Jakarta. Startup funding in Indonesia plunged 67 percent to just Rp 1.29 trillion ($78.5 million) in the second quarter of 2025, marking the lowest level in six years. For the first time, the country slipped behind the Philippines, which secured Rp 1.41 trillion ($86.4 million) during the same period.

The slowdown mirrors a broader reset across Southeast Asia, where startup equity investment dropped 20.7 percent year-on-year to Rp 30.3 trillion ($1.85 billion) from 229 deals, also the weakest in more than six years.

Private debt financing in ASEAN also shrank to Rp 8 trillion ($490 million) in Q2, nearly half the level recorded a year earlier, as lenders tightened requirements for even revenue-strong companies.

Across the region, Singapore remained the hub with Rp 19.8 trillion ($1.21 billion) raised, almost two-thirds of the total. Yet, the city-state also logged its weakest half-year performance, with deals down 13 percent year-on-year. Vietnam bucked the trend with funding surging 169 percent to Rp 4.5 trillion ($275 million), while Malaysia doubled to Rp 3.2 trillion ($196 million), supported by several large transactions.

Despite the downturn, three new unicorns emerged in ASEAN: Malaysia’s Ashita Group ($155 million), Singapore’s Thunes ($150 million, valuation $1.42 billion), and digital asset bank Sygnum, bringing the region’s unicorn tally to 58.

In Indonesia, the funding chill is expected to persist. Investor Daily reported that higher US Federal Reserve rates and global economic uncertainty will likely weigh on capital flows throughout the year. The trend follows a steep multiyear decline, with domestic startup investment falling from Rp140 trillion ($8.5 billion) in 2021 to just Rp5 trillion ($304 million) by late 2024.

Nailul Huda, an economist at the Center of Economic and Law Studies (Celios), warned that Indonesia has not produced a new unicorn in the past two years and is unlikely to do so in 2025. He added that the tight funding environment has triggered massive layoffs from 2022 to 2024, as startups of all sizes struggled to secure financing.

Tracxn data show that ASEAN startup funding plunged 59 percent to Rp 46.6 trillion ($2.84 billion) in 2024, compared with Rp 114.8 trillion ($7 billion) the year before, and just a fraction of the Rp 233 trillion ($14.2 billion) recorded in 2022.

One area still attracting investor interest is artificial intelligence. According to the East Ventures Digital Competitiveness Index 2025, AI-focused startups in Indonesia drew a total of Rp 8.9 trillion ($542.9 million) through 2024, up 141.5 percent since 2020.

East Ventures co-founder and managing partner Wilson Cuaca said AI is a key driver of digital transformation, helping businesses boost productivity and enabling more data-driven decision-making.

AI adoption has accelerated in Indonesia since the launch of ChatGPT in 2023, fueling applications in marketing, gaming, and education. Economists estimate AI could contribute around 12 percent to Indonesia’s GDP growth, equivalent to Rp 5.9 trillion ($366 billion) by 2030.

“With AI, IoT, blockchain, and 5G, Indonesia is well-positioned to strengthen its digital competitiveness and cement its role as a leading digital economy in Southeast Asia,” Wilson said.