Regional Startups Venture

Asia Startup Funding May Be Leveling Off After Quarters Of Decline

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

Funding to startups in Asia in the third quarter of 2023 saw only a slight drop year to year, a sign that the continent’s funding market may be finding its equilibrium.

Asia funding seemed to mirror global trends, with year to year being down, but with the third quarter actually representing an 8% increase from the previous quarter, per Crunchbase data. The small growth from last quarter was mainly led by late-stage and growth funding being up even as seed and early stage struggled.

Startups in the region raised a total of $22.3 billion compared to $24.4 billion in the same quarter last year. In Q2 of this year, funding hit $20.6 billion.

Deal flow, however, was mostly down, with only 1,518 deals being announced in Q3 — a 17% drop from the previous quarter which saw 1,826. The number also represented a 30% year-to-year drop from 2,177 deals.

Table of Contents

Growth rounds grow

Due to their size, late-stage and growth rounds are what really drive the needle as far as funding numbers. Those rounds helped push Q3’s numbers past the previous quarter

Last quarter saw $14.6 billion in such rounds, a 25% increase from $11.7 billion in Q2 and a whopping 51% uptick from the previous year, which saw only $9.6 billion.

Not surprisingly, a lot of the largest of those growth rounds went to Chinese startups — which raised seven of the 10 biggest rounds of the quarter, including:

  • GTA Semiconductor raised a private equity round worth approximately $1.9 billion early last month.
  • Runpeng Semiconductor raised a private equity round worth approximately $1.7 billion in mid-August.
  • Electric vehicle startup Hozon locked up a venture round worth about $961 million in late August.

Deal flow remained almost even for late-stage and growth rounds from Q2 — 157 in Q3 compared to 154. However, that represents a 21% decline from Q3 2022 which saw 199 late-stage and growth deals.

Early stage sinks

Obviously not every stage saw an increase, and early rounds sank the lowest by percent. Only $6.2 billion went to early-stage rounds, a 15% decrease from $7.3 billion in Q2 and a massive 51% drop from the $12.7 billion invested in such rounds for the same quarter last year.

Deal flow didn’t pick up here either. In Q3, 538 early-stage deals were announced, a 6% dip from 538 in Q2 and a 17% fall from the 646 announced in Q3 last year.

Seed rounds see big decline

Angel and seed rounds also declined, but just moderately when one considers their lower price point.

In Q3, only $1.5 billion went to those earliest rounds, an 8% decline from $1.6 billion in the previous quarter and a slightly bigger 29% drop from the $2.1 billion invested in angel and seed rounds in Q3 2022.

However, deal flow for angel and seed did take a significant hit. Only 823 such rounds were announced in Q3 — a 25% decline from the 1,100 rounds in Q2 of this year and a 38% fall from the 1,332 angel and seed deals announced in Q3 last year.

What it means

The numbers were somewhat similar to last quarter, with funding up from the first quarter of the year but down year to year.

The good news for investors may be that Asia is finally finding an equilibrium. It seems logical to conclude at this point that the $54.8 billion invested in Q4 2021 was unsustainable. However, the massive quarterly and year-to-year declines seem to be lessening and may be falling more back in line with reality.

The comeback of late-stage and growth rounds could be a good indication, although the massive dip in early-stage rounds and the drop in deal flow for seed rounds is concerning. Eventually, it will have to be some of the seed and early-stage companies raising large growth rounds if funding numbers are to stay level.

Will those companies make it there as fewer and fewer of them get early funding?

Of course, political tensions in Asia right now hang over everything. The fighting in Israel could significantly affect funding to the country’s robust startup ecosystem — especially its well-known cybersecurity sector.

There also are the heightening tensions between China and the U.S. There is no denying U.S. investors have pulled out of the region’s largest startup ecosystem. At the very least, they have split it from their U.S. businesses as GGV Capital announced in September — cleaving its business in two, with one focused on Asia and the other on the U.S. That follows Sequoia Capital’s similar announcement in June.

Time will tell what effect that will have on funding overall for Asia.


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

Illustration: Dom Guzman

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