SEA of Startups

Presented by YourCFONext week there is going to be a very big press release.From the 15th to the 17th of November, ASEAN’s leaders meet in Manila for the 49th ASEAN Summit. The Philippines is chairing this year, and the headline deliverable, the thing everyone has been working towards, is that they are due to sign something called DEFA: the ASEAN Digital Economy Framework Agreement.You are going to see the photos. Leaders in a row, matching shirts, pens on the table. You are going to see the phrase “world’s first region-wide digital economy agreement.” And you are going to see a number: that this deal could take the region’s digital economy from about one trillion dollars to two trillion by 2030.I want to get to this before the ceremony, not after. Because once the photos are out, everyone will tell you this is the moment Southeast Asia became one market for startups. It isn’t. I don’t say that to be cynical. There is something real in this deal, and I will tell you exactly where. But if you are a founder planning your expansion around a signing ceremony, you are going to plan it wrong.One. What they’re actually signingThe short version: DEFA is a regional agreement that tries to make it easier to do digital business across all ten ASEAN countries. Payments that work across borders. E-invoices and trade documents one country accepts from another. Digital identity. Rules for moving data across borders. Cybersecurity. E-commerce. And some newer ground: AI, fintech, and protection for your source code, so a government cannot make you hand it over as a condition of doing business.The longer version, because the timeline matters. Negotiations launched in September 2023 and concluded at the end of May this year, at a meeting of senior officials in Manila. Every member state has since been doing a legal review of the text. Signing is scheduled for next week. After signing, each country has to ratify it, with a target of 180 days.So best case, you are looking at the middle of next year before it is even in force across the region. And in force is not the same as your customer’s bank, your customer’s tax office and your customer’s regulator all changing how they work. That is implementation, and implementation is where the real time goes.Two caveats. First, the final text is not public yet. Civil society groups have complained about exactly that, and they have a point. Most of what you will read next week, including from me, is built on summaries, law-firm notes and what officials have said in public. Hold it all a little loosely.Second, that two-trillion-dollar number. It comes from a study done for the negotiations. I am not saying it is wrong. I am saying a study that tells the people who commissioned it that their project will double the economy is not the most independent research you will read this year. It’s a slide, not a forecast.Here is what is genuinely good about it, and I want to be fair. This is ten very different countries agreeing, in writing, on the direction of travel. Data should flow. Payments should connect. E-invoices should be recognised. Source code should not be a bargaining chip. For a region that has historically agreed on very little in tech, that matters. It tells regulators which way to lean when they write the next rule. This is a fragmented market, and anything that defragments it is welcome.But direction is not the same thing as a market.Two. We’ve signed this beforeIf you have been around this region long enough, this will feel familiar. The ASEAN Economic Community launched at the end of 2015: a single market and production base, free flow of goods, services, investment and skilled labour. I remember the conference panels. I remember the decks. It was going to change everything.In 2019 the region signed an ASEAN agreement on electronic commerce. That one took until the end of 2021 to come into force.Now ask yourself honestly. If you are a founder in Kuala Lumpur selling software to a customer in Jakarta today, how much did either of those agreements change your week? Your contracts, your tax, your payment collection, your data setup?For almost every founder I know, the answer is: not much. Not because the agreements were bad, but because an agreement between governments sets the direction, and then every country implements it through its own laws, its own regulators and its own politics. The treaty is the easy bit. The six separate rulebooks underneath it are the hard bit.Three. Six rulebooks, six lawyersHere is the detail I really want founders to hear. From the legal analysis I have seen, DEFA does not automatically override national data rules, and it does not override data localisation. Each country keeps its own. That is how treaties usually interact with national law, and there is no sign this one is different.Two examples, used as a regional pattern, not to pick on anyone. Indonesia has had a regulation since 2019 that separates public and private system operators, with local storage requirements on the public side and real fines behind its rules. Vietnam’s cybersecurity framework can require certain online services, including foreign ones, to store Vietnamese users’ data in Vietnam for at least 24 months and to set up a local presence. These are sovereign choices, and governments have their reasons. But if your product touches user data, and almost every product does, those rules do not disappear because a treaty was signed in Manila.So your expansion cost is still six legal opinions, six data setups, six tax registrations, maybe six local entities. The founder who reads next week’s headline and thinks “great, one market now” is going to be very expensively surprised in month four.Make it concrete with a made-up but very typical company. You are a B2B software company in Kuala Lumpur selling HR and payroll tools to small businesses. A few hundred paying customers in Malaysia, the product works, and your board says it is time to go regional. Indonesia is big, the Philippines is growing, let’s do both.Here is your next twelve months. A local entity in each country, or a partner who will act as one. A local lawyer to tell you whether payroll data has to stay in the country. Working out whether your cloud setup is fine, or whether you need a second region or a local provider. Tax registration in each market, and learning how e-invoicing works there, because it works differently in each one. A way to collect money from customers who pay by bank transfer in one country and by e-wallet in another. And payroll itself is regulated differently everywhere, so your product needs local rules built in before anyone can use it.None of that is exotic. None of it is fixed by next week’s signing. All of it costs money and months before you have earned a single dollar of new revenue. That is what six markets means. Not six flags on a slide. Six sets of paperwork, each with its own queue.ASEAN is about to sign a single digital market, but your startup still needs six lawyers.A business survey cited in some of the coverage puts numbers on it: about two thirds of firms said uncertainty over cross-border data rules was an obstacle, and about two thirds of those using cross-border digital payments reported delays, with a similar share complaining about costs. I could not see the original survey, so treat the exact figures carefully. But it matches every founder conversation I have had about going regional.Four. The part that’s actually workingSo if the treaty is not where integration happens, where does it happen? This is the part I am genuinely optimistic about, and it gets almost no airtime.Real integration in this region is already happening. Just not on a stage. It is happening in payments plumbing, built quietly by central banks, one link at a time.Start with QR payments. Since 2022, a regional payment connectivity initiative has linked the QR systems of Indonesia, Malaysia, Thailand, Singapore and the Philippines. Vietnam has offic… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Presented by YourCFOIn about five weeks, Southeast Asia’s two biggest growth stories swapped places.Vietnam got promoted by one of the big index providers. Indonesia got told by another that it might be pushed out of emerging markets altogether, and its stock market fell 11% in a day. Right in the middle of that, the IMF put out a forecast that says Vietnam’s income per person will pass Indonesia’s this year. First time ever.Meanwhile in Malaysia, where I’m based, the economy is growing at about five and a half percent. If you’re a founder in KL, you would never know it. And in the Philippines, the economy is having one of its worst years in a while, exports just hit an all-time record on AI chips, and the startup activity on the ground is better than the numbers suggest.None of that lines up the way you’d expect, and that’s the point. The size of an economy, the growth of an economy, and whether a startup in that economy can actually get funded and get bought are three different questions. We spent ten years treating them like one question.If you write cheques or raise them, this matters. Every seed round in this region is a bet on a buyer seven years from now. This month we got a clear look at who that buyer is, and where it’s getting harder to find.1. The crossoverThe IMF’s October World Economic Outlook projects Vietnam’s GDP per capita at about $5,260 this year, against about $5,150 for Indonesia. Last year Indonesia was about $250 ahead, and as of April the IMF still had Indonesia in front. In six months, the forecast flipped.The caveats, properly. These are nominal dollars, and the rupiah has been weak, so Indonesia looks a little worse after conversion. The gap is tiny, about two percent. This is a photo finish, not a lap. And Indonesia’s economy is still almost three times the size of Vietnam’s: about $1.5 trillion against about $540 billion. Indonesia isn’t shrinking into irrelevance.All true, and none of it changes the direction. Vietnam is growing a lot faster, and the IMF expects it to stay ahead next year. When you’re betting seven years out, direction matters more than size.Here’s why this one hits me personally. I have sat through hundreds of pitches where slide three is the market slide, and for Indonesia that slide wrote itself. 280 million people. Young. Mobile first. Every fund that raised for this region in the last decade had some version of it in its own LP deck.The thing that slide never said was how much money those 280 million people actually have. And whether there’s anyone at the end of the road who’ll buy the company you build to serve them.Big isn’t the same as rich. And it definitely isn’t the same as investable.Vietnam never had that slide. People called it the next China, but it ended up benefiting from the less sexy story: factories, the manufacturing shift, China plus one. The less sexy story compounded.2. Promoted and demotedNow the part that actually decides whether startups get paid: the markets.The quick version of how index providers work. MSCI and FTSE Russell sort every country’s stock market into buckets: developed, emerging, frontier, and a few that don’t fit anywhere get labelled standalone. Trillions of dollars of passive money, the index funds and ETFs, follow those buckets automatically. If you’re in the emerging bucket, emerging market funds have to own a slice of you. If you get moved out, they have to sell. No opinions involved. It’s the rule.So these aren’t academic labels. The bucket decides whether a huge pool of money is even allowed to show up.Vietnam first. FTSE Russell’s upgrade from frontier to secondary emerging took effect on 21 September and phases in through September 2027. MSCI hasn’t moved yet, but there’s a real chance it follows. How much money does it bring in? Estimates run from about one billion dollars to about six. When estimates are that far apart, nobody really knows. The direction isn’t in doubt: money is coming in, not going out.And that upgrade wasn’t luck. Vietnam spent years doing the boring work the index providers kept asking for: how foreign investors get access to the market, how trades settle. Nobody throws a party for the plumbing of a market. Vietnam did it anyway, and it got rewarded.Then Indonesia. On 15 October, MSCI opened a consultation on moving Indonesia from emerging to standalone. Not down to frontier. Standalone, below frontier, where almost nobody gets put.MSCI didn’t just say it didn’t like the vibes. It wrote down its reasons. Free float that isn’t really free: shares counted as being in public hands but actually held by people connected to the owners. Ownership structures you can’t see through. Trading in some stocks that looked coordinated. None of this came out of nowhere. MSCI froze changes to its Indonesian index back in January over the same concerns. Indonesia has been working on reforms all year, and MSCI acknowledged some progress in April. In October it said, basically, not enough and not fast enough. It will decide by the end of June 2027, and it expects to go ahead with the demotion unless it sees clear evidence of material improvement.The day after the announcement, the Jakarta Composite fell about 11%.Then it got political. A former trade minister claimed Singapore’s sovereign funds, Temasek and GIC, had pressured MSCI so they could buy assets cheap. Both said the claim is untrue. Another former official called the whole theory nonsensical. There was a theory blaming the US too.I understand why “blame Singapore” plays well. It’s still noise. MSCI wrote down its reasons. If you want to argue, argue with the free float numbers, not with Singapore.Put the two side by side. Same region, same few weeks. Vietnam fixed its plumbing and got a promotion. Indonesia let its plumbing clog and got a warning letter. And the bigger economy is the one on the wrong side of it.Markets get promoted for plumbing, not for population.3. Why a seed investor cares about index committeesBecause of the chain.Index funds and big institutions buy listed shares. Because they’re there to buy, an exchange can price IPOs. Because IPOs can happen, the growth funds who write the big late cheques know they can get out. Because they can get out, they’ll pay up at Series B and C. Because there’s a Series B, the Series A investor can get paid. And because there’s a Series A, someone like me can write a seed cheque and believe there’s a road to a return.Every link depends on the one after it. The index money is the last link. Pull it out and every price upstream turns into a guess.So what does it look like when the chain starts breaking? Look at Indonesian startups this year. I’m not going to throw totals at you, because aggregates mislead. Here’s the shape. In the first nine months of the year, one single deal made up about three quarters of the money that went into Indonesian tech. Seed, the very first cheques, has almost vanished. There were zero tech IPOs. A couple of big companies can still get money. Everyone underneath them can’t.When I price a seed round, I’m really pricing what the exit might look like years down the road. In one of these two markets, that buyer is getting closer. In the other, it’s walking away.To be fair to Vietnam: I’m not telling you Vietnamese seed is booming because of an index upgrade. The startup numbers there are messy and don’t agree with each other. It may take years to trickle down to seed. But it’s an indication that the chain is getting stronger, not weaker.4. GDP doesn’t fund startupsYou’d think the lesson is simple: fast-growing economy good for startups, slow economy bad. The rest of the region says that’s wrong too.Malaysia. My home base, and the economy is doing properly well. The advance estimate for the third quarter came in at 5.3%, ahead of expectations, and the first nine months are at about five and a half percent, up from 4.8% a year ago. Given the global disruption, that’s a strong economy.Now ask a founder in KL whether t… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Presented by YourCFOThe biggest company the Philippines has ever floated went public last week. A homegrown name that sits on tens of millions of phones. And when I read the terms, the first thing I felt was not pride. It was a very specific, very familiar itch.Because the deal priced well below where it was pitched. And most of the money did not go into the company at all. It went to the people who already owned it.So here is the week in one sentence. The exit door in Southeast Asia has finally swung open after years of being stuck shut. That part is real, and it matters. But a door swinging open tells you nothing until you watch which way people are walking through it. This week, a lot of them were walking out with their coats on.Three stories, and they rhyme. A giant Philippine IPO and the exit market reopening around it. A fast-growing Manila lender raising a headline that is not quite what it looks like. And the big annual report that says this region is using artificial intelligence faster than almost anyone on earth. Put them side by side and you get one question. Who actually gets paid? The company, or the people cashing out of it. The founder, or the lender. The region, or someone flying in from very far away.One. The biggest bell in Philippine historyOn 20 October, Mynt, the company behind GCash, listed on the Philippine Stock Exchange under the ticker GCASH. It is being called the largest IPO the country has produced. For public markets that have spent years being described as sleepy, that is a genuinely big moment, and I want to be clear about why it is good before I get to why it is complicated.GCash is not a toy. It is how a huge number of Filipinos move money, pay bills, buy load, borrow small amounts and save. A domestic financial app grew up inside the Philippines and then listed on the Philippine exchange, rather than quietly disappearing into a foreign holding company. That is the kind of outcome this country has been owed for a long time. Credit where it is due. Build more of these.Now the terms. The deal priced at 6.60 pesos a share, a third below the 10-peso ceiling in its filings. The base offer came to about 53 billion pesos, rising to about 60.9 billion if the overallotment is fully exercised. Call it roughly $845 million, reaching toward a billion if everything clears.A low price is not a scandal. Markets are cautious, rates are still biting, and a disciplined price that clears beats a greedy price that flops on day one. But price is information. It is the market telling you, in public, what it thinks the growth is worth today. When a company prices at the top of its range, the buyers are fighting to get in. When it prices at the bottom, the sellers are relieved to get it done. Those are two very different rooms, and you should always know which one you are standing in.And here is the part I want you to sit with. Most of this offering was not new money for the company. It was secondary: existing shareholders selling their stock. Reports put the company’s share of the proceeds at about 30 percent. The rest goes to selling holders, including Ant Group and private equity backers, who say they are trimming rather than exiting.So when the headline says record raise, read it twice. A record amount of money changed hands. Most of it moved from new public investors to early backers ready to take money off the table. That is not a growth round dressed as an IPO. It is a liquidity event with a bell ceremony attached.First-day moves tell you about sentiment, not about the business. Ask me again in a year.Two. The window is open. Look who is walking through itMynt did not happen in a vacuum. The exit market across Southeast Asia has quietly come back to life. Deloitte counted 47 IPOs in the region in the first half of 2026, raising more than $3 billion, more than double the same period a year earlier, with Malaysia leading on deal count and Singapore climbing the table.So the door is open. After years of founders being told there was nowhere to list, there is somewhere to list again.But look at what is actually going public. Property. Financial services. Consumer names. Established businesses with real cash flows that public investors understand. What is mostly not going public is the venture cohort: the unicorns and soonicorns that raised at a billion dollars or near it in the free-money years, on a promise of growth that would justify the price later.Those companies are caught in a very specific trap. Their last private valuation is a number the public market will not honour. Raise again at a lower price and crush everyone who came in at the top, which founders and their existing investors will do almost anything to avoid. Or sit still, burn down the runway, and hope the market comes up to meet them, which it mostly will not.Make it concrete. Say you raised your last round at a billion dollars in 2022 on the promise that revenue would quadruple. Revenue doubled instead, which is a very good outcome in any sane world. But the public market now prices a company like yours at four or five times revenue, not twenty. Do the arithmetic and your honest public value is a few hundred million, not a billion. So you cannot list, because listing crystallises a number your early investors and your own team will treat as a failure, even though the company is healthy. You are trapped by your own headline, and the headline was never real. That is the hangover from the free-money years, and this is the year a lot of people wake up to it.Spare a thought for the retail buyer too. When an IPO prices low and sells mostly secondary, the ordinary investor putting in a month of savings is, in plain terms, buying the stock the insiders are selling. Sometimes that is a fine trade. Insiders sell for all sorts of reasons, and the people who built GCash are entitled to take some money off the table after years of work. Just enter with your eyes open, knowing who is on the other side.And the constructive piece, because I mean it. A public GCash is a disciplined GCash. Once you are listed you report every quarter, you answer to investors who can sell you, and you cannot hide a soft number behind a cheerful blog post. That discipline is the best thing that could happen to Philippine fintech. The milestone is real. I just want the whole country watching the structure, not only the bell.Three. Two animals wearing one headlineWe stay in Manila, because Manila owned the week. On 19 October, consumer lender Salmon announced $140 million in new financing. On its face, a big vote of confidence in lending to underbanked Filipinos. And the market is one I like. Tens of millions of people here have thin or no formal credit history and real demand for small, fair credit. A disciplined lender serving them well is a good business and a good thing. I am rooting for the mission.But read the structure. That $140 million is $90 million in equity commitments and a $50 million public bond. Two completely different animals wearing one headline. Equity is money investors put in believing in the upside, money the company never has to pay back. A bond is borrowed money. It has to be repaid, with interest, on a schedule, whether the business thrives or not.For a lender, debt is not a sign of weakness. It is the raw material. A lender borrows at one price and lends at a higher one, and the gap is the business. So a bond is normal, even healthy. But stacking a $50 million bond on a $90 million equity number and announcing one combined figure makes the raise sound larger and more growth-flavoured than it is. When you see a blended number, split it in your head before you react.This follows a similar package in April: $60 million of equity and a $40 million bond. Inside one year, about $240 million across these structures. Impressive momentum. Also a lot of capital flowing into a loan book very quickly, and speed is exactly what should make you ask more questions, not fewer.Four. Profitable… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Presented by YourCFOI need to be honest with you before we start, because otherwise this whole piece reads like a man with an axe to grind.I do have an axe. Let me show it to you first.I do not like Grab. I am not going to be coy about it. For my money it is one of the most frustrating companies to actually use in this part of the world, and frustrating precisely because there is often no other option. The app fights me. The map sends my driver in a slow circle around the block. Support, when something goes wrong, is a maze designed so you give up before a human ever appears. And all of it sits on top of a market position so dominant that none of it has to get better.So this is not a neutral host reading you the news. I want that on the table up front.Why give a company I cannot stand a whole week? Because this week Grab did something that fits the pattern I have been chasing for a month. The $13 billion funding number wearing the costume of a boom. Exit figures wearing the costume of liquidity. Seed rounds wearing the costume of a Series A. Real numbers, dressed up as something they are not.This week the costume was not on a spreadsheet. It was on a company. In seven days, Grab put on a lab coat and announced to Southeast Asia, twice, that it is now an artificial intelligence company. I looked at the thing wearing the lab coat and I knew its face, because I argue with it in traffic every week.I will be fair. Grab earns some credit here and it will get it. But the costume is coming off.One. Two announcements in seven daysThe facts first, clean, before I say a single sharp thing.Announcement one. On 8 October in Kuching, SoftBank, Grab and PETROS, the Sarawak state energy company, signed a framework agreement to explore an AI and digital infrastructure platform in Sarawak. The scope, as described, could stretch across AI compute and services, advanced technologies, robotics, and local workforce and community development. SoftBank brings its AI infrastructure and computing expertise. PETROS brings energy. Grab, per the release, brings its Southeast Asian digital platform, its “applied AI capabilities” and its regional customer and partner networks.Hold on to that last line. We are coming back to it, because it is the most honest sentence in the announcement.Announcement two. Six days later, on 14 October in Bangkok, Grab stood up with OpenAI and launched GO Forward with AI: practical AI training for more than 3,000 drivers, riders and merchants in Thailand, with three months of free ChatGPT Plus for those who attend the workshops in person. It is the first step in a plan to reach more than 30,000 workers and small operators across the region within two years. Grab’s chief executive, Anthony Tan, framed the point well: access alone is not enough, the question is whether the training turns into earnings.Now the fair hearing I promised.The gig worker programme, at its best, is a genuinely good idea. A while back I got into a Grab car, mentioned what I do, and the driver spent the ride telling me what he had built on the side with AI tools. The people driving these motorbikes and cars and packing these bags are some of the most capable, hustling operators in the region. A driver who learns to use these tools to run a side business, market it and manage the money is a real thing. They are also the people most exposed if autonomy and automation arrive in their line of work. Teaching that class of worker to use the most powerful general tool of a generation is not nothing. I am not going to sneer at it.And the Sarawak plan points at something the region genuinely needs. Sarawak has been thoughtful and aggressive about making its own moves. Real computing capacity, built here, with local energy behind it, is a serious ambition. No quarrel with the ambition, none with Sarawak wanting it, none with a local energy firm backing it. Build it.So here is the question for the rest of this piece. Two announcements, both with the letters A and I stamped all over them, and one company at the centre of both, suddenly presenting itself as an engine of Southeast Asian intelligence. What does either of these actually require Grab to build? What does Grab have to deliver, and by when, or it has failed?I went looking for the answer and found a lab coat with nobody inside it.Two. The map in my pocketLet me explain why I cannot take Grab seriously as an AI company, using the least glamorous technology in the world. A map.A few years ago Grab decided to move off the outside mapping providers that powered its navigation and build its own, GrabMaps. The logic was reasonable on paper. Southeast Asia is genuinely hard to map. Alleys with no names. Addresses that are really a landmark and a vibe. Whole neighbourhoods the big global maps render as a grey blank. Grab said it had millions of drivers on these roads every day and could map them better than anyone. Good story.Here is the part that is not on paper. It is on my phone, several times a week.In my own daily use, since that switch, the experience has got worse. Type in an exact address and it cannot find it. The pin lands on the wrong side of the building, or the wrong side of the road. The driver is routed to a phantom entrance. I watch the little car on the screen drive past me, turn away and loop the block while the arrival time climbs, and the arrival time had no basis in reality to begin with.I am not giving you a statistic. This is me, a regular user, telling you what the product does in my hand. The reporting on whether drivers are happier since the switch is thin, so I will not dress my annoyance up as data. But I will tell you what it did to my behaviour. I have cut my usage sharply and started using other providers for most of my travel, out of sheer frustration. It did not get better. It got worse, and then it stayed worse.Three. The dominance pays for the mediocrityWhy would a company let its core product get worse and just leave it there? That is the real question, and it has nothing to do with AI.A company that wins on the quality of its product cannot let the product rot. If you have three real competitors and your map sends people to the wrong door, you lose them by the end of the week. A company that wins on dominance, on the simple fact that there is nowhere else to go, can let the product sit at good enough forever. There is no punishment. The customer grumbles, screenshots the circling car, posts it, and opens the same app the next morning.The map is just the part I can see. Try reaching a human when an order arrives wrong, or when the pizza box arrives tipped on its side with everything piled in one corner, which has happened to me more times than I can count. The support experience feels less like help and more like a series of locked doors, each one hoping you give up before you reach the next. That is not the accident of a young company still figuring things out. Grab is not young. It is a design choice a dominant company can afford, because the cost of your frustration is carried by you, not by them.That is what sits underneath the costume. In my experience Grab is not a technology company that wins because its technology is excellent. It is a distribution position. It got big first. It bought its position with capital, got the drivers, got the merchants, got the habit. From inside that fortress, mediocre tech, a clumsy interface and poor customer experience are not a crisis. They are the resting state. Competing against that dominance costs too much, so the dominance pays for the mediocrity.And notice who absorbs the resting state. Not only the irritated rider. The driver whose map sends him the wrong way and whose time is eaten by the loop around the block. The small merchant who lives inside an app she does not control and cannot meaningfully complain to. The people most dependent on Grab pay the quiet tax of a product allowed to stay just good enough.So forgive me if I am slow to believe the fix is… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

In the first nine months of this year, startups in Southeast Asia raised more than $13 billion. A record. Depending on whose tracker you believe, that is somewhere between a 120% and a 170% jump on last year.Hold on to that range for a second. Two serious data providers, looking at the same region over the same nine months, cannot agree on the number. That is not an accident, and we will come back to it.Here is the second number, and it is the one I want you to actually feel. Of that $13 billion, seed and angel rounds, the first real cheque a brand new company gets, came to about $270 million. Spread across roughly 90 companies.Sit with the gap. $13 billion at the top of the page. Ninety founders at the bottom, splitting $270 million between them. The money in this region has never been bigger, and it has almost nothing to do with the founder in Manila, KL or Bangkok trying to make payroll this month.I have watched the money here change shape about four times in a decade. Every time, it arrived looking like the boom had finally come. Every time, the headlines said we had arrived. And every time, when you followed the money to the end, it was not here to build a Southeast Asian company at all. It was here for something else.So this week I want to follow the money through all four of its disguises. Then, at the end, I will tell you why, after taking a blowtorch to all of it, I am more bullish on this region than I have been in years. I mean that. This is not a sad story.One. The headline is the trickThirteen and a half billion dollars, nine months, a record. If that is the only line you read, the drought is over and it is time to go out and raise again.Here is what the line does not tell you. Three deals were 54% of that number. Three. Widen the lens to every round of a billion dollars or more, and four deals were about 63% of all the money raised in the entire region this year. Before we have even started, nearly two thirds of Southeast Asia’s record year is a handful of enormous cheques going to a handful of enormous companies.So here is the one habit that will protect you from almost every misleading funding headline about this region. When a number says funding hit a record, your first question is never how much. It is how many. How many companies? Here, more than almost anywhere, one or two giant transactions can carry the whole number and make a starving market look like it just ate a feast.Look at where the money actually sat. Late stage, the Series C and beyond, the pre-IPO money, more than tripled to over $10 billion. Early stage, the seed and Series A, the part of the market where companies are actually born and where the next decade here gets decided, barely moved.Data centres alone were about 35% of all the money. I would love to know when we started counting data centres as startup funding. Video generation tools took another big slice on top.Think about what a data centre is. Power, concrete, cooling, and rack after rack of servers. It is a real estate and energy play with a technology label on the front. Perfectly good business, and we need them. It is just not a Southeast Asian founder with an idea and a laptop. The single biggest category in our record year is, quite literally, buildings.So the record is not founders getting funded. The record is a small number of very large, very late cheques going into physical infrastructure and a couple of foreign technology giants, sitting on top of an early stage market running on fumes. That is not a recovery. That is a costume. A big, shiny, $13 billion costume.To understand the costume, you have to understand the waves that came before it, because each one taught us a bad habit. We are still paying for all of them at once.Two. The hype moneyMost of you lived through this one. Rates were on the floor, capital was effectively free, and it flooded into Southeast Asia from big global funds that had made a fortune in China and were hunting for the next one.The instruction attached to that money was simple. Grow at all costs. Buy the users, buy the market share, buy the headline. Worry about a business model later, or frankly never.For a while it worked the way a sugar high works. Valuations went vertical. Everyone was a soonicorn. The pitch stopped being “here is a company that makes money” and became “here is a rocket, get on before it leaves the ground.” Burn was no longer a warning sign. Burn was the strategy. You were supposed to lose money faster than the next guy, because that proved you were winning the land grab.I sat in rooms where a founder losing $10 million a year was treated as more investable than one quietly making $1 million, because the one making money was clearly not thinking big enough.Then the free money ended. Rates went up, the global funds pulled back, and reality walked in through the front door and turned the lights on.You know the wreckage, because some of it made headlines around the world. eFishery in Indonesia, the poster child for aquaculture meets technology, hundreds of millions raised, a genuine darling until it was not. According to reports, a very large share of its revenue turned out not to be real, inflated to feed a valuation that had become the whole point. Zilingo raised enormous money, scaled hard across the region, and came apart on governance and burn before it could grow into the price tag it had been given.Underneath those two famous names sits a long, quiet graveyard. Companies that raised a monster round at a monster number, then went silent. Shut two or three country offices. Laid off most of the team. Then did a down round so brutal, or a bridge on such ugly terms, that they simply stopped sending press releases. You only find out when you check the cap table a year later.But here is what I think wave one really did, and it is worse than the billions it burned. It rewired a generation of founders. It taught them that the core skill of building a company was fundraising, not building. That the most important customer was the investor, not the human being using the product. It trained people to run their companies like they were preparing to sell them to a greater fool, because for about five years the greater fool kept showing up on schedule with a bigger cheque.When the greater fool stopped showing up, a lot of those founders did not know what to do next, because nobody had ever asked them to. I have watched genuinely talented people spend three years becoming world class at exactly one thing, raising money. When the market turned, that skill was worth nothing, and there was nothing underneath it.That is the quiet tragedy of wave one. Not the companies that died loudly. The founders who were patiently taught the wrong trade, and the LPs, angels and fund managers who walked away with a damaged view of the whole region. Disguise number one: money that came to inflate a story into a bigger story and flip it before the music stopped.Three. The grant moneyWave two is gentler, and in some ways it did more lasting damage, precisely because it showed up wearing the nicest costume of all. This money came to help.When the hype money left a crater, two kinds of capital stepped into the gap. Both arrived with genuinely good intentions and genuinely terrible incentives. Hold both ideas at once.The first is grant money. To be clear, this is everywhere, not one country: the US, Europe, Seoul, Japan, right across Asia. Governments decided they could build a startup scene by writing cheques directly to startups. Grants, matching funds, innovation programmes, disbursements tied to milestones. On paper it sounds wonderful. Free, non-dilutive capital for founders. What could go wrong?Here is what goes wrong. That money does not select for the best company. It selects for the best grant application.Think about who approves these grants. Usually a panel. Often very few of the people on it have ever built or sold a piece of technology. They sit in a room with a scoring… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Let me describe a company to you. Real revenue. Customers who pay every month, on time. A product that works and a team that ships. By every standard that mattered three years ago, this is a fundable company. Three years ago it raises a Series A without breaking a sweat. Today it cannot get a second meeting.Nothing about the company changed. The bar moved underneath it while the founder was busy building. That is happening everywhere, in San Francisco, London and Bangalore. But if you are building in Southeast Asia, here is the part almost nobody says out loud. The bar did not move once here. It moved twice. And the second move is one no venture podcast in San Francisco will ever explain to you, because none of them has had to raise a round across six countries at once.So this week I want to walk all the way through it. Why your next round is harder than your last one had any right to be. What it costs in months and in cash. And what I would do on Monday morning if I were sitting where you are.One. The seed mirageThe headline going around is that seed funding in Southeast Asia is up this year. On paper, true. DealStreetAsia’s half-year numbers have seed dollars up 128% year on year to $328 million. Read only the top line and you would think the taps are open and the hard years are behind us.Now look at who got the money. In the first half of 2026, 63 companies in the entire region received their first institutional cheque. Sixty-three. Across six countries, 680 million people and six months. That is not a wave of new founders getting funded. That is a number you could seat on one decent coworking floor in Singapore.Here is the part that should make you suspicious. While the seed total went up, the number of deals across the region fell to its lowest level since at least 2018, and the typical seed cheque got bigger. Hold those two facts together. Bigger cheques, fewer of them than in nearly a decade. That is not money spreading out to more people. That is money piling up on fewer of them.Who gets the fat cheques? Overwhelmingly AI and deep tech. A normal software seed in this region is still one to three million dollars. The AI rounds run at roughly double that and climbing, and they are the ones dragging the average up and making the chart look healthy. The chart is not lying exactly. It is letting you believe something that is not true. When you hear “seed is back,” the honest follow-up is “back for whom.” The honest answer is: for a small number of companies that probably do not look like yours.One more number, same story at a bigger scale. The region raised $7.25 billion in the first half, the strongest half since 2022. Almost all of it was one data centre raise, DayOne’s $4.5 billion Series C. Take that single deal out and the region raised about $2.75 billion, down on the half before and below the same period a year earlier. One deal, one building full of servers, is doing the work of making an entire half-year look like a recovery. I made the same point about exits a week ago. The discipline never changes: how many deals?So here is where we stand. The money that exists is real. It is also concentrated, going to a narrow slice of companies, and the breadth a healthy early stage is supposed to have is not there. The costume says boom. The body underneath says something much tighter.Two. The bar moved, and the Americans admit itNow the thing that actually decides your future: the bar for your next round.Listen to the American shows, 20VC, SaaStr, the ones every founder here has on in the background, and the same confession comes up every few weeks. A partner gets comfortable in the chair and says the quiet part out loud. The bar to raise a Series A today would have been a Series B three years ago. They say it the way you mention the weather, and then they move on.Here are the numbers behind the anecdote. The revenue a company needs to clear a US Series A has roughly tripled. A few years ago, about $1 million of annual recurring revenue got you a serious conversation. In early 2026 the figure doing the rounds is closer to $3.5 million. Not double. More than triple.Graduation fell off a cliff too. Carta, which sees a huge slice of American cap tables, tracks the share of seed-stage companies that go on to raise a Series A within two years. For companies that raised seed in early 2018, that was about 31%. For the early-2022 cohort it was about 15%. One in three became one in six. And it takes longer. The median walk from seed to Series A is now past two years, against roughly a year and a half in the late 2010s.Put those together and you understand what people mean when they say a stage of the market got deleted. Seed became the new Series A. Series A became the new Series B. The old Series A, the round you raised on promise and early traction, quietly stopped existing. The companies standing on it got no warning. They raised their seed, hit the milestones that used to be enough, went out for the A, and found the floor had moved while they were heads down. Pre-seed founders are discovering the same thing one step earlier: the seed bar is far higher now unless you are spinning out of a frontier lab.That is the American story. It is brutal on its own, and it is the story your foreign investors carry in their heads whether they say so or not, because the serious players read the market globally. Hold onto it. Now the Southeast Asian version, which is worse.Three. One company, one raiseNumbers in the abstract do not land, so let me walk you through a raise.Invent a company. Call the founder Mei. She is in Kuala Lumpur, where I am based, and she has built B2B software for mid-sized logistics operators. It is good. Two years in, she is at about $1.5 million of annual recurring revenue, almost all of it in Malaysia. Her customers renew. Her churn is low. Her team is lean. By the standard of 2021, Mei is a textbook Series A. She did everything the playbook told her to do.So she goes out to raise. Meeting by meeting, here is what happens.The local funds take the meeting, because they know her, they are polite, and they like the business. But the ones who would have led her A two years ago are either not raising a new fund right now or have quietly moved upmarket, chasing bigger, later, safer deals. They tell her she is a little early. Early, at $1.5 million of revenue and two years of history. That word is the sound of the bar moving.Then the regional funds out of Singapore. The first serious question is not about her revenue. It is about her map. How many markets are you in? When she says one, Malaysia with a little spillover, she watches the temperature in the room drop. What they are really asking is whether she is a Malaysian company or a Southeast Asian one. A Malaysian company at $1.5 million is not a regional Series A. It is a nice local business they no longer know how to underwrite, or no longer want to.Then, if she is lucky, a foreign fund. Now she is being measured, silently, against the American number. $3.5 million, growing fast, in a market the investor understands. She is at $1.5 million in a market they would need a fourteen-hour flight to visit. She does not lose that meeting because her company is bad. She loses it because she is graded on a curve drawn in another part of the world.Mei, who did everything right, walks away from a month of meetings with no term sheet, a lot of “keep us posted,” and a dawning understanding that the round she was told to raise does not exist for her at her size. That is not a failure of the company. That is three versions of the bar stacked on top of each other, all moving, and she walked into all three at once.Four. The border taxThe second move of the bar, the one San Francisco never has to explain, is what I call the border tax.A software company in San Francisco proves one market. The United States is one language for business, one currency, mostly one set of rules, one enormous wallet. A founder there c… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

There are two ways out of a company in Southeast Asia.One of them is loud. On 20 October, GCash will ring the bell at the Philippine Stock Exchange in the biggest listing that country has ever done. Cornerstone investors with names like BlackRock and T. Rowe Price. A valuation that starts with a number most Filipino founders will never see in their lifetime.The other is quiet. A few weeks earlier, on 8 September, private equity firm Navis Capital closed the sale of a chain of premium Malaysian supermarkets, Village Grocer, Ben’s Independent Grocer and a few others, to a Thai retailer. No bell. No cameras. Just a wire transfer and, reportedly, around five times the money they put in more than a decade ago.For years the complaint about this region was that there were no exits. Great companies, nowhere to sell them. That complaint just stopped being true. The door is cracking open. But before anyone pops the champagne, walk through it with me and look at who is standing on the other side. Because it is almost never a Southeast Asian.One. Six and a half times the money, four more companiesHere is the number that made me put this on the docket. In the first half of this year, venture-backed companies in Southeast Asia returned $5.65 billion in exits, per DealStreetAsia. Trade sales, listings, the lot. In the first half of last year, that figure was $856 million.Call it a six and a half times jump in twelve months. Hear only that and you would think the drought is over, and the region has finally figured out how to give investors their money back.Here is the part that gets buried. That $5.65 billion came from twelve exits. Twelve. The year before, it was eight. The value went up more than six times. The number of companies actually getting out went up by four.Sit with that, because it is the whole story of this market right now. The money is real. The breadth is a mirage. Twelve companies is not a wave of liquidity. Twelve companies is a handful of very large outcomes, and everybody else is still sitting in the waiting room.We saw the same trick with funding. The region raised $7.25 billion in the first half, the strongest since 2022. Sounds fantastic, until you notice that deal volume fell to its lowest level since at least 2018, and a single data centre deal carried the headline. Strip that one out and regional funding actually fell. The median Series A cheque shrank. The average founder is not living in the record. The average founder is living in the drought.When you see “exits are back” or “funding hits a record,” your first question is always the same. How many deals?Two. The loud door, and who already has a keyThe public market. The listing. The dream. And in the Philippines, that dream is about to come true in a very big way.GCash, the wallet on almost every Filipino phone, is going public through its parent, Mynt. The offer could raise around 80 billion pesos, roughly $1.4 billion, and closer to $1.6 billion with the overallotment. At the top of the range, Mynt is worth 669 billion pesos, about $11.5 billion. It is the largest listing in the history of the Philippine Stock Exchange, and it beats the old record, Monde Nissin, comfortably. More than 20 cornerstone investors are in, BlackRock and T. Rowe Price among them. The offer period opens on 6 October. Trading starts on the 20th.I want to be genuinely positive here, because this matters and I am on record as bullish on the Philippines. For a decade, the knock on Manila was that it could not host a listing like this. Any serious technology company would have to go to Singapore or New York to find money deep enough. GCash is proving that wrong on home soil. That is a real milestone, and Filipino founders should take a moment with it.Then I put the investor hat back on and read the cap table out loud, because Real. Raw. Relatable. means I do not just clap at big numbers.GCash is not a scrappy startup three friends built in a Makati garage. Mynt is a joint venture between Globe Telecom and the Ayala group, one of the most powerful families in the country, and Ant Group, the fintech affiliate of China’s Alibaba. The anchor buyers flying in are the giant American asset managers. So the biggest technology listing in Philippine history is, honestly described, a telco and a Chinese fintech giant selling a slice of their joint venture to Wall Street.That is not a criticism of the deal. It is a great deal, and GCash is a great company. It is a question about the pattern. If the only way to a landmark listing is to already be owned by a conglomerate and a foreign tech giant before you start, what exactly does that prove for the founder with no conglomerate behind them?Across the region in the first half, there were 47 listings raising about $3 billion. Healthy on paper. But reliable public liquidity for a venture-backed technology company still exists on a very short list of exchanges. Malaysia will point out that Bursa has been busy, and SkyeChip showed a local chip designer can list at home. Fair. It is still the exception. For most of the region, the loud door is not actually on offer.The public door is open. Just notice how narrow it is, and who already has a key.Three. The quiet door is a grocery aisleMost exits here do not happen with a bell and the start of public trading. They happen with a strategic buyer writing a cheque and quietly absorbing your company. Trade sales are the workhorse. And the clearest picture of this entire market I have seen is a story about groceries.Back to Navis. More than a decade ago, they started putting together a group of premium Malaysian supermarkets under a company called The Food Purveyor: Village Grocer, Ben’s Independent Grocer, BSC Fine Foods and a couple of others. This month they closed the sale for about RM1.66 billion. Good outcome, clean exit, the kind of return that keeps a fund alive.The buyer? CP Axtra, the Thai company that runs Lotus’s. And this is where one deal stops being one deal and starts being a pattern, because this is not the first time CP has gone shopping in Malaysia.Rewind to 2020. CP Group bought Tesco’s entire business in Thailand and Malaysia for $10.6 billion, one of the biggest deals in Asia that year. The Malaysian piece alone was valued at around $3 billion. Seventy-four Tesco stores were rebranded as Lotus’s.Follow the timeline. In 2020, CP buys the value end of the market, the big hypermarkets. In 2026, CP buys the premium end, the shops where the affluent city crowd does its weekly run. Put them together and one Thai conglomerate now has more than 120 outlets across Malaysia, covering everyone from the most price-sensitive shopper to the most comfortable. Top to bottom. The whole aisle.And it is not only CP. The other big premium chain in Malaysia is Jaya Grocer. Grab bought a majority of it at the end of 2021, in a deal reported at RM1.5 to 1.8 billion, roughly $400 million. Grab is a Singapore company. Some Malaysians will argue that point with me, and I am going to keep calling it Singaporean anyway.So let me say the thing plainly. Malaysia’s two leading premium supermarket chains are now both foreign-owned. One Thai, one Singaporean. Malaysian operators and Malaysian investors built these businesses into category leaders, and when it was time to sell, the buyer flew in from Bangkok or Singapore. Each time.That is the exit market in one shopping trip. You build it here. You sell it there.Four. The pattern holds in techWiden out from groceries and the data backs it up. In the first half, technology M&A in the region fell to 41 deals, down 37% on the year before, according to DealStreetAsia. So even while exit value went up, the number of tech deals went down. Fewer transactions, bigger cheques. The same concentration we started with.And who did the deals that did happen? Foreign buyers completed 30 of the 41. Nearly three in four. Domestic acquirers managed eleven. Japanese corporates, Chinese groups, regional conglomerates l… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Somebody is going to stand on a stage in Singapore this month and tell you two things. Southeast Asia now has more than 60 profitable tech startups. And the region is in the middle of a $4 billion AI boom.Both numbers are true. Both are also lies. Not made up. Lies the way your uncle lies at dinner, where every word checks out and the whole thing is still nonsense.So I am going to tell you up front where this lands. The most profitable AI business in Southeast Asia is not building the model. It is not even the thing people are calling the AI boom. It is teaching people how to actually use it. That is a services business. It gets paid on day one, or net 30. And it is the one lane where being a follower is not a weakness. It is the strategy.I am writing this from KL with the haze back, the Twin Towers invisible from three streets away and a throat that sounds like I gargled a satay grill. We cannot see through the sky this week. We can still see through the press releases.One. The 40 people who never logged back inThis did not start with a report. It started with watching the same movie play out across my portfolio and my network.A company I am close to spent good money last year buying every AI tool you can name. Seats for the whole team. I did the same thing myself. I had so many subscriptions I lost count, and I justified every one as my R&D budget.Fast forward to today and ask how it is going. Past the slides, the honest answer is this. A handful of people went fully red-pilled and got the lift. The rest logged in once, maybe twice, felt a bit confused or a bit silly, and quietly went back to doing the job the way they already knew how.Nothing was wrong with the tools. The tools are incredible. What was missing was the boring part. Nobody sat down with 40 people and taught them, in plain language, for their actual job, how to make the thing useful before nine o’clock on a Monday.Once you see it, you see it everywhere. Startups, SMEs, corporates. The gap is not the model. The gap is the person in the chair who was never taught, and was too embarrassed to say so.Multiply that person across 680 million people and you do not have a technology problem. You have the biggest teaching job this region has ever faced. And where there is a job that big that nobody has done yet, there is money.Two. Take a wrench to the headline numbersFirst, the 60-plus profitable startups. It comes from a single list, quoted everywhere, and nobody says who is on it or how profitable is defined. I sanity-checked it against my own portfolio and I would apparently be a meaningful chunk of the region’s total. I am a good solo GP. I am not that good.Here is what I will concede. Directionally, it is right. I sit across from early-stage founders every week, and genuinely profitable venture-backed companies are less rare than they used to be. The capital drought forced it. Treat the number as a direction, not a fact.The second one is worse. Native AI startups in the region raised about $4.1 billion so far this year, roughly double all of last year. Pop the champagne.Now pull the thread. Kling AI, the video generation unit of Beijing’s Kuaishou, raised a $2.8 billion Series D. That one round is about 68 percent of the entire “boom.” Strip it out and you are looking at a fraction of the headline. The number of rounds actually fell, from 41 last year to 23 this year. That is not a boom. That is one cheque and a thinner deal count.Of what is left, almost all of it lands in Singapore. With the usual caveat I will keep repeating until it stops being true: half the region is incorporated in a Singapore holdco, so the geography in these tables is partly an accounting artefact.So put both numbers down. Neither tells a founder in Manila or Bangkok where to make money in AI this year. Here is the rule I want you to carry for the rest of this piece:Do not count logos on a slide. Do not count dollars in one giant round. Count who sells a thing and collects cash.Three. AI projects do not fail. They stall on people.We have all seen the MIT-style reports on enterprise AI projects that never deliver a return. I do not think most of them fail, exactly. They stall. And not because the model is not smart enough, or the tool is badly designed. They stall because nobody knows how to use it, nobody trusts it, and the pilot dies quietly in a slide deck.If you have ever rolled out a CRM at a growing company, you know this movie. The software was never the hard part. Changing the daily habit was.Research on the roughly $400 billion corporate learning market lands on the same point: workforce readiness, not technology, is what blocks most enterprise AI. One survey has three in four companies saying they cannot keep up with their own demand for new skills. They have the tools. They have the budget. They do not have the drivers.That flips the story. If the model is not the moat and the model is not the blocker, the bottleneck in the entire AI economy is human. It is a teaching problem. A change management problem. A get-accounts-payable-to-trust-the-tool problem. That is not a San Francisco problem. That is an on-the-ground, local, human problem. And being close to the ground is one of the few things we are genuinely good at.Four. Sell shovels, not a prayerThe AI training and enablement slice of corporate learning is somewhere in the six to seven billion dollar range today, heading toward something like 18 by the end of the decade. Estimates vary and I am not going to pretend to precision. Every serious forecast points the same way: up and to the right, fast.Here is why I care. Teaching people is a services business, and services get paid differently. No eight-year burn. No praying you hit an inflection before the money runs out. A company signs a purchase order, you deliver, you invoice, you get paid. Assuming a good payer. We have all met the other kind.This is the picks and shovels trade of the AI era. You can run at the hills and maybe strike gold. Or you can sell shovels to everybody running, and get paid whether they find gold or not. You do not need a frontier lab or a $200 million round. You need expertise, a curriculum, a customer and a purchase order.That is a business. Not a bet.Five. Three kinds of buyer, all moving at onceDemand for this is not spread evenly around the world. It is concentrated here. Surveys have roughly 96 percent of Southeast Asian employers prioritising upskilling, against around 85 percent globally. Young workforce, fast adoption, hundreds of millions of people who came online mobile-first and now have AI in their pocket from day one. The instinct that let this region skip the desktop and skip the credit card is now pointed at AI.And this is not a prediction. Two of these moves landed this month while most people were not looking.Individuals. On 16 September, Singapore rolled out more than 200 AI courses under SkillsFuture, and citizens who take one get six months of a premium AI tool for free, so they can actually practise. A government putting shovels directly in people’s hands.Educators. ASEAN education officials endorsed AI Ready ASEAN, backed by Google.org and the ADB, moving from awareness into applied learning with a target of more than 1.7 million students and teachers by the end of 2028. That is not a webinar. That is a regional workforce being built on purpose.Governments. Here at home, Malaysia’s national AI skilling push with Microsoft, Microsoft Elevate, has already reached 80,000 learners from its pilot. The part I like is who it includes: educators, small business owners, civil servants, even retired servicemen and women. That is a whole-of-country bet that the bottleneck is people and the fix is teaching.A word to my friends in the Philippines, because this one is yours to win. The youngest population, the strongest English, and a workforce that already trains and supports the rest of the world for a living. You have done the BPO. You have done the data annota… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

This week a guy who, as far as anyone can tell, had never posted anything in his life put up a thread about artificial intelligence and got 170 million eyeballs on it in five days.A former Anthropic employee, or so the byline says. Within 48 hours you had Senator Bernie Sanders talking about banning superintelligence, market people calling for a bloodbath on Monday morning, and half my group chats forwarding the same screenshot to each other.Then, almost on cue, the chief executive of one of the biggest AI labs on earth published an essay saying, and I am paraphrasing, we need to slow this thing down before it gets away from us.And then China told him to get lost.So here is the question I want to sit with. Not “is AI going to kill us all.” That is the wrong question, and frankly it is the question everybody wants you asking, because it sells. The question is this. When the most powerful people in the most powerful technology of our lifetime suddenly all agree you should be afraid, or suddenly all agree you should not be, who actually benefits from that?And the second one, the question that matters if you are reading this from KL, Manila, Bangkok, Jakarta or Singapore. While the big boys fight about the brakes, are we building this future, or are we just being told what the rules are?One. Where I stand, so you knowLet me put my cards on the table before I say another word, because I am about to be skeptical of a lot of people in this piece, and you deserve to know where I am coming from.I am an optimist on AI. Full stop. I invest in it. I use it every single day, in my fund, in my other businesses, in how I read the market. I think it is one of the best things to ever happen to a small team trying to compete against a large incumbent. If you are a founder in this region with four people and a good idea, this is the closest thing you have ever had to a fair fight.So I am not here to scare you.But optimism is not the same thing as being naive, and this is the part people get wrong. Every powerful technology in human history arrived with bad actors attached to it. Every single one. Fire, gunpowder, nuclear fission, the internet. Even the ATM got used for fraud. Cheques got used for fraud. The tool does not decide. People do.There will always be rogue states. There will always be criminals. There will always be somebody who wants to take the sharp end of a good thing and hurt someone with it. That is not an AI problem. That is a human problem, and it is as old as we are.So hold both of these at once, because I am going to keep coming back to it. I am bullish. I am also clear-eyed. Those are not opposites. Anybody telling you that you have to pick one is selling you something.Two. Panic has sponsors nowBack to our mystery man and his 170 million impressions.Here is what should bother you about that thread, and it has nothing to do with what he actually said. Multiple outlets that dug into it came away thinking the virality itself was manufactured. An account with basically no history, suddenly spiking on numbers that do not behave the way organic posts behave.In plain language: somebody may have paid to make you panic.I do not know that for certain, and neither does anyone else, and that is exactly the point. We now live in a world where the fear itself is a product. Somebody can build it, ship it and sell it. Whether the goal is attention, influence, or moving a stock on a Monday morning, panic has sponsors.So when a piece of content seems engineered to make your stomach drop, the correct response is not to feel the fear and forward it to the family group chat. The correct response is to ask a boring question. Who wanted me to feel this way, and what do they get if I do?That is not cynicism. That is media literacy in 2026. And it applies just as hard to the calm, reassuring voices as it does to the scary ones. Keep it in your pocket, we need it in about two minutes.Three. Sincere and self-serving are not oppositesOn 12 September, Dario Amodei, chief executive of Anthropic, published an essay called “We Must Pace the Frontier.” Just under 4,000 words, which by the standards of this genre counts as restraint.The core argument is reasonable on its face. He is not saying stop, and he is careful about that. He is saying slow the rate at which these models get more capable, so that the safety work and the outside checking can keep up. His worry is recursive self-improvement, which is a fancy way of saying an AI that gets good enough at building the next AI that the whole thing starts accelerating on its own, faster than any human can supervise it. His ask is that each generation gets aligned and checked by independent evaluators before anyone sprints to the next one.Honestly, as reasoning, that is not crazy. If you were building a bridge and you had a machine that could design the next, taller bridge by itself, you would want to inspect a few of them before you drove your family across.But here is where you put the glasses back on.When the leader of one of the two or three companies out in front says we should all slow down, bring in third-party evaluators and regulate this properly, what world is he also describing? He is describing a world where the companies already ahead get to lock in their lead. Where the rules get written around the way the current leaders already do things. Where it becomes a lot harder and a lot more expensive for a challenger to catch up. Regulation is a wall, and walls protect whoever is already inside the castle.I am not accusing him of dishonesty. This is the nuance I actually want you to take away. He can be completely sincere about the safety risk, and it can also happen to be extremely good for his business. Both of those can be true at the same time. Sincere and self-serving are not mutually exclusive. Grown-ups can hold that.So I do not clap and I do not boo. I note it. A safety argument from a company that benefits from a safety regime is still worth listening to. It is just not scripture.And by the way, some of the reporting says other lab bosses nodded along with him. Be careful there. “Signalled agreement” is doing a lot of work in those headlines, and I have not seen anything I would put my name to on exactly who endorsed what. So I am going to leave it alone rather than build a story on a soft source. You should demand the same from anyone reporting this to you, including me.Four. The paragraph the Western coverage walked pastHere is the part of that essay most of the Western coverage glided over, and it is the part that matters most for us out here.The same essay that says let us all slow down together for safety also says, and I am being fair to the text, that a Chinese lead in AI would be a grave danger, and that the United States should keep restricting the sale of the most advanced chips and chipmaking equipment to China.Read those two things back to back. Slow down, everybody, in the name of global cooperation and safety. And also, we should keep choking off one specific competitor’s access to the hardware.China noticed. Of course China noticed. Their foreign ministry called it fearmongering and said, more or less, that confrontation and vicious competition will wreck any chance of real global cooperation on AI. Global Times called the essay a Cold War playbook dressed up as safety. The commerce ministry said the real game is the US trying to hold a monopoly on the industry.Now, same rules apply. I am not going to sit here and tell you Beijing is the innocent party and the noble truth-teller. A government framing a safety debate as an anti-China containment plot is also incredibly convenient for that government. It rallies their own industry. It plays well across a developing world that already carries some anti-American sentiment. And it lets them skip straight past the actual substance of whether frontier AI is dangerous. A rebuttal can be fair and strategic at the same time. Again, hold both.And while we are … This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

Last week one of the firms that taught this region what seed capital even looks like quietly admitted that it will not raise another Southeast Asia fund.500 Global showed up in KL, in Jakarta, in Bangkok more than a decade ago, when honestly almost nobody in the Valley could find these cities on a map, let alone wire money to them. They ran the accelerators. They wrote the small early checks that nobody else was writing at the time. For a lot of founders here, a 500 check was the first time a real Silicon Valley name said yes.DealStreetAsia reported on 31 August that they are not raising another dedicated Southeast Asia fund. Future bets here come out of the global pool. A smaller local team, mostly managing and winding down what they already own.To be fair, and I am going to try to be fair the whole way through this, Khailee Ng pushed back a few days later. Still committed to the region, still managing the existing funds, still looking at new mandates. I believe him. He is tied to this place far more than I am, because I was not born here. And both things can be true at once. You can be genuinely committed to a region and still decide you will not raise a dedicated fund for it.Hold that thought, because the gap between what people say and what they will actually write a check for is the entire point of this piece.And this is not a 500 story. That is just the way in.One. Two canaries, one coal mineRewind and look at Y Combinator, the most famous accelerator on the planet. In 2021 and 2022 their batches swelled to something like 400 companies. Founders from everywhere, checks everywhere, the whole world invited.Then under Garry Tan they cut the batch back to roughly 100. They stepped back from late stage. And they pulled back from the rest of the world. The Winter 2023 batch was about 21% international. The batch right before it was 42%. Cut in half. Today something like 80% of the batch is an AI company, which surprises nobody.Now look at what those two decisions have in common. The biggest early stage machine in the United States, and one of the most important funds this region ever had, a decade apart, looked at the whole wide world and reached the same conclusion. Smaller. Closer to home. Pointed straight at AI.That is the tide going out. Two canaries in the same coal mine, singing the same note. This piece is about what the tide leaves behind here.Two. The boom is four companies wearing a trench coatStart with the number everybody is celebrating, because that number is part of the tell.Global venture capital just had a record six months. Around $510 billion in the first half of 2026. That is more than all of last year in half the time. If you only read that one headline, you would think we are living through the single greatest funding boom in the history of the industry.Put your skeptical hat on with me, because here is the number that actually matters. Artificial intelligence took roughly 77% of all global venture dollars in that half year. Two companies you already know, OpenAI and Anthropic, raised somewhere around $217 billion between them.Say that a different way so it lands. Two companies, essentially in California, took about 43% of all startup funding on planet Earth. The US on its own was about $412 billion, and 86% of that went to AI.Now the caveat, because I promised I would and because the whole brand of this show is that I do not read you a number without telling you what is wrong with it. These figures move depending on who is counting and what they choose to count. Different reports land on slightly different numbers, so treat them as directionally correct rather than precise. And the definition of an AI company right now is extremely generous. Anyone with an API wrapper and a login screen qualifies. Out here we are throwing data centres and chip companies into the same bucket, and it is a fair question whether hardware belongs in an AI funding total at all.Every version of the number tells the same story anyway. The money is concentrating into the US. Inside the US it is concentrating into AI. Inside AI it is concentrating into about four companies, mostly the two I just named.So when a fund manager gets on a stage and tells you venture is back, ask the simple question.Back where?Strip out those few mega rounds in San Francisco and the rest of the planet is not in a boom. Some markets are recovering. That is not the same thing. The oxygen got pulled into one room, and we are not in that room.Three. This time they have something better to do at homeHere is the part that should sting, because it is a change from the old story.This is not the usual complaint where American money ignores us because it does not understand us. This time the US money has something better to do at home. So ask yourself honestly: why would capital that has that choice get on a 14-hour flight to underwrite a logistics startup in Kuala Lumpur, when it can walk three blocks from the office and put a check into a frontier lab that might be worth a trillion dollars?It would not. It is not. That is not a slight against Southeast Asia. That is gravity. The returns moved, so the money moved. Capital is not loyal and it never was.Even the money that does show up in our numbers is not always what it looks like. You will hear that Singapore now captures something like 78% of all Southeast Asian startup funding. Seventy-eight percent, one city. Be careful with that figure too, because a chunk of it is not activity, it is address. Companies born elsewhere domicile a holding company in Singapore for the tax and the safety, and the raise gets counted as Singapore.Strip out the holding company effect and the infrastructure deals, and the amount of genuine early stage, founder-led money landing across the rest of this region is thin. Thinner than the conference panels will tell you.Four. Nobody is funding the fundsWhich brings me to the question the rest of this is really about. If the tourists have gone home to chase AI, and the money that stayed is huddled in one city, who is actually left to fund the next founder in Manila, in Ho Chi Minh, in Kuala Lumpur, in Bangkok?So I went looking at who is raising money to invest in this region. Not investing. Raising. That is the leading indicator, and almost nobody talks about it, because a lot of it is non-public by regulation and quite a lot of it is non-public by design. A fund that cannot raise cannot write checks next year, no matter how confident it sounds or how good the website looks.Here is what you find, and it should stop you.In the first half of 2026, I could not find a single dedicated Southeast Asia fund that reached a final close. Not one. Only one Southeast Asia focused venture fund closed at all in that window. And as of August, no Southeast Asia headquartered venture manager had reported a final close for the year.My data set may well be incomplete. Some of the paid sources I do not subscribe to will show something I cannot see. But the word on the street matches the numbers I can get to. It is tight.Let me translate that out of finance language. The machine that raises the money, that then funds the founders, has basically stopped for the year.Think about how a fund actually works. A general partner goes to family offices, pension funds, high net worth individuals, sometimes corporates, and at the larger end the sovereigns. That is the raise, and it takes a year, two, sometimes three. Then they spend the following years deploying it into startups.So if nobody is closing a fund in 2026, that is not a bad year. That is a hole in the checks founders will feel for the next several years. Regional deal value is already down, and the tank that is supposed to refill it is running close to empty.Keep that one in your pocket for the next time somebody at an event talks glowingly about this region’s bright future. Bright futures are funded in advance, and right now almost nobody is funding the funds.And before you te… This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com