VCs eye exits in 2025 as funding winter begins to thaw

This year has not been a good one for players in the venture capital (VC) space.

“There was a fair bit of optimism for VC in this region to pick up, but it has lagged behind quite a fair bit,” said Looi Qin En, a partner at corporate VC firm Saison Capital.

While other private equity segments recovered in 2024 to pre-Covid levels, VCs – funding to startups and early-stage companies with high growth potential – have had a “disappointing” year, he said.

But market watchers believe the funding winter for VCs is showing early signs of easing.

Image credit: Timmy Loen

While VC activity was muted in the first half of 2024, things have started to pick up.

As Neo Weisheng, a partner at VC firm Qualgro, put it: “Capital can’t sit still” – and the dry powder accumulated during the boom years has to be deployed.

In the second half of 2024, some fundraising announcements by both VCs and startups made headlines. These included VC funds Intudo, Square Peg and Wavemaker, as well as startup Omni HR.

“It seems to be picking up a little, and I think it’s partly due to the easing of the interest rates in the second half of the year,” said Willy Chang, partner at consultancy Bain & Company.

However, a number of VC funds have missed their fundraising targets, and late-stage funding and exits are still far and few between.

Exits remain key

Transaction levels are still very soft, indicated Angela Lai, head of Asia-Pacific and valuations, research insights, at data platform Preqin.

Based on half-yearly surveys conducted by Preqin, investors have been looking to reallocate funds out of the asset class in the past couple of years. The trend has been ongoing since its June 2022 edition of the survey, including the June 2024 edition.

Photo credit: 123RF

The road ahead