SEA Dispatches: From Blitzscalers to Bedrock Builders

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I’ve recently returned from Southeast Asia.

For more than a decade, the region has been framed as “the next frontier” for tech: a young, mobile-first population, rapid GDP growth, and a wave of high-profile unicorns. But on the ground last month—from Singapore to Jakarta—that story felt both true and more nuanced.

The froth has thinned. The Southeast Asia tech ecosystem is being re-examined. A new phase is taking hold: less hype, more discipline, and a deeper focus on building durable businesses.

From Blitzscaling to Category Building

The first wave of the region’s startup story was defined by blitzscaling. Grab, GoTo and Sea Group raised billions, capturing markets by outspending competitors and accelerating consumer adoption. That period created the region’s digital backbone: payments ubiquity, logistics networks, and a generation of consumers comfortable transacting online.

It also left behind fragile unit economics and uneven governance.

Quietly, a more durable revolution is underway. As Tech Collective argued founders are shifting toward vertical AI, industrial and logistics software, climate technology, and B2B infrastructure. Consumer scale alone no longer guarantees success. Startups are building the backbone of the digital economy and transformation.

The talent base is maturing in parallel. Much like in other ecosystems, a new generation of spin-out founders are spinning out of leaders—alumni of Grab, Sea and Gojek—are building their own companies, bringing with them the playbooks of their alma matters.

This emerging flywheel what you see in more established hubs like Silicon Valley or Tel Aviv. A decade ago, Southeast Asia didn’t have this density. Today, it is starting to.

Enabling infrastructure has also caught up. Payments rails logistics APIs, cloud and data platforms, and embedded fintech stacks are now standard building blocks. In my book Out-Innovate (HBR Press), startups don’t need to build *as much* of the full stack as they needed to in the past. More enabling infrastructure means faster route to market. But that also means the bar for defensibility has risen: it is no longer enough to be first; one has to be deep.

A Funding Reset and a Return Reckoning

The capital cycle makes this maturation visible in the numbers. In the first half of 2025, Southeast Asia tech startups raised about US$2.0 billion, according to Tracxn’s semi-annual “SEA Tech – H1 2025” report. That total was down 24 percent from the US$2.6 billion raised in the second half of 2024.

In 2021, startups in SEA raised over $25b.

The strain is evident at the early stage. Founders are raising smaller rounds, extending runway, and being forced to prove unit economics much sooner. Perhaps the strain is highest at the growth stage.

For investors, the challenge is different but related: lofty valuations have not translated into cash. DPI—Distributions to Paid-In Capital—remains a weak spot for many Southeast Asia venture funds.

When Trust Breaks

The funding reset has also exposed a second fault line: governance.

Two scandals—eFishery and Investree—have shaken confidence in the Southeast Asia startup ecosystem and put a spotlight on financial controls, board oversight and the role of venture investors when things go wrong.

eFishery, once Indonesia’s agritech flagship and a symbol of “impact at scale,” was valued above US$1 billion with investors including Temasek, SoftBank and Sequoia. By late 2024, it was under investigation for allegedly inflating revenues by roughly US$600 million in the first nine months of the year. Reports suggest the company claimed profits while actually posting losses. Green Queen, which mapped the saga in detail, described “the startup scandal that rocked Southeast Asia’s food-tech sector.” Integrity Indonesia reported evidence that eFishery kept two sets of books—one for management, another for investors—with divergences of up to 75 percent in reported sales.

Investree, an Indonesian SME lending and fintech platform, tells a different but rhyming story. Once held up as a model of digital credit innovation, it saw non-performing loans climb to around 16 percent—well above regulatory thresholds—amid allegations of executive misconduct and mismanagement. The Runway Ventures unpacked how a combination of governance lapses and risk controls led to a sharp breakdown in trust between lenders and the platform.

The Builders Ahead

Yet the picture is not one of collapse. It is one of recalibration.

The funding pullback is painful for founders and investors alike, but it is also forcing the Southeast Asia startup ecosystem to look for firmer footing.

The next wave of companies will be leaner and deeper. Valuations are becoming more rational. Founders who can navigate constraint—operate as “camels” rather than unicorns—are easier to identify.

Tracxn notes that Singapore-based tech firms accounted for 92 percent of all tech funding in the region in H1 2025. That concentration underscores both strength and fragility: Singapore remains the dominant hub, but secondary centers like Jakarta, Ho Chi Minh City and Manila are quietly gaining momentum and deserve more attention from global capital.

For venture firms, return expectations are shifting too. The model that assumed endless multiple expansion and rapid exits will need to be replaced by funds designed for longer holding periods, creative liquidity (including secondaries and strategic M&A), and governance built in from day one.

Why This Is Still the Moment

All of this might seem like an argument for caution. In reality, it is an argument for discernment.

The next phase of Southeast Asia’s startup story will not be written by blitzscalers. It will be led by builders who understand constraint—who treat capital efficiency, integrity and depth as strategic edges rather than constraints to tolerate.

In Out-Innovate, I argued that ecosystems outside Silicon Valley succeed not by copying the Valley. It will be by executing over the long-term for more enduring opportunities.

Possibility in Southeast Asia will no longer come from flashes of hype. It will emerge from the bedrock beneath.