Trade wars force rewrite of Southeast Asia’s VC playbook

Southeast Asia’s venture capital scene is at a reset point. Amid trade tariffs, slowing globalization, and changing exit pathways, the region must find a new playbook – one that moves beyond unicorn dreams and toward sustainable wins.

At Entropia Capital, which also operates in the US and Europe, we’ve seen this shift firsthand: fewer IPO ambitions, more capital-efficient startups, and leaner funds deploying smarter capital. The era of blitzscaling on cheap money is over, and that’s a welcome evolution.

Image credit: Timmy Loen

The Silicon Valley mindset, which depends on a culture of experimentation and risk-taking to drive innovation, sparked much of Southeast Asia’s early tech momentum. While strong ties to the Bay Area still matter, the region no longer needs to emulate Silicon Valley to thrive. Instead, it needs a venture model tailored to its unique markets.

Building consistently and pragmatically

Tariff tensions are once again rippling through global markets. US President Donald Trump’s sweeping tariffs are affecting everything from ecommerce rollup firms that sell primarily to the US to private equity firms now struggling to achieve exits.

In Southeast Asia, the impact is particularly acute.

In our discussions with founders and operators across Southeast Asia, a common reality is emerging. Whether it’s supply chains, logistics costs, or shrinking runways, the sentiment is consistent: Macroeconomic pressures are mounting.

This convergence of inflationary input costs, tariff-driven trade friction, and tightened capital flows is hitting the region’s innovation ecosystem at a pivotal time. Many startups are reaching critical growth stages and seeking sustainable, capital-efficient models to navigate forward.

See also: $60m bet says Southeast Asia won’t mind being watched by AI

Additionally, Southeast Asia’s VC scene faces a hard reckoning after the boom of the past decade. While the region raised US$34.1 billion in capital in 2021 it saw relatively few exits.

Many startups have raised ambitious rounds with the hope of listing or attracting global buyers, only to discover that Southeast Asia still lacks the liquidity depth and IPO culture of markets like the US.

Compared to US$38.92 billion in the US, only US$2.66 billion in IPOs were recorded in 2024 between the main exchanges in Singapore, Thailand, Malaysia and Indonesia.

Photo credit: Jack Hong / Shutterstock

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