We covered AI’s impact on just about everything: health care, banking, agriculture, video gaming, and even K-pop. (As an aside, check out my debut as a Korean singer—thanks to some assistance from Korean AI developer Supertone).

DeepSeek’s efficient, powerful—and importantly, cheap—models have shaken up the Asian AI conversation, pushing investors to give the region’s AI developers a second look and encouraging firms to adopt the new technology for themselves. 

Granite Asia’s senior managing partner Jixun Foo, speaking on our stage last week, credited the “DeepSeek moment” for democratizing access to AI across the region. 

AI optimism has also lifted Hong Kong’s stock market, as investors rush to invest in mainland Chinese AI developers like Alibaba and Kuaishou. Shares in other Asian tech firms—like TSMC, Softbank, and Korea’s Naver and Kakao—have surged amid the AI boom as well. 

At first glance, Southeast Asia should be an attractive home for startups. The region’s population is young, still growing, and digitally savvy. But on our conference stage, those that actually have to fund these AI endeavors were more wary. 

Even amid a global slowdown, venture funding in Southeast Asia plummeted by almost 80% from 2022 highs, according to CNBC. “Funding dried up dramatically as people looked for more profitable companies and steady cash flow rather than cash-burning tech companies,” said AC Ventures managing partner Helen Wong at the conference. 

She urged investors to be cautious. “This is not a very mature ecosystem, unlike China, where you have entrepreneurs that have gone through intense competition…here is still a bit more raw,” she said.

“What’s the exit landscape here [in Southeast Asia]?” Phylicia Koh, a general partner at Play Ventures, asked during a separate panel on video gaming. “That has been a challenge, and one I don’t envy for Southeast Asia-focused VCs.”

Singapore, the region’s financial hub, has had just three IPOs this year as of mid-July. Its largest, NTT DC REIT (a real estate investment trust of data centers from Japan’s NTT) raised $773 million. Hong Kong’s largest IPO—the secondary listing of batterymaking giant CATL—raised at least $4 billion.

Public tech companies haven’t done too well either. In a recent issue of the magazine, my colleague Lionel Lim tells the story of one such startup, the Indonesian ride-hailing firm GoTo, whose shares have plunged by almost 85% since its 2022 IPO in Indonesia.

“[Are] the capital markets here mature enough to support an exit? It hasn’t probably performed as well as investors wanted it to,” Koh added. 

Another reason why Southeast Asia struggles? While it’s big, it’s not quite as big as markets like China, India, or the U.S. “Why is there not a RedNote in this part of the world?” Foo asked, using the global name for the wildly-successful Chinese social media platform Xiaohongshu. Southeast Asia, smaller than China (and split into different markets), lacks the network effects to supercharge a local content platform.

Still, speakers noted that there are plenty of opportunities in Southeast Asia for those willing to look for them. Wong noted that while fintech and e-commerce firms may have suffered, climate and sustainability startups are still raising funds. 

There’s “a tremendous opportunity for a lot of much more specific, highly differentiated visions that could potentially be billion-dollar companies,” said Matthew Graham of Ryze Labs. (He, however, wasn’t interested in a company “trying to be the 19th LLM.”)

And funders based in Southeast Asia are prepared to start investing again—even if not right now. “We want to be patient. We want to see the confluence of talent and market adoption, and then we’ll start investing,” Foo said.

Nicholas Gordon
X: @nickrigordon
Email: nicholas.gordon@fortune.com

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VENTURE DEALS

- Lumotive, a Redmond, Wash.-based programmable optics company, raised $59 million in Series B funding from Amazon’s Industrial Innovation Fund, Oman’s ITHCA, Gates Frontier, and MetaVC.

- Positron AI, a Reno, Nev.-based developer of hardware for multimodal AI, raised $51.6 million in Series A funding. Valor Equity Partners, Atreides Management, and DFJ Growth led the round and were joined by Flume Ventures and others.

- BlinkOps, an Austin, Texas-based developer of cybersecurity micro-agents, raised $50 million in Series B funding. O.G. Venture Partners led the round and was joined by Lightspeed Venture Partners and Vertex Growth.

- Fable Security, a San Francisco-based human risk management platform, raised $31 million in funding from Greylock Partners and Redpoint Ventures.

- E2B, a San Francisco-based provider of open-source cloud infrastructure designed for AI agents, raised $21 million in Series A funding. Insight Partners led the round and was joined by Decibel, Sunflower Capital, Kaya, and angel investors. 

- Julius AI, a San Francisco-based AI-powered data analyst for knowledge workers, raised $10 million in seed funding from Bessemer Venture Partners, Y Combinator, Horizon VC, AI Grant, 8VC, and angel investors.

- Reach Security, a San Francisco-based developer of AI-powered assistant technology designed to reduce exposure to security risks, raised $10 million in funding from M12 and existing investors including Artisanal Ventures.

- Journey, a New York City-based provider of mental health solutions for companies, raised $8 million in Series A funding. Cambrian Growth Partners led the round and was joined by Manchester Story, Canaan Partners, J-Ventures, J-Impact, Life Science Angels, HealthTech Capital, and others.

- Overwatch Imaging, a Hood River, Ore.-based developer of airborne imaging systems and AI-powered automation software for intelligence and surveillance, raised $6 million in funding. Squadra Ventures led the round and was joined by SEMCAP AI, the Elevate Oregon Venture Direct Fund, and Edo Capital.

- Keye, a New York City-based AI tool designed for private equity teams, raised $5 million in seed funding from Sorenson Capital, General Catalyst, Y Combinator, ERA, Tiferes Ventures, Dunamu Ventures, Palm Drive Capital, and angel investors.

PRIVATE EQUITY

- BVP Forge acquired a majority stake in BetterRx, a Salt Lake City-based hospice pharmacy platform. Financial terms were not disclosed.

EXITS

- EQT and CPP Investments agreed to acquire NEOGOV, an El Segundo, Calif.-based provider of HR and compliance software for U.S. public sector agencies, from Warburg Pincus and Carlyle. Financial terms were not disclosed.

- Gridiron Capital agreed to acquire Greenix Pest Control, an Orem, Utah-based pest control company, from Riata Capital Group. Financial terms were not disclosed.

- Warburg Pincus agreed to acquire FlavorSum, a Kalamazoo, Mich.-based provider of natural flavor solutions for food and beverage companies, from The Riverside Company. Financial terms were not disclosed.

OTHER

- NiCe agreed to acquire Cognigy, a Dallas-based developer of customer service AI agents, in a deal that values the company at approximately $955 million.

IPOS

- Figma, a San Francisco-based design software company, now plans to raise up to $1.15 billion in an offering of 36.9 million shares priced between $30 and $32. The company posted $821 million in sales for the year ending March 31, 2025. Index Ventures, Greylock Partners, KPCB Holdings, Sequoia Capital, and Wu-Wallace Family Trust back the company.

- Firefly Aerospace, a Cedar Park, Texas-based space and defense technology company, announced plans to raise $631.8 million in an offering of 16.2 million shares priced between $35 and $39 on the Nasdaq. The company posted $108 million in revenue for the year ending March 31, 2025. AE Industrial Partners, Astera Institute, and Thomas Markusic back the company.