Southeast Asian companies are facing a funding challenge tied to market volatility and investor caution. In March 2025, Indonesian equities suffered a sudden slump that triggered a trading halt, with the local benchmark dropping 7.1% in a single morning and stocks falling to their lowest level since 2021.
This volatility in the region’s largest economy highlights broader capital constraints affecting the region’s tech ecosystem. According to DealStreetAsia’s 2024 Data Vantage report, venture capital funding for Southeast Asian startups decreased by two-fifths year-on-year to $4.5 billion in 2024. Risk-averse retail investors have become hesitant to provide long-term backing for publicly listed companies in the region, resulting in depressed valuations that make securing follow-on capital through debt or equity sales difficult.
Corporate governance concerns have further complicated the investment picture in Southeast Asia. In one prominent example, Indonesian aquaculture startup eFishery allegedly inflated its revenue by almost $600 million in the nine months through September 2024, according to reporting from Bloomberg.
In this context, alternative financing approaches are emerging as crucial tools for the region’s tech companies. EquitiesFirst, a global investment firm with a substantial presence in the region, has emerged as one such solution through its equities-based financing model. The firm has established a global presence spanning 13 offices across eight countries, including operations in Singapore and Thailand that position it to serve Southeast Asia’s growing tech ecosystem. Its financing tactic, which it calls “progressive capital,” enables businesses to access liquidity by financing against publicly traded securities.
The Macroeconomic Case for Growth
Despite facing funding obstacles, Southeast Asia’s digital economy is still showing signs of promise. The iEdge Southeast Asia+ TECH Index, which tracks the performance of the largest 30 technology companies in the region, grew by 32% in the 12 months ending January 31, 2025, outperforming peer indices in Europe (6.6%) and India (19%).
The broader macroeconomic environment in Southeast Asia offers substantial growth potential. The number of middle-class and affluent consumers in the region is projected to reach 415 million by 2040 — more than the entire population of the United States. This demographic trend promises steady revenue growth for tech companies that can successfully persevere through the current funding environment.
For Southeast Asian tech entrepreneurs and investors, progressive capital solutions could serve as a means to do so. This financing model can help leverage existing holdings to access immediate capital while maintaining long-term exposure, so investors can endure periods of short-term market volatility without being forced to liquidate positions at unfavorable valuations.
Tech Developments on the Horizon
A potential catalyst for the regional tech sector could come from the proposed merger between super-app Grab, a Thai-based app that combines ride-hailing, food delivery, grocery shopping, and digital payment services, with Indonesian rival GoTo. While the two companies have experienced stock price volatility since their respective listings in the U.S. and Indonesia, they both maintain massive user bases, and a merger could create a regional tech powerhouse with the potential to anchor a tech ecosystem and attract more capital to Southeast Asia’s broader startup scene.
Southeast Asia’s tech sector could also be well-positioned to benefit from growing investments in artificial intelligence and related infrastructure. The region is experiencing increased interest partly due to multinational companies diversifying their supply chains in response to U.S.-China trade tensions. Strategic investment partners have recognized these opportunities, offering specialized financing solutions for investors looking to participate in this growing market.
U.K. semiconductor firm Arm Holdings has announced plans to establish a regional base in Malaysia to support local companies developing their own chip designs. And analysts at Maybank Research project that the number of data centers in Southeast Asia will grow by 20% annually over the next three years.
For tech entrepreneurs and investors looking to take the long view and invest in these opportunities, it may be crucial to access liquid capital to navigate current market volatility. Alternative financing approaches could offer a flexible alternative to traditional funding channels. Business owners and investors can use illiquid assets to free up capital for new investments without sacrificing long-term positions.
This also has potential applications in the merger and acquisition space, where Southeast Asian tech firms are increasingly active. With the right capital structure, companies have more freedom to pursue well-timed acquisitions to consolidate market position or expand capabilities with an eye toward future growth in the region’s tech sector.
Of course, investing in Southeast Asia’s tech ecosystem is not without challenges. Corporate governance improvements will be essential for restoring investor confidence following incidents like the eFishery allegations. Similarly, regulatory developments regarding tech mergers could reshape competitive dynamics across the region.
But ultimately the combination of rising incomes, digital infrastructure development, and geopolitical realignments could create a long-term opportunity for Southeast Asia’s tech sector. Equity-based financing solutions provide alternative financing blueprints that offer flexibility during market volatility, playing an increasingly important role in helping those involved in the space deal with near-term challenges while positioning for growth.
For entrepreneurs and investors seeking to participate in Southeast Asia’s digital transformation, understanding the full spectrum of available financing options — including equities-based alternatives — can help develop resilient capital strategies in this dynamic but promising regional market.
