Regional Startups Venture

Asia Startup Funding In First Half Of 2023 Falls 50% As Late Stage Continues Decline

Illustration of Asia-labeled piggy bank on an inclined plane.

Funding to startups in Asia in the first half of 2023 dropped 50% from the previous year — spurred on by fewer large, late rounds, and mirroring the global venture market.

Funding in the region dropped from more than $73 billion in the first half of 2022 to only $36.3 billion for H1 this year, Crunchbase data shows. Deal volume also slowed, dropping 40% from 5,402 deals in H1 2022 to only 3,237 for this year’s first half.

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For the second quarter, funding in the region dropped 44% from the same quarter last year — from $32.8 billion to $18.5 billion.

Deal flow dropped a similar amount year to year, falling from 2,508 to 1,564 — a 38% decline, according to Crunchbase data.

However, the second quarter actually realized a slight uptick from Q1 in terms of dollars. The second-quarter dollar figure was actually a 4% increase from Q1.

Dealmaking, however, dropped 7% from the 1,673 deals announced in Q1.

Late stage and growth continue to decline

Not surprisingly, late- and growth-stage funding were the main culprits for the overall decline in venture dollars.

Late stage and growth funding dropped from $18.4 billion in 246 deals in Q2 last year to only $10.2 billion in 144 deals for Q2 this year — a 45% decline in dollars and a 41% drop in volume.

The decline is even worse when looking at the entire first half of the year. The first six months this year saw late and growth rounds totaling $19 billion, an astounding 53% drop from the $40.8 billion raised in the same half last year.

The decline in the late stage is significant — especially in terms of dollars — since such growth rounds are the most valuable.

The second quarter’s dollar figures were actually an increase from the previous quarter, which saw only $8.8 billion in such late rounds.

Despite the drop-off year to year, the region did see some impressive rounds in the quarter, including:

  • In May, China-based Shein, the popular fast-fashion startup, reportedly raised $2 billion. (Still, the $66 billion reported valuation was only two-thirds of its previous valuation.)
  • Last month, India-based renewable energy firm Avaada Energy locked up a $1.3 billion funding round.
  • In April, Seoul-based autonomous mobility firm 42dot raised a corporate round worth approximately $787 million.

Nevertheless, not even those large raises could raise the funding tide.

Early-stage struggles

For the sixth straight quarter, early-stage funding also dropped.

Startups in Asia raised only $6.8 billion in 529 early-stage deals in Q2, per Crunchbase. That was a decline of 8% from last quarter’s $7.3 billion, and a whopping 42% from Q2 2022 which saw $11.7 billion raised in similar rounds.

However, deal volume only dropped 4% from last quarter, but 35% from 2Q 2022, which saw more than 800 early-stage rounds announced.

Seeds fail to sprout

Angel and seed deal dollars also hit their lowest point since early 2021.

In the second quarter, such rounds totaled only $1.5 billion, down from $1.6 billion in the first quarter, and down $2.7 billion from Q2 2022 — a fall of 42%.

While seed rounds don’t really change the total dollar numbers for overall funding, they do affect volume. In this case, deal counts barely dropped quarter to quarter, with 891 angel/seed rounds announced in Q2 compared to 964 in Q1.

However, deal volume was down 38% from the same quarter last year, which saw 1,445 such deals announced.

What it means

The good news is startup funding in Asia was up in Q2 compared to the first quarter of the year, and the percentage drop in funding is starting to decrease in the region. But that is mainly because the free-spending times of 2021 are sliding further back in the rearview mirror.

However, the continuous drop is still concerning, as numbers are off even 2020’s pace.

Of course, the ever-increasing tensions between the U.S. and China likely are not helping funding activity. Those tensions seem to have led to VC giant Sequoia Capital to break into three distinct businesses — Sequoia Capital, China-based HongShan, and India and Southeast Asia firm Peak XV Partners — as U.S. investment in tech in China is getting trickier as pressure between the two superpowers rises.

It will be interesting to see if that breakup further disrupts venture investing in the region, or if the new, separate entities can attract the same wealthy limited partners the Sequoia name has made a habit of doing.

One thing to continue to pay attention to is China’s IPO market. With Alibaba’s plan to split up and likely public float its units, there has been a renewed hope that Ant Group could see its indefinitely suspended IPO restarted.

Three years ago, the fintech giant’s $34 billion-plus IPO was scuttled by increased regulatory overview of tech companies by the Chinese government.

Such a move could be a boon for the tech sector, and that type of exit could get investors salivating.

However, there are certainly strong headwinds right now in the Asia funding market and navigating through them may only get more difficult.


The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of July 3, 2023.

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.

Please note that all funding values are given in U.S. dollars unless otherwise noted.

Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

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Illustration: Dom Guzman

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