TLDR: Startup funding across Asia experienced a notable decline in the first half of 2025, with China leading the downturn. Overall funding in the region was down by approximately one-third compared to the same period last year, accompanied by a decrease in deal volume. Specifically, Greater China saw a steep 71.4% year-over-year drop in transaction value in March, with Q1 2025 funding at $9.6 billion, a 52.4% reduction from Q1 2024.
Asia’s vibrant startup ecosystem has faced a challenging first half of 2025, marked by a significant slide in funding, with China at the forefront of this decline. Investment in Asian startups reached a multiyear low during this period, despite a slight amelioration in the second quarter. Overall, funding across the continent in the first six months of 2025 was down by roughly a third compared to the corresponding period last year, a trend also reflected in a decline in deal volume.
The Greater China region, encompassing mainland China, Hong Kong, Macau, and Taiwan, particularly illustrates this downturn. In March alone, startup funding activity in Greater China suffered a steep 71.4% year-over-year decline in transaction value, with deals totaling nearly $4 billion. The first three months of 2025 saw startups in Greater China secure approximately $9.6 billion, representing a substantial 52.4% decrease from the $20.1 billion raised in the first quarter of 2024.
Analysts attribute this plunge in deal value primarily to the scarcity of ‘megadeals’—investments worth at least $100 million. A contributing factor has been the unprecedented and expansive tariffs recently rolled out by the United States against its major trading partners, including China. Despite these challenges, some analysts from Pictet Asset Management note a relative strength in the Chinese market, citing the country’s considerable capacity for monetary and fiscal stimulus, ongoing price deflation, and ample fiscal space. Furthermore, China’s reliance on US exports is often overstated, accounting for only 3% of the country’s GDP.
Despite the decline in overall funding value, the deal count in Greater China held up relatively well in Q1 2025, with 627 deals sealed, a modest 1.9% increase from the 615 recorded during the same period a year ago. Early-stage investments continue to dominate the deal volume, with Series A and pre-Series A rounds accounting for 47.8% of the total deal count and 24.6% of the deal value.
Notable activity in the region included the largest deal in March, where Chinese state-owned waste incineration and power generation company SE Environment, controlled by Shenzhen Energy Group, secured 5 billion yuan (approximately $689.3 million) in strategic investments from several Chinese insurers and other investment funds.
Also Read:
- Asia’s AI-Native Startups Spearhead Transformative Growth Across Key Industries
- Southeast Asia’s AI Investment Landscape: Growth, Challenges, and Emerging Opportunities
In terms of public markets, Hong Kong recorded 15 IPOs in Q1 2025, raising HKD 18.2 billion ($2.3 billion), a significant increase from 12 IPOs raising HKD 4.7 billion ($604.9 million) in Q1 2024. Similarly, in the US, 21 Chinese companies launched IPOs in Q1 2025, raising $300 million, compared to 12 new listings raising $102 million in Q1 2024, marking surges of 75% in new listings and 194% in proceeds.
