DeepSeek Lowers AI Barriers for Southeast Asia as VC Funding Plummets 79% From 2022-2024

DeepSeek’s emergence as an accessible AI platform is reshaping Southeast Asia’s tech landscape, offering local firms a gateway to artificial intelligence despite lingering caution among venture capital investors. The region’s tech funding environment has contracted sharply, with venture capital inflows into Southeast Asian startups plummeting by 79% between 2022 and 2024, according to Tracxn data cited by CNBC. This decline has prompted investors to reassess strategies, with some identifying early signs of recovery while others adopt a watchful stance.

At the Fortune Brainstorm AI Singapore Conference, industry leaders highlighted both opportunities and challenges. Helen Wong, managing partner at AC Ventures, noted that “green shoots” are emerging, as top-tier companies continue securing funding. However, panel discussions underscored a broader sense of urgency about the region’s lag in technological adoption. Matthew Graham of Ryze Labs emphasized the need for startups to pursue “highly differentiated visions” rather than replicating existing models, warning that generic approaches risk diluting competitive advantages.

Jixun Foo of Granite Asia pointed to DeepSeek as a pivotal enabler, stating that the AI model has “democratized access” to technology, allowing smaller firms to build innovative applications. Despite this, Foo revealed that his firm remains cautious, awaiting clearer signals of market readiness and talent alignment before committing capital. He also raised concerns about legacy systems hindering progress, noting that traditional tech companies risk obsolescence as AI-native startups disrupt established sectors.

Ren Yeong Sng of Temasek outlined a strategic focus on addressing technological bottlenecks, such as infrastructure needs for agentic AI systems. “Investing in these bottlenecks is critical,” he said, citing containerization and persistent memory as key areas where startups can create unique value. This perspective aligns with broader investor skepticism about overambitious scaling efforts. Graham echoed this sentiment, advising founders to prioritize “super fans”—users with urgent needs—rather than chasing mass adoption prematurely.

The cautious investment climate reflects a broader recalibration in Southeast Asia’s tech ecosystem. While DeepSeek’s lower barriers to entry are fostering innovation, investors remain focused on fundamentals, emphasizing differentiation, market readiness, and sustainable growth over rapid expansion. This approach suggests that the region’s AI sector may evolve through niche, high-impact solutions rather than broad, generalized platforms.

The interplay between accessibility and investment prudence highlights a transitional phase in Southeast Asia’s tech journey. As founders navigate this landscape, the challenge lies in balancing innovation with practicality, ensuring that AI applications address real-world needs while aligning with the region’s evolving funding dynamics.

Source: [1] [DeepSeek Makes It Easier for Southeast Asia’s Firms to Get into AI, but Venture Investors Are Still Adopting a Wait-and-See Attitude] [https://fortune.com/asia/2025/07/23/venture-funding-southeast-asia-winter-deepseek-brainstorm-ai-singapore/]