08. April 2025
Asia Venture Capital Market Plunges To Lowest Point Since 2014 As Funding Dries Up
The Asian Venture Capital Market Hits Its Lowest Point Since 2014
In Q1 2025, the Asia-Pacific region witnessed its lowest venture capital funding quarter since 2014, with only $13 billion going to VC-backed startups. This represents a 40% decline from the same period last year and a 25% decrease from Q4 2024.
The region’s lagging venture market has been on a downward trend for four consecutive quarters, with two exceptions. The total dollar figure for investment in Asia is now at its lowest since Q4 2014, when only $12.3 billion went to startups in the region.
Late-Stage Funding Declines Sharply
The decline in late-stage funding was particularly pronounced, with technology growth investment totaling $6.1 billion in 145 deals. This represents a 29% fall off from Q4 and a 27% drop from the same quarter a year ago. The deal volume declined by 6% from Q4 and 25% from Q1 2024.
The largest late-stage deals all came from China, with notable examples including Shenzhen Energy Environmental Protection’s $692 million venture round in January, Smart Fabric’s $460 million Series C in January, and Zhipu AI’s $247 million private equity round in March. These deals highlight the region’s increasing reliance on Chinese investors and startups.
AI Funding in Asia Falls Short
Contrary to expectations, funding for AI startups in Asia actually fell last quarter. AI startups saw only $1.8 billion in funding, representing 14% of the region’s total. This is half of what it was a year ago and 23% less than Q4.
Early-Stage Funding Declines Sharply
Both angel/seed and early-stage rounds also saw significant declines. Early-stage rounds totaled $5.3 billion in 533 announced deals, representing a 21% drop from Q4 and a massive 53% fall from the same quarter a year ago. The deal flow declined by 16% from Q4 and 19% from Q1 2024.
Seed and angel fared similarly poorly, with only $1.6 billion raised by young startups in Asia last quarter in 791 deals. This represents a 22% drop from Q4 and 24% less than the same quarter last year.
Causes of Decline
Several factors contribute to the decline in venture capital funding in Asia. Chinese AI startup DeepSeek, which sent shockwaves in the industry with its low-cost AI models, is now reportedly considering outside funding for the first time. This could potentially turn the tide in Q2 2025.
Other contributing factors include slow recovery from the pandemic and ongoing conflict in the Middle East, which has affected the Israel VC hotspot, leading to several startups facing challenges in securing funding.
Methodology
The data contained in this report comes directly from Crunchbase, which provides reported data as of April 2, 2025. Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.
Glossary of Funding Terms
For those unfamiliar with Crunchbase’s terminology, here is a brief glossary:
- Seed and angel consists of seed, pre-seed, and angel rounds.
- Early-stage consists of Series A and Series B rounds, as well as other round types above $3 million.
- Late-stage consists of Series C, Series D, Series E, and later-lettered venture rounds following the “Series [Letter]” naming convention.
The region’s lagging venture market has significant implications for startups and entrepreneurs in Asia. The decline in funding could lead to reduced investment, lower valuations, and decreased growth opportunities for startups in the region.