AI’s SaaS threat looks different in Southeast Asia

Up until a few years ago, founders and investors across Asia flocked to SaaSBoomi, an annual gathering in India that mirrored the rise of software-as-a-service in emerging markets.

This year, AI has taken over the vocabulary and imaginations of startups and VCs alike. And SaaSBoomi became AIBoomi.

That transition captures how AI is affecting Southeast Asia’s software sector. But the story in the region is more nuanced than the “AI will kill SaaS” narrative that has dominated Silicon Valley over the past two years.

According to Neha Singh, co-founder of startup data platform Tracxn, Southeast Asia’s software ecosystem remains relatively underpenetrated, fragmented across markets, and heavily dependent on local relationships. These factors have given incumbent SaaS players more breathing room than their Western peers.

Deal volume beyond series A is higher in 2026 than in 2025, and it’s likely to touch the peak of 12 rounds in 2020 before the year ends. However, there has been a paucity in late-stage raises, referring to rounds from series C onward.

Singapore continues to dominate the region’s SaaS funding landscape, accounting for more investments than Indonesia, Malaysia, Thailand, and Vietnam combined.

The era of easy-growth SaaS may be over, but the vertical is far from disappearing in Southeast Asia.

AI has changed SaaS, but not evenly

For Roshan Raj, partner at Redseer Strategy Consultants, AI’s impact on software firms is milder in Southeast Asia than in Western markets.

Most AI challengers are still focused on the US and Europe, where enterprise budgets are larger. Southeast Asia’s AI ecosystem, while growing rapidly, is still developing enterprise-grade products capable of fully replacing established SaaS platforms.

Another factor is the nature of enterprise software adoption in the region. Companies such as Waresix and Rhapsody built their businesses through offline sales networks, implementation teams, and local customer support.

Such relationships can be difficult for newer AI-native entrants to replicate quickly.

According to Singh of Tracxn, the biggest change in SaaS is visible in investor sentiment. Pure-play SaaS is no longer among the top investment themes.

M&A activity is rising

A more crowded market