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 mirage
The 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 it
Now 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 raise
Numbers 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 tax
The 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 can reach $3.5 million of revenue without leaving home. They could reach $100 million without leaving home.
A company here gets asked to prove three markets. That is the real test gating a regional Series A: not just revenue, but evidence you can cross borders. The whole thesis of a Southeast Asian company is that it is regional, and an investor writing a Series A cheque is buying the regional story, not the single-country one. So the question is never only how much revenue. It is how much revenue, in how many markets, and can you do it again in the next one.
Here is what nobody puts on a slide: what market number two actually costs.
• A local entity, which means lawyers and a registration process measured in months, not weeks.
• Local payment rails, because money moves differently in Indonesia, the Philippines and Thailand, and your billing has to speak all of them, e-invoicing mandates included.
• Localisation that goes well past translating the buttons: tax rules, invoice formats and compliance quirks that differ in every single country.
• A first hire on the ground who actually knows the market, because selling into Jakarta from Kuala Lumpur over video calls does not work, and everyone who has tried it knows it.
Add it up and entering one new market properly is a 12 to 18 month project that swallows a serious chunk of your round and a serious chunk of your attention. The Series A test asks you to have done it two or three times before anyone writes the cheque.
Look at what that does to Mei. The American founder gets to $3.5 million by going deep in one market. Mei is asked to go wide across three, each one more than a year and a large pile of cash, on a seed round that was never sized for it. That is the border tax. It is invisible in the headline numbers, and it is the single biggest reason a good regional company stalls between seed and Series A. Not product. Not revenue quality. Geography, and the cost of crossing it.
Five. The missing middle, and the bridge trap
The third wall catches you even after you clear the first two.
Say Mei does it. She grinds into a second and a third market, lifts her revenue, builds the regional story. Who writes the cheque that takes her from there to real scale? Right now, in this region, almost nobody local.
Chua Kee Lock runs Vertex, one of the most established investors in this part of the world, and he is not a man who reaches for drama. In late September he told DealStreetAsia that “not only has the early-stage VC market dropped significantly, but that whole middle layer of this stage is essentially hollow.” He called it a breakdown. Regional firms, he said, now look as far as Japan, Hong Kong and mainland China for growth co-investors. The late-stage money chases a handful of megadeals. The seed money is small and getting more selective. The growth capital in between, the money meant to catch a company between its first cheque and its scale, has thinned to almost nothing locally. The same reporting has the median Series A in the region shrinking to $8 million from $11.6 million in late 2025.
Watch what the smartest early investors are doing in response, because it tells you they see it too. Peak XV, the firm that used to be Sequoia’s arm out here, raised the ceiling on its Surge seed programme from $3 million to $5 million per company at the end of September. Rajan Anandan said it plainly: the bar for a Series A has gone up significantly. Read that honestly. They are putting more money in at seed precisely because they know how long and how lonely the walk to the next round has become. Extra supplies for a longer trek, because the resupply station in the middle may not be there.
Now the trap that catches founders in exactly this spot. The bridge round.
When the Series A does not come and runway is short, the tempting move is a bridge. A little more from existing investors, same terms or close, to buy another year. Sometimes a bridge is a genuine bridge to a real milestone and a real round. Very often in this market it is a plank extended over the same gap, and at the end of the plank is the same Series A that was not there before, except now with more investors, more dilution, more pressure and less time. A bridge makes sense only if you know exactly what milestone sits on the other side and you have evidence someone will fund it. If you are raising one because you ran out of road and hope the market turns, you are not buying time. You are borrowing it at a terrible rate.
If you are an angel or an emerging manager reading this, the flip side is the opportunity. The mispricing in this region is not at seed, where everyone is crowding into the same AI deals. It is in the abandoned middle: companies that did everything right, with real revenue across real markets, and nowhere local to land. If you have the capital and the patience to be the one who catches them, that is where the returns are hiding. Everyone is standing at the shiny end of the room. The value is in the part they walked past.
Six. The AI objection
If you have been reading closely you have the obvious objection ready. Kevin, you keep saying the money is going to AI. I am building in AI, or I could be. Is that not the way through?
Honest answer: partly, and less than you think.
Yes, the AI rounds are where the big cheques are, here and everywhere. If you are genuinely building something hard, you can raise a bigger seed than a normal software company, and some of that capital reaches this region. That is real. I am not telling you to ignore where the money is.
Two things to be clear-eyed about. First, most of the enormous AI cheques are not coming here at all. They go to a small number of labs and model companies, overwhelmingly in the US and China, founded by people with very specific pedigrees. When you read that global AI funding is at a record, you are mostly reading about a dozen companies you could name, and none of them is in Jakarta. The odds your AI seed looks like theirs are genuinely low.
Second, and this is the part founders here miss, a thin layer around somebody else’s model is not a defensible company, and the investors who matter know it now. Eighteen months ago you could raise on “AI for X” and a demo. That window has closed. There is value in a wrapper, but the wrapper itself has to carry a value proposition that is more than a user interface on someone else’s model. If anything, the bar for an AI company is higher than for normal software, because everyone can see how fast a feature gets copied when the model does the heavy lifting.
So, the exception stated honestly. AI is a real lane if you have genuine depth, a real wedge, and something that gets better with use in a way a competitor cannot instantly clone. For most founders here it is not an escape hatch from the three walls. It is the same three walls with more competition and a more skeptical room. Build in it because you have an edge, not because that is where you heard the money was.
Seven. Two founders
I think in people more than in charts, and I suspect you do too.
The first founder reads the American playbook literally. They hear $3.5 million, they hear three times a year, and they decide the answer is to burn hard and chase the metric. They raise a seed and spend it fast on sales and marketing to force the curve up. They stay in one market because that is where the quick revenue is, and they bet that if the number gets high enough the Series A will come. Sometimes it works. Usually, here, it does not. They hit the border question with an empty tank, one market deep and out of money, having optimised for a number priced somewhere else. They built for a room they were never going to be in.
The second founder accepts the terrain they are standing on. They raise a seed and treat it like it has to last, because it does. They pick their two or three markets deliberately and early, and start the slow, expensive work of crossing borders while they still have cash and calm to do it properly. The revenue curve looks less exciting on a slide, because the money went into entity setup and local hires instead of a growth spike. But two years in, they hold the one thing that actually gets a regional Series A written: proof the model travels. Not the flashiest company in the batch. The one still standing when the flashy ones ran out of road.
This is not an argument for less ambition. The disciplined, multi-market, capital-aware founder is the one who survives the three walls. The burn-to-a-foreign-metric founder becomes the cautionary story at a conference. The terrain rewards patience and punishes imitation. Build for the terrain you are on.
Eight. What I would do on Monday
Enough diagnosis. If you are building here right now, this is what I would actually do.
1. Raise your seed for 30 months of runway, not 18. It sounds conservative. It means raising more or spending slower, and both hurt. Do it anyway. The walk to a Series A stretched past two years in the best-funded market on the planet. Assume it is longer here, and give yourself room to arrive without a desperate bridge. Runway is not caution. In this market, runway is strategy.
2. Pick your two or three markets on day one, and make crossing into the second an explicit milestone of the seed round, not a someday ambition. Budget the entity, the payment rails and the local hire from the start. One market deep is a lifestyle business here, and there is no shame in that, but it is not a venture Series A story. Three markets working is.
3. Do not run your company against a San Francisco revenue number. A foreign investor will quote $3.5 million at you like it is the law of gravity. Know the number exists so you are not surprised in the room, but do not let it set how you spend. Customers in Kuala Lumpur, Manila and Bangkok do not pay like customers in San Francisco, and pricing your burn as if they do is the fastest way to set your runway on fire chasing a target that was never yours.
4. Be honest about the bridge. Before you raise one, write down the single milestone it gets you to, and the name of the investor who has told you they will fund that milestone once you hit it. If you cannot write both down, you are not raising a bridge. You are delaying a hard decision with other people’s money and your own equity.
5. Pick the AI lane only if you have a real edge in it. Not because that is where the headlines are. The headlines are about a dozen companies that are not you.
The bow
Everyone is calling this a Series A crunch, as if it were weather. It rolls in, ruins a season, passes, and all you have to do is wait it out. In San Francisco, maybe. Maybe it is cyclical there, and the floor they deleted gets rebuilt when the mood turns.
Here it is not weather. Here it is the building. We never built the stage of the market that is supposed to catch a company between its first cheque and its scale. Seed has always been thin. The next layer has always been thinner. The thick layers sit at the very end, around a handful of megadeals. So when the hot money comes back, and it will, because it always comes back for whatever is shiny that year, it will not rebuild a middle that was never really there. It will chase the next shiny thing and leave the same gap behind.
Which means the founders who make it through the next two years will not be the ones who raised the biggest seed or chased the loudest metric. They will be the ones who understood the terrain, planned for a longer and lonelier walk, spent their money like it had to last, and could stand in front of an investor and prove they had crossed a border while everyone around them was still quoting a San Francisco number at a Southeast Asian cap table.
Seed is booming. Not here. Pretending otherwise is how good companies quietly run out of money in month 19.
If you are sitting on a seed round right now, or about to raise one, I want to know two things, and I read every reply. How long is your runway, really, not the optimistic version? And have you started on market number two? Tell me where you are. I want to know who is still standing.
This piece accompanies this week’s episode of SEA of Startups. Real. Raw. Relatable. Listen on Spotify, Apple Podcasts, or YouTube, and subscribe to the newsletter at seaofstartups.substack.com.
