A report has highlighted significant funding gaps that remain within Southeast Asia’s tech investment landscape despite signs of stabilization.

While capital deployment in late 2024 improved, total invested capital declined 18% year-on-year (YoY), with deal count down 23%, according to the 2024 State of the ASEAN Technology Ecosystem Report by Singapore-based investment firm January Capital.

These are the smallest annual declines since 2021, suggesting a potential turning point after years of decreasing funding.

Despite global AI interest, Southeast Asia’s AI sector remains underfunded, with software and AI-related deals dropping 50% YoY since 2022.

Seed-stage funding also struggles, with series A investments now three times higher than seed-stage funding and valuations four times greater.

Around 72% of pre-seed and seed founders rated fundraising conditions as poor.

While late-stage funding shows some stabilization, early-stage funding and AI investments remain critical issues.

January Capital’s partner Ben Dunphy warned that without dedicated seed and AI capital, the region could lose top talent and stifle future high-growth companies.

The report concludes that addressing these gaps is crucial for ASEAN’s long-term innovation and competitiveness.