Southeast Asia’s VC Challenge Lasts Two to Four Years

By Grace Kim

Southeast Asian startups received $94 billion in funding from 2014 through 2023, according to figures cited by TokenPost, as Rakuten Capital’s Saemin Ahn expects the region to struggle for investor attention for another two to four years.

Ahn, managing partner for international investment at Rakuten Capital, tied his forecast to Southeast Asia’s company-building path and public-market results. In comments to TokenPost, he said conventional venture capital is a difficult fit for the region. Good startups get “a lot less oxygen,” he said.

His recommendation is broader financing, not an exit from equity. Companies may need a capital mix that combines equity with structured financing, including mezzanine or tranche financing, debt and credit, according to Ahn. The proposal gives founders several ways to fund growth while conventional venture funding remains constrained.

Why is conventional VC a difficult fit?

TokenPost’s account centers on the region’s company-building path and public-market results. Ahn’s forecast covers two to four years, which makes financing structure a sustained operating issue for Southeast Asian startups. His proposal also places blended capital on the agenda throughout the period he describes, rather than leaving the region dependent on the conventional VC model.

Ahn’s language points to a gap in support, not an absence of deal activity. In his assessment, startups can attract money and still receive less capital than their growth plans require. The result is a mismatch between the financing products available and the needs of companies advancing through the region’s company-building and public-market paths.

Under Ahn’s proposal, equity remains part of a company’s plan, but mezzanine or tranche financing, debt and credit may also have to sit alongside it. He presented those instruments as a combined response to the support gap facing good startups in the region.

What does Rakuten’s expansion show?

Rakuten Ventures began with an exclusive focus on Southeast Asia before broadening its geographic reach about three years later, Ahn said. Rakuten Capital launched in 2013 and has invested in more than 90 companies worldwide, according to TokenPost.

The two milestones describe the expansion behind Ahn’s regional perspective. Rakuten Ventures moved from a Southeast Asia-only mandate to a wider map, while Rakuten Capital has invested across multiple markets, according to TokenPost. That operating history gives his two-to-four-year warning a direct investor context.

How large is the gap with China?

TokenPost’s figures show the scale of the challenge alongside the funding history. The regional totals are large, but they remain well below China’s figures for the same startup period.

• Southeast Asia: $94 billion in startup funding from 2014 through 2023; $121 billion in combined value for unicorns created during that period, measured as of the second quarter of 2024.
• China: $582 billion in funding over the same period; $1.402 trillion in unicorn value.

The comparison pairs capital raised during 2014-2023 with later valuations of unicorns formed during the period. It does not capture venture performance across every startup, TokenPost said. The $121 billion and $1.402 trillion figures therefore describe the scale of the unicorn cohorts, not realized returns for the wider startup populations in Southeast Asia and China.

Ahn’s warning extends past both the funding period and the second-quarter 2024 valuation date. He expects another two to four years of difficulty attracting investor attention. His case points to a broader financing model for company building and public-market outcomes, not merely more money directed through conventional VC.

Can blended capital ease Southeast Asia’s funding gap?

For founders, the practical question is which capital stack can support growth through that two-to-four-year window. Ahn’s answer includes equity plus mezzanine or tranche financing, debt and credit. For investors, the test is whether those broader structures can keep good startups moving despite the limited support he described.

His forecast also puts Southeast Asia’s public-market path at the center of the financing debate. Companies that cannot attract enough attention through the conventional venture route may need to assemble capital differently before reaching those markets. That is the financing adjustment behind his two-to-four-year warning for regional companies and investors.

Ahn expects a two-to-four-year investor-attention gap in Southeast Asia. His prescription—equity plus structured financing, debt and credit—puts the region’s capital mix, rather than headline startup valuations, at the center of what investors should watch next.