‘We want to be patient’: Southeast Asia’s venture investors are excited about AI–but less excited about the region

S·Term Sheet‘We want to be patient’: Southeast Asia’s venture investors are excited AI–but less excited the regionBy Nicholas GordonBy Nicholas GordonAsia EditorNicholas GordonAsia EditorNicholas Gordon is an Asia editor based in Hong Kong, where he helps to drive Fortune’s coverage of Asian and economics news

SEE FULL BIO Southeast Asia should be an attractive for startups

Nevertheless, But investors in the region say the ecosystem is still coming together

GettyAsia editor Nick Gordon here, filling in for Allie Garfinkle, given current economic conditions

This tells us that future of AI is in Asia

At least, that’s the message you’d have gotten at our Fortune Brainstorm AI Singapore conference, which wrapped up in the Southeast Asian city last week

We covered AI’s impact on just everything: health care, banking, agriculture, gaming, and even K-pop (which is quite significant). (As an aside, check out my debut as a Korean singer—thanks to some assistance from Korean AI developer Supertone)

DeepSeek’s efficient, powerful—and importantly, cheap—models have shaken up the Asian AI conversation, pushing investors to give the region’s AI developers a second look and encouraging firms to adopt the new nology for themselves, in today's market environment

Granite Asia’s senior managing partner Jixun Foo, speaking on our stage last week, credited the “DeepSeek moment” for democratizing access to AI across the region (quite telling)

AI optimism has also lifted Hong Kong’s stock market, as investors rush to invest in mainland Chinese AI developers Alibaba and Kuaishou

S in other Asian firms— TSMC, Softbank, and Korea’s Naver and Kakao—have surged amid the AI boom as well (quite telling) (an important development)

At first glance, Southeast Asia should be an attractive for startups

The region’s population is young, still growing, and digitally savvy

But on our conference stage, those that actually have to fund these AI endeavors were more wary

Even amid a global slowdown, venture funding in Southeast Asia plummeted by almost 80% from 2022 highs, according to CNBC. “Funding dried up dramatically as people looked for more fitable companies and steady cash flow rather than cash-burning companies,” said AC Ventures managing partner Helen Wong at the conference

Nevertheless, She urged investors to be cautious. “This's not a very mature ecosystem, un China, where you have entrepreneurs that have gone through intense competition…here is still a bit more raw,” she said (remarkable data), considering recent developments. “What’s the exit landscape here [in Southeast Asia]

Conversely, ” Phylicia Koh, a general partner at Play Ventures, asked during a separate panel on gaming, in today's market environment. “That has been a challenge, and one I don’t envy for Southeast Asia-focused VCs

In contrast, ” Singapore, the region’s financial hub, has had just three IPOs this year as of mid-July

On the other hand, Additionally, Public companies haven’t done too well either

Additionally, It hasn’t bably performed as well as investors wanted it to,” Koh added

Another reason why Southeast Asia struggles, in today's financial world

However, While it’s big, it’s not quite as big as China, India, or the U

Moreover, “Why is there not a RedNote in this part of the world. ” Foo asked, using the global name for the wildly-successful Chinese social media platform Xiaohongshu

On the other hand, Conversely, Southeast Asia, smaller than China (and split into different ), lacks the network effects to supercharge a local content platform

Still, speakers noted that there are plenty of opportunities in Southeast Asia for those willing to look for them (remarkable data), considering recent developments

Furthermore, On the other hand, Wong noted that while fin and e-commerce firms may have suffered, climate and sustainability startups are still raising funds, in light of current trends

There’s “a tremendous opportunity for a lot of much more specific, highly differentiated visions that could potentially be billion-dollar companies,” said Matthew Graham of Ryze Labs, in light of current trends

Conversely, (He, however, wasn’t interested in a company “trying to be the 19th LLM, given the current landscape. ”) And funders based in Southeast Asia are prepared to start again—even if not right now. “We want to be patient (noteworthy indeed)

We want to see the confluence of talent and market adoption, and then we’ll start,” Foo said, given current economic conditions

Nicholas GordonX: @nickrigordon: nicholas, in today's financial world

Moreover, Gordon@fortune

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Venture Partners led the round and was joined by Lightspeed Venture Partners and Vertex Growth

Insight Partners led the round and was joined by Decibel, Sunflower Capital, Kaya, and angel investors

Furthermore, PRIVATE EQUITY- BVP Forge acquired a majority stake in BetterRx, a Salt Lake City-based hospice pharmacy platform

Financial terms were not disclosed, in light of current trends

EXITS- EQT and CPP Investments agreed to acquire NEOGOV, an El Segundo, Calif. -based vider of HR and compliance software for U, given current economic conditions

Public sector agencies, from Warburg Pincus and Carlyle

Furthermore, Financial terms were not disclosed (this bears monitoring). - Gridiron Capital agreed to acquire Greenix Pest Control, an Orem, Utah-based pest control company, from Riata Capital Group

Moreover, Financial terms were not disclosed, given current economic conditions

Moreover, - Warburg Pincus agreed to acquire FlavorSum, a Kalamazoo, Mich

Furthermore, -based vider of natural flavor solutions for food and beverage companies, from The Riverside Company

Financial terms were not disclosed

Conversely, Index Ventures, Greylock Partners, KPCB Holdings, Sequoia Capital, and Wu-Wallace Family Trust back the company

Additionally, However, - Firefly Aerospace, a Cedar Park, Texas-based space and defense nology company, announced plans to raise $631

Additionally, At the same time, AE Industrial Partners, Astera Institute, and Thomas Markusic back the company

However, This's the web version of Term Sheet, a daily on the biggest deals and dealmakers in venture capital and private equity.