The venture market in Asia is facing its steepest slowdown in years, and it’s not just China pulling the numbers down. From India to Singapore, a series of regional challenges—economic uncertainty, geopolitical tension, and restricted cross-border investment—have sent the venture market into a broader retreat.
Four of Asia’s six largest venture markets posted significant declines in the first quarter of 2025. While China, India, Singapore, and South Korea saw funding drop sharply, only Israel and Japan showed any signs of resilience. As the venture market continues to shift, these numbers highlight deeper struggles beneath the surface.
China’s Ongoing Venture Market Slump
China, the region’s largest contributor to the venture market, continues to see its funding base erode. In Q1 2025, Chinese startups secured just $6.5 billion—a staggering fall from $12.5 billion during the same quarter last year. The drop was also notable compared to the $8.2 billion raised in Q4 2024.
The slowdown in China’s venture market is tied to ongoing deflation fears, sluggish economic recovery, and the looming threat of a trade war with the United States. Even so, the country still managed to deliver some of Asia’s largest deals. Shenzhen Energy Environmental Protection raised $692 million in March, Smart Fabric secured $460 million in January, and Zhipu AI, a homegrown AI contender, closed a $247 million round.
Zhipu AI could become a turning point for China’s venture market if it succeeds in its rumored IPO this October. Yet, tensions remain high. With Zhipu listed on the U.S. export blacklist, the road ahead for attracting Western capital is anything but smooth.
India and Southeast Asia Follow a Downward Path
India, Asia’s second-largest venture market, saw funding shrink by 26% year over year. In total, startups raised $2.8 billion in Q1 2025—down from $3 billion the previous quarter. Still, two major deals stood out: Pioneer Aluminium Industries brought in $244 million, while blinkit attracted $173 million in corporate backing from Zomato.
Singapore’s venture market fared even worse. Startup funding plummeted nearly 80% compared to both Q1 and Q4 of last year. With just $400 million raised, the city-state hit a multi-year low in venture capital deployment. In South Korea, the trend was similar. The country raised $500 million, down 38% from the year prior.
The overall contraction highlights how interconnected Asia’s venture market has become. As funding in China and India dips, smaller markets like Singapore and South Korea tend to follow.
Israel and Japan Offer a Glimmer of Growth
Amid the regional downturn, Israel posted a notable recovery in its venture market. Funding jumped 38% year-over-year to $1.1 billion in Q1 2025, up from $800 million the same time last year and significantly higher than the $700 million raised in Q4. Quantum Machines led the comeback with a $170 million Series C round backed by PSG Equity.
Japan also managed a slight boost. The country raised $600 million in venture funding during Q1, compared to $500 million in the previous year. However, this figure still reflects a sharp drop from the $1.3 billion Japan attracted in Q4 2024.
While both markets remain relatively small players in the broader Asian venture market, their upticks provide a measure of optimism.
What Lies Ahead for Asia’s Venture Market?
Asia’s venture market is clearly under pressure. The slowdown in China casts a long shadow over neighboring economies, while rising interest rates and geopolitical instability continue to rattle investor confidence. For venture capitalists, the path forward may require a strategic pivot—focusing on sectors like AI, clean energy, and cybersecurity, where innovation remains strong.
If the venture market is to rebound, it will likely hinge on regulatory stability, renewed investor appetite, and standout exits like Zhipu AI’s planned IPO. Until then, most signs point to more turbulence ahead.
