drugs with machine learning. They just opened a Silicon Valley office to go with the Singapore base.

Here is why this is not just a funding roundup. When an elite American endowment and Big Pharma’s investment arm both pick Singapore companies for their opening move, in the same week, that is not a coincidence. That is a signal about where sophisticated capital now thinks the edge is.

These are not tourists chasing a hot round. PVX is unglamorous infrastructure. Engine is deep science. Both are the kind of bet you make after you have done the work.

Hold that thought, because the rest of this is about what happens to the money that was already here when it tries to leave.

The Philippines is betting its whole year on one listing

On the 27th, Mint, the company behind GCash, filed its registration with the Philippine SEC and its listing application with the stock exchange. The number: up to 92.3 billion pesos, roughly 1.5 billion US dollars at up to ten pesos a share, targeting a fourth-quarter debut. If it prices at the top, it is the largest IPO in Philippine history.

Sit with the context. The Philippines’ IPO count for 2026 before this filing was zero. Nothing. So the country’s first listing of the year is also the biggest it has ever had. And it is a fintech, which if you have listened before you know is my home-turf bias made concrete.

GCash put financial services into something like 90 million pockets. It is the rare regional company that is genuinely profitable. The pitch writes itself: the people who made GCash a habit can now own a piece of it. I want this to work. Let me say that plainly.

Now the part that worries me, out loud, because that is the point of these episodes.

The float is about 12%. Twelve percent of the shares go to the public market. The public is being sold a fairly thin slice while insiders keep the rest. And to fit GCash into its main index, the exchange is now considering cutting its own minimum public float rule from 20% down to as low as 12%.

Take that in. The benchmark is bending its own rules to accommodate one company. When a market reshapes itself around a single listing, and that listing is carrying the whole nation’s IPO year on its back, that is not a recovery. That is concentration risk wearing a party hat.

The real question: does GCash trade well enough to reopen the pipeline for everyone waiting behind it, or does one wobble set the Philippine market back another two years?

To answer that honestly, you cannot just look at GCash. You have to look at what happened to the last batch of regional champions that rang the bell.

Indonesia got a stay of execution, not a clean bill of health

While Manila is opening a door, Jakarta is trying to keep one from closing.

On the 24th and 25th of June, MSCI, the index provider whose decisions quietly move billions in passive money, deferred its decision on whether to downgrade Indonesia from emerging-market status to frontier. They kicked it to November. Indonesia keeps the badge, for now.

Why was it even on the table? MSCI said, in effect, that it cannot trust the market. Lack of transparency in who actually owns the shares. Suspected coordinated trading that makes it hard to know what a fair price even is, or how much stock is genuinely free to trade. And the market rallied on the news.

Here is where I get off the celebratory bus. That rally is celebrating a delay, not a fix. When the index provider tells you it cannot work out who owns the shares or what they are really worth, that is not a paperwork problem. That is a governance warning about the entire market.

And look at the response. Indonesia is leaning on Danantara, the sovereign fund, plus insurance and pension money, to add buying support and prop up the exchange. Think about what that means. To pass a test about transparency and genuine free float, the answer is to bring in state and pension money to hold the market up. That is close to the opposite of the thing they are being asked to prove.

A frontier downgrade is not abstract. It would force passive funds to sell Indonesian equities mechanically, which raises the cost of capital for every late-stage founder in the country dreaming about an IPO on that market, especially now without the hype cycle. November is closer than it sounds.

Manila might be opening up, maybe. Jakarta is one review away from being pushed out. Hope on one side, risk on the other. So let me put some numbers on which way this bet usually goes.

The receipts

I promised you a number at the top. Here it is with the receipts. Since 2017, this is how Southeast Asia’s big tech IPOs have actually treated the public investors who bought in.

SPAC valuations are listing marks, not day-one closes. Dollar figures are dragged by weak pesos and rupiah. Current values approximate.

One winner. Sea Limited went out at a $4.9 billion valuation and trades somewhere in the $56 billion range today. Everything else is a shipwreck. Grab is down around 60% from its listing cap. GoTo lost roughly nine-tenths of its value. Bukalapak is trading below the cash it raised. Converge, the one Philippine name I could pull, is the cautionary tale sitting right next door to GCash.

Now the caveats, out loud, because the show runs on honest data. The SPAC valuations were listing marks, not day-one closes, and several fell on the open. Currency matters too: weak pesos and rupiah drag the dollar figures down. On a per-share basis the returns are often worse than the market-cap numbers suggest, because of share issuances along the way.

But the base rate for this region is brutal. If you bought the Southeast Asia tech IPO story over the last eight years, with one exception, you lost money.

What actually breaks the curse

Here is the thing that matters. Almost every one of those shipwrecks went public unprofitable, floated at the very top of the cheap-money window on a growth-at-all-costs story.

GCash is not that. GCash actually makes money. That is the one real thing that could break the curse.

The curse was never the business. The risk is the entry price. GCash is reportedly chasing a valuation around eight to nine billion dollars, against roughly five billion in the private market just a couple of years ago. That is the exact same “premium to the last round” framing that came right before every name on the shipwreck list.

History says it is not company quality that determines whether public investors win. It is the price on the day they are let in. Buy low, sell high. If Mint prices for perfection at the top of the range, the regional base rate says the valuation compresses toward fundamentals first and compounds later, if you are patient. Converge, down 40%, is what impatience looks like.

Who holds the pen

Here is the thread that ties the week together.

This was the week Southeast Asia’s public markets stopped pretending to be a pure growth story and started behaving like state-managed plumbing. A fintech bends an exchange’s rules to get listed. A country leans on its sovereign fund to keep its emerging-market badge. And underneath all of it, the smartest new money in the world, MIT and Pfizer, is quietly buying into private companies at the early stage, where the value actually gets made, long before any of this public-market theater begins.

Notice where the sophisticated capital is putting its chips. Not into the IPO. Into the cap table, years earlier.

So my filter for all of it, and yours, should be the same question: who actually holds the pen here? Who decides what gets built, what gets listed, what gets propped up? More and more in this region, the answer is governments and sovereign funds, not founders and not public investors.

If you are a founder who is not a conglomerate heir or a sovereign-fund favourite, that should tell you exactly where to aim, and exactly who to raise from.

That is the week. If it was useful, the most useful thing you can do is send it to one founder who is about to get excited about an IPO.

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

Start with two numbers and a question.

In May, startups in this region raised $472 million. More than double what they raised in April. Read only that line and you would think the drought had broken.

Now the second number. That doubling was built almost entirely on two checks. Take those two out and May was thin, still down on the year before.

So here is the question I want to sit inside. When you are a founder in Kuala Lumpur, or Bangkok, or Manila, which numbers are actually telling you the truth?

Because two of the loudest numbers in this market, the funding headline when you raise and the IPO pipeline when you want out, are both unreliable. And they are unreliable in different ways. The money coming in is inflated. The money going out is uneven. In between sits a real company, your company, trying to make decisions on top of figures that flatter and figures that lie.

The mirage: headlines that flatter

The funding rebound is a perfect little lie. Not a dishonest one. A statistically true one, which is worse, because it is harder to argue with.

May 2026: $472 million across 31 deals, per DealStreetAsia. Up 104% on April. The kind of line that gets screenshotted into a pitch deck by Tuesday.

Look underneath it. The jump came from the return of mega deals, transactions worth $100 million or more. A data center. An AI hardware platform. April had none. May had two. Two checks did the heavy lifting for an entire region. And even with them, May still came in 18% below the same month a year earlier. Strip the two big ones out and what you have left is quiet.

This is not new, and that is the point. We saw the same shape in the first quarter: about $2.8 billion across 98 deals, the lowest deal count in at least eight years, with a single data center raise accounting for more than 70% of all that capital. Once you see the pattern you cannot unsee it. The total goes up. The number of companies actually getting funded does not. The aggregate is being inflated by hardware and data centers, while the count of real operating companies catching a check stays flat.

Here is why that matters to you, and it is not academic. If you are raising right now and you benchmark yourself against the headline, you will conclude that capital is flowing and you are simply being passed over. That is the wrong lesson, and it will make you do desperate things. The right lesson is that the deal count, not the dollar total, is the honest gauge. And the deal count says fewer companies, higher bar, slower checks.

The honest number is in the margin

So if the aggregate is a mirage, what is the real one? What is the number on a Southeast Asian cap table that does not lie?

It is the margin. Which brings me to one of the genuinely good stories in the region this month.

Respond.io, a Malaysia-based company, raised a $62.5 million Series B led by Camber Partners, with Endeavor Catalyst and existing backers coming back in, off the back of going through the Endeavor selection network. Big round. But the round is not the story. The story is what was true before the round.

$35 million in annual recurring revenue. Growing over 100% a year. At a decent profit margin. Read that again, because they were already profitable. They raised growth money from a position where they did not strictly need it. That is the exact opposite of the burn-first, find-the-model-later playbook the last cycle rewarded and then punished.

They run an AI-agent-powered customer messaging platform, the layer that lets a business actually hold a conversation and close a sale across the channels where commerce in this region happens. Billions of messages a quarter, more than 10,000 businesses, over 180 countries. The new money is going west, into North America and Europe, with the possibility of some acquisitions. A profitable company, quietly compounding, raising on its own terms and going on offense into the biggest markets in the world.

Take one thing from this. Stop reading the league tables. Read the profit and loss. In 2026, the only honest number on a Southeast Asian cap table is the margin, because it is the one figure nobody can dress up with a single big check.

The asterisk Malaysia should be honest about

Let me complicate my own happy story, because I am not here to wave the flag.

This one is close to home, and KL should be proud of it. The founder is not Malaysian. The company did not start here. It was brought here. That should be a feature, not a footnote. A founder who could base anywhere chose to base in KL, and that decision creates things you can touch: engineering jobs, payroll that gets taxed, corporate tax, office leases, local lawyers and accountants, the cafe downstairs, and a signal to the next founder weighing where to land that says people build serious companies here. Malaysia should bank that credit fully and without an asterisk.

But the timing is almost too on the nose, because there is an asterisk.

At the same moment, the rules on foreign talent are leaning the other way. The salary floor on the employment pass has jumped. Pass lifespans are changing. To me, though, the salary number is not the headline. The harder one is the requirement that you have a replacement plan in place for foreign talent, and some of those plans are short.

Detail has been scant, but one person closer to the interpretation told me the employment is treated as tied to the company, not to the title or the role. So if you bring in a foreign hire to fill, say, a junior developer seat, and that person does well and gets promoted, it does not matter that their title has grown. What matters is that they are still there, and the requirement is that you replace them so that they no longer are.

Sit with that from the talent’s side. What highly capable person takes a role knowing there is a clock on it? If they have a family, will they uproot to a market that is effectively saying we want you temporarily but not forever?

I understand the intent. We do need to build local capability, and you should not let companies park expats in seats indefinitely. Fair enough. But here is the tension I cannot get past as an investor. You cannot run a “come build your global company here” pitch and a “here is your countdown timer, please train your replacement” policy at the same time. The open-door version of this works. There are countries we can point to that prove it.

This is a competitive sport. The founder who chooses KL had other options, because Singapore wanted him, Hong Kong wanted him, Tokyo, Bangkok and Manila all wanted him. The risk is that Malaysia celebrates this win in the very quarter it makes the next one harder to land. If attracting mobile founders is how a small market punches above its weight, and it is, then the policy and the pitch have to point in the same direction. For this month at least, they did not.

The fork in the road

Now the way out. Every founder eventually asks the quiet question. If this works, how do I get out, and where? Every investor asks it less quietly. In Southeast Asia the answer used to be a shrug. This month, three companies gave three different answers, and together they tell you more about this region than any funding total.

Thailand sends its champion abroad. LINE MAN Wongnai, the app more than 10 million Thais use for food, rides and payments, is weighing an IPO, and the venues it is looking at are Hong Kong and New York, not Bangkok. The reporting cites weak domestic conditions and political volatility, with a decision expected as soon as the end of this month. Sit with that. The most-used app in the country looked at its home exchange and decided it could not get a fair hearing there, so it is shopping for a listing 8,000 kilometers away. A market that cannot list its own champions does not have a sentiment problem. It has a plumbing problem. The pipes that turn a great company into a liquid, locally owned public outcome simply have not been built.

The Philippines builds a house worth staying in. In the same window, the opposite answer. Mint, the parent of GCash, the finance super app tens of millions of Filipinos live inside, has authorized the filing to go public: a registration with the regulator, a listing application with the Philippine Stock Exchange, an offer of around 12% of the company, targeting the second half of this year and possibly the fourth quarter. It is shaping up to be the largest IPO in the history of that exchange. And it is listing at home. Not Hong Kong. Not New York. The biggest fintech outcome the country has produced is choosing to be a Philippine public company. It is not alone. Maya, the digital bank, is weighing its own listing on a dual track, the local exchange plus NASDAQ, after its first profitable year. One foot at home, one foot abroad, a hedge.

Look at the fork honestly. Thailand’s champion is leaving the list. The Philippines has one champion committing to the home exchange outright and another hedging across both. That is not the region as a single sound story. That is the region splitting in real time over the same question: is it worth building a venue people want to stay for? Right now, this quarter, the Philippines is making the bigger bet that the answer is yes.

The caveat, because I promised it. Do not let anyone sell you Mint and Maya as a scrappy-startup miracle. Mint sits behind Globe and the Ayala group, with AMP alongside. Maya sits behind PLDT. These are conglomerate and telco children going public, which rhymes with what I said recently about Vietnam, where the giants raise and the startups starve. Hold both thoughts. The optimism is earned: a deep local public market is the single thing this region has always lacked, and the Philippines is genuinely building toward it. But the homegrown-founder fairy tale is not the right frame. Incumbents are listing. That is still good. It is just not the legend.

And here is the constructive next move, the one I would want a Filipino policymaker or operator to actually hear. One record listing does not make a market. The test is the second one, and the third, and the fourth. Can the exchange turn Mint’s debut into a habit, so that the next great Filipino company does not even think about Hong Kong or the US? If it can, the Philippines stops being the market everyone underrates and becomes the market with the exit nobody else in the region has.

The through line

Two acts, the same lesson from opposite ends of a company’s life.

When you raise, the headline lies. It is inflated by a handful of checks you will never be part of, and the only number that tells you the truth is your own margin. So build like respond.io. Get to profit, and let profit, not a press release, be the thing that earns you a round.

When you leave, the region forks. One country will send you abroad to be valued. Another is trying, right now, to build a house worth staying in. Do not assume your exit. Choose it on purpose, the way you would choose a co-founder.

In between sits the thing I keep coming back to. The capital around a Southeast Asian founder, the private money coming in and the public money you eventually exit through, is unreliable and uneven. That is not a reason to be cynical. It is a reason to be precise. Read the honest number, pick the real venue, and do not build your company on top of someone else’s headline.

The markets that win the next decade out here will be the ones that do both: attract the people who create the margin, and build the place those people can cash out at home. This month, one company showed us the margin. One country showed us the door, opening it and starting to close it at the same time. And one country started building a room worth staying in.

Be the reason the money stops sitting still.

Real. Raw. Relatable.

... --- ...

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Start with a sliver of water between Iran and Oman. On a normal day, roughly a fifth of the world’s oil moves through the Strait of Hormuz. This year it stopped being normal. When the strait seized up, Brent jumped 10 to 13 percent in a single session into the low 80s and kept climbing to the highest level since 2022. The International Energy Agency, which does not deal in drama, called it the largest supply disruption in the history of the global oil market.

I am not here to cover the politics. I am here to follow the power. Because that one shock shows up three times in the Southeast Asian startup story this quarter, wearing three different costumes. It sold electric cars. It raised the price of the electricity our data centre boom depends on. And it gave every cautious LP one more reason to keep the chequebook shut. Energy, iron, and idle capital. Follow the power and you follow the whole region.

One. The war that sold a million electric cars

The lazy version of this story is “war happened, everyone bought an EV.” That is not what happened. What happened is that a fuel shock landed on top of a shift that was already moving fast, and poured petrol, pun intended, on the fire.

The scale first. In 2025, EV sales in Southeast Asia more than doubled year on year to more than half a million vehicles, and more than 90 percent of those were full battery electric, not hybrids. The demand was already there. Then the petrol queues showed up. One Thai market report described long lines at filling stations on the same days that EV displays pulled the biggest crowds at the Bangkok motor show. That is the whole story in one image. One queue for the old thing, one crowd for the new one.

Go around the region and the averages hide the real story. Vietnam is the outlier nobody outside Asia talks about: EV share of new cars hit close to 40 percent in 2025, ahead of the UK and the EU, almost entirely on the back of one company, VinFast, which targets 300,000 deliveries this year after 175,000 last. Thailand is the cleanest fuel link, with EV sales tripling year on year to over 44,000 units in January 2026 alone, and logistics fleets switching specifically to cut their exposure to fuel cost swings. When the fleet operators move, it is about the spreadsheet, not the planet. Indonesia crossed 15 percent EV share and passed the United States, with Chinese brands taking more than 75 percent of the market. This is not a Western EV story. It is a Chinese supply story with a Southeast Asian buyer. And Malaysia, my home market, is earlier and more honest: adoption up 14-fold since 2022, but still only about 5.5 percent of cars sold, held back by roughly 5,000 public charge points. You cannot fuel-shock your way past missing infrastructure.

None of this is just consumers being noble. It is policy and cheap money. Thailand cut excise on passenger EVs from 8 percent to 2, and to zero on electric pickups. The Philippines went further, putting forward an incentive package worth around 60 billion pesos while ending subsidies for combustion engines, with the reporting tying the move directly to the oil shock. Read that again: a government using an oil crisis as cover to stop subsidising petrol and start subsidising electrons. Then the banks did the quiet part. In Singapore, UOB ran a green car loan at 1.5 percent, DBS at 2.48. When a bank prices your electric car loan below your petrol one, the moral argument is over. The maths makes the decision.

The part that matters for operators is the fleet. Grab signed with BYD to put up to 50,000 EVs into its fleets across the region, with an eco-friendly toggle in Singapore and Thailand. GoTo took the other lane, going after two wheelers with a pledge to electrify Gojek’s motorbike fleet by 2030. On autonomy, be honest: the robotaxi headlines are a US and China story. Out here the fundable shift is the powertrain under the existing driver, not removing the driver. If you are pitching autonomous ride-hailing for Southeast Asia this year, the oil shock did not help you. The EV swap did.

Here is where I land, and it is not the clean version. The war did not invent this boom. China did, with cheap good cars and a supply chain nobody here can match, and governments did, with subsidies written before anyone fired a missile. The shock just compressed years of slow behaviour change into a few quarters. And demand pulled forward by a price spike can snap back. If Hormuz reopens and Brent drifts back to the 60s, some of this 2026 surge was borrowed from 2027 and 2028. The companies that survive that are the ones building real local supply, financing, and charging, not the ones riding a fear premium.

Two. Twenty billion lands in Johor, and DayOne raises four and a half

We have covered the Malaysian data centre build before, so I will not reread the brochure. I want to follow the money one step further than the headlines do.

Announced data centre capex across the region now runs past 20 billion US dollars over the 2024 to 2028 window, and that is committed, not deployed. AWS around 9 billion into Singapore, Google 5 billion plus 2 for its first Malaysian site, Microsoft a couple of billion more into Malaysia and Indonesia. On top of that, private money: AirTrunk alone is putting 12 billion ringgit into two new Johor campuses, taking its Malaysian commitment to roughly 27 billion ringgit, call it 7 billion dollars. And just this month DayOne, the Singapore-domiciled operator that flipped out of China’s GDS, closed a 4.5 billion dollar Series C led by Coatue and Hillhouse with Indonesia’s sovereign fund alongside. Hold that name, because it comes back in the third act.

Now the question nobody asks: what is that money actually buying? Land, concrete, power, cooling, and imported chips. A hyperscale data centre is a real estate and energy project wearing an AI t-shirt. The single biggest cheque inside it goes to Nvidia. Very little of that 20 billion touches a local software founder. This is not venture capital landing in the region, it is construction capital.

So what is the secondary effect on the rest of us? Three things, and I want to be balanced. First, cost. These campuses pull on the same grid and water local businesses use, and Malaysia stopped approving non-AI data centre proposals back in 2024 to keep the power for AI builds. The state is rationing power and choosing hyperscalers. When your tariff drifts up in three years, this is part of why. Other parts of the world now require operators to reinvest into the local energy and water network to offset that pressure. I have not seen that proposed seriously in Malaysia yet, and I would like to. Second, jobs. A hyperscale campus employs a crowd for eighteen months of construction, then a skeleton crew. It is not a founder-jobs engine. Third, and this is the genuine prize: if the build is done right, founders get cheaper, closer compute and local data residency, the thing that lets a regulated fintech or health startup build on sovereign infrastructure without stitching together a compliance workaround.

The roads analogy is the honest one. Infrastructure is an enabler, not the destination. The data centre boom only pays off for the domestic economy if we generate the demand to use it: enterprises and government going properly digital, and a real layer of AI-native startups creating the load these campuses were built for. Lay the road, then you still need the trucks. Capital keeps flooding the iron. Whether it earns its return depends entirely on who drives on it.

Three. The lowest deal count in eight years, sitting on a mountain of cash

Two facts that should not be true at once. In the first quarter of 2026, Southeast Asian startups raised about 2.8 billion dollars across 98 equity deals, the lowest quarterly deal count in at least eight years, and even that is flattered by one or two giant infrastructure cheques of the DayOne variety. Meanwhile APAC investors sit on roughly 240 billion dollars of dry powder, down from a 2023 peak near 315 but hardly an empty tank.

So which is it, drought or hoard? Both, and the contradiction is the story. The money exists. It is just not moving into Southeast Asian early stage. The last clean read on region-specific dry powder was around 7 billion dollars, a couple of years old and probably overstated, but the direction is the point: funding here fell about 70 percent from the 2021 peak while the cash pile barely moved. That is not a region that ran out of money. That is a region whose investors went on strike.

Where did the new money go instead? Peak XV, the old Sequoia India and Southeast Asia team, closed 1.3 billion late last year, labelled India Seed, India Venture, and APAC. India now runs hundreds of active early-stage funds and has climbed from roughly 9 percent of APAC capital markets volume toward 20. The APAC money is concentrating into India for growth and Japan for buyouts, not Southeast Asian seed. So when a Singapore GP tells you the market is tough, hear it precisely. It is not that Asia has no money. It is that the money is choosing India’s depth and Japan’s stability over our fragmentation and our weak record in the asset class. Capital is being selective, and Southeast Asia is the one being un-selected.

Then layer the war back on. In March the reporting was blunt that the Iran conflict threatened to deepen Asia’s worst private equity fundraising slump in a decade. An oil shock spikes uncertainty, and uncertainty is the enemy of a new fund commitment. The same barrel of oil that sold an electric car in Bangkok made a pension fund in the West, and a high-net-worth backer here, think twice about a new Southeast Asian VC. Cash gets more cautious exactly when founders need it to get braver.

So do not buy the clean drought story, and do not buy the clean abundance story either. The honest version: the tank is full, the driver is scared, and the road out, meaning exits, still looks rough. 98 deals is not a money problem. It is a conviction problem and an exit problem wearing a money problem’s clothes. And even that 7 billion dollar regional figure is fuzzy, because so much of it sits in Singapore holding structures that can deploy anywhere from Jakarta to Bangalore. When the domicile lies, the dry powder number lies a little too.

The money is here. It is waiting for a reason. Your job, whether you are building or, like me, allocating, is to be the reason it stops sitting still.

Sources and further reading: IEA Global EV Outlook 2026 · RECCESSARY, Thailand EV 2026 · VinFast targets, Nikkei Asia · Philippines incentives, Gulf News · Grab and BYD · AirTrunk Johor, NST · DayOne closes $4.5B, Crowdfund Insider · DayOne, the Singapore flip, Asia Tech Review · SEA Q1 2026 deal review, DealStreetAsia · APAC PE Report 2026, Bain · Peak XV $1.3B, YourStory

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

Singapore just released its report on venture funding for 2025, and almost every write-up reads the same way. Funding winter. Capital’s gone quiet. Hold the line, it’ll come back.

I think that’s the wrong story.

I’ve been sitting with these numbers for a few days, and the more I look at them, the more I’m convinced we’ve been telling ourselves the comfortable version. The comfortable version is that the money left and the money will return. The harder version, the one I actually believe, is that the region made a strategy bet a decade ago, the bet didn’t have an exit attached to it, and 2025 is just the year the math stopped hiding. We’ve had a few of these years where the math stops hiding. This is another one.

So let me do a bit more opining than usual. This one’s a little spicy.

* * *

The number everyone read

The headline is genuinely rough. In 2025, Singapore recorded 472 venture deals, down 35 percent from the year before. Total capital raised came in at 4.6 billion US dollars, down 34 percent year on year. And Singapore is the strong one. Across the ASEAN-6, both deal value and deal volume hit a four-year low.

Now hold that next to the United States in the same year. Silicon Valley deal value nearly doubled, to around 160 billion dollars. A lot of that was two rounds: OpenAI at 40 billion, Anthropic at 15 billion.

Two companies, in one country, raised more than ten times what the entire island of Singapore raised across 472 deals all year.

The easy conclusion is that capital is concentrating into American AI and starving everyone else. That’s true as far as it goes. There’s real gravity pulling allocators toward the bleeding edge, and that gravity sits in Silicon Valley.

But that’s a description of the weather. It doesn’t tell you why our house is the one with the leak.

For that, you have to go back further than last year, and look at what we actually spent the money on, and what we expected to get out the other side.

* * *

The bet we made

Here’s the part that doesn’t get said enough. For most of the last decade, Southeast Asia poured its venture money into consumer. Ride-hailing, e-commerce, food delivery, the super-app. The big, beautiful, blitzscaled consumer story where you capture a young, mobile-first population of 700 million and become the thing they open twenty times a day.

I’m not mocking it. I lived through the optimism. Grab, GoTo, Sea, Lazada, Shopee. These companies built the rails the whole region runs on now. Digital payments are everywhere because of them. That’s real, and it was needed. Consumer is the precedent layer. Most maturing markets start there, build the rails, then transition. That part is natural.

But look at the allocation. In 2023, more than a third of Southeast Asian venture deal value went into consumer. The honest caveat is that “consumer” is a fuzzy line, depending on whether you fold in consumer fintech, so treat the exact figure loosely. Even on the conservative read, you land somewhere north of thirty percent. Run the same count in the US that year and you’re in single digits. The number I keep landing on is around three and a half percent.

Read that again. We put an order of magnitude more of our capital into consumer than the most mature venture market on earth did.

And we weren’t growing out of it. We were accelerating into it. Consumer’s share of regional deal value kept climbing while software’s share fell. So while the US was doing the boring, durable thing, funding enterprise software and infrastructure, we were doubling down on the consumer copycat play right as the cheap money drained out.

Why does that matter? Because of what happens at the end.

* * *

The door that was never there

Every venture dollar is a bet on an exit. Money goes in, and somewhere down the line it has to come out bigger, through a sale or a listing. No exit, no returns. No returns, no next fund.

So how did the region do on exits? Here’s the number that should be tattooed on every term sheet. Since 2015, the entire Southeast Asian venture market generated roughly 70 billion dollars in exit value. Sounds fine until you look underneath. More than 55 billion of that came from three exits, all in 2021. Stretch it out and nearly 87 percent of all exit value since 2015 came from six companies. Take it to the top twenty and you’re at 96 percent.

Yes, there’s always a power law. Concentration is normal. But strip out a handful of unicorns and the regional market has returned almost nothing to almost everyone. The investment-to-exit ratio has run consistently above twenty to one. Twenty dollars in for every dollar that found its way out.

It’s been a trap. The Hotel California of venture. You can check in, but you can never leave.

And here’s the part that connects the dots. The few giant exits we did get didn’t happen here. Grab went out via a SPAC on the Nasdaq. Sea listed on the New York Stock Exchange. They had to leave to get out. The Singapore Exchange, the biggest in the region, ranks only ninth by market value in Asia-Pacific, and several regional exchanges still carry listing rules strict enough to keep a cash-burning consumer company out entirely. For a blitzscaled consumer business, the local IPO was a closed door.

So put it together. We funded consumer companies built on the growth-at-all-costs playbook, and that playbook only pays off through a big public listing. We never built the public markets to list them on. We built companies for a door that, at home, was never there.

That’s not a winter. Winter ends. This was a design flaw.

* * *

Consumer is the hardest thing to sell, everywhere

This is the part I want founders and investors to chew on, because it goes beyond us. Consumer is one of the hardest categories to exit anywhere in the world.

Think about who actually buys companies. In enterprise software there’s a deep, permanent bench of buyers who do this all day. 2025 was the most active year on record for software M&A, with strategic buyers alone accounting for around 42 percent of deals. The most active software acquirers in 2024 included IBM, Cisco, Autodesk, Nvidia. There were 22 firms that each made at least five acquisitions in a single year. That’s a machine. A standing market of people whose job is to buy companies. What are they buying for? Recurring revenue, mission-critical, sticky, hard to rip out.

Now ask who the standing buyer is for a regional food-delivery app, or who’s lining up to roll up consumer brands in a market where customers switch the second someone else runs a discount. There isn’t a bench. Consumer internet leans almost entirely on the IPO. And we just covered what happened to that door.

Let me be fair, because the honest version is more interesting than the cheap one. Enterprise exits aren’t easy either. Only about ten percent of companies tagged as software ever get acquired. IPOs are about six percent of software exits. The median software acquisition went for roughly three times revenue, not the eye-watering multiple people imagine. B2B is not a golden ticket.

What enterprise has is a functioning market of repeat buyers. Consumer mostly has the IPO. It’s a difference in optionality, in how many doors are actually open. We bet the region on the category with the thinnest exit options, and didn’t build the one exit that category depends on until recently. If you wanted to design a liquidity crunch on purpose, that’s how you’d do it.

* * *

The people who built it are now saying it

What makes this report worth reading past the headline is the back half, where they ran candid pieces from a row of the region’s investors. To their credit, the honesty is right there.

Vishal Harnal at 500 Global names liquidity as the clearest challenge facing the region, pointing straight at underdeveloped exit markets and the long holding periods that wear founders and investors down. Angela Toy at Golden Gate is just as direct, conceding the region still lacks depth in both M&A and secondaries to get people their money out.

The one that stuck with me is from Cyril at SOSV, who lays out the question every Singapore founder eventually asks out loud. If the place you ultimately have to go for capital, scale, and an exit is San Francisco, why not just start there on day one? Why build here at all? That’s a tough one to sit with. It’s not a critic on the sidelines. It’s a GP at an active global fund saying the quiet part into a government report.

Then there’s Antler. They’ve raised about 1.5 billion dollars globally, from dozens of institutions and sovereign funds. The amount that came from Singapore institutions was around 10 million. The US allocates roughly five percent of its capital to venture as an asset class. Singapore sits well below one. So even the domestic money, the money that’s right here, mostly doesn’t back the local market. The capital sits in the city. It just doesn’t believe in the thing the city keeps saying it wants to be.

When this many people who built the market all point at the same missing piece, it stops being a complaint and starts being a diagnosis.

* * *

So what do we actually do

To be clear, Singapore isn’t sitting still. The response is substantial: an extra billion dollars into Startup SG Equity for growth-stage companies, a new 1.5 billion dollar anchor fund aimed squarely at strengthening exits, and a Singapore Exchange and Nasdaq partnership we’ve talked about here before. Almost all of it is about building the exit door now, after a decade-plus of funding companies that needed it and didn’t have it.

I’m not saying that to dunk on the policy. The policy is correct. Real liquidity, a working M&A culture, a credible place to list, that is exactly the right thing to spend on. My point is that we’re building the staircase after everyone already jumped. The companies that needed this in 2018, 2021, 2023 are gone or got out somewhere else. The question is whether the next decade of founders builds for the door that’s finally going up.

So here’s where I land. Stop building for the exit that doesn’t exist, and start building for the one that does.

That’s been our thesis at Indelible Ventures: back the higher-probability path from where the region actually is, and keep tracking how that liquidity path shifts over time. If the dependable way out is acquisition rather than a hometown IPO, then build the kind of company that has buyers. Real revenue, defensible product, something a strategic acquirer or a private equity firm actually needs to own. Not a big user number you’re hoping a public market rewards someday. Reality over vanity metrics. Capital efficiency stops being a constraint you tolerate and becomes the strategy. The companies getting funded here, and more importantly the ones that can get out, are the ones with clean unit economics, not the steepest growth chart.

I want to say something specific about the Philippines, because I’m genuinely optimistic about it and the lesson lands well there. The consumption story is real. Household spending is something like three-quarters of GDP. The young population, the digital adoption, all of it is genuine. The trap would be to look at that and run the same blitzscaled copycat playbook that just left the rest of the region holding companies it can’t sell. The opportunity is to build for that consumption with discipline, with models that travel across similar markets, and with an exit in mind from the start.

Same demand, smarter strategy. The fundamentals are a gift. The old playbook was the problem.

* * *

What it actually says

Southeast Asia’s problem in 2025 was never that it ran out of money. The region is full of money. Family offices, sovereign funds, the whole lot. The problem is that we built a generation of companies with no clean way to turn into returns, in the category least likely to produce them, listing on markets that mostly weren’t here.

That’s fixable. But only if we’re honest that it was a choice, not the weather.

The money will come back. The question is whether we’ll have built something it can actually leave through.

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