Start-ups Can Expect Brighter 2025 After Prolonged Funding Winter

Industry Players See Buoyant Funding Landscape, Driven by Investments in Region

- Timothy Goh

Start-ups are expected to find it easier to secure funding in the year ahead after a tough 2024 which saw rising costs, muted investor interest and geopolitical developments hampering their growth.

Industry players told The Straits Times that the local funding landscape is poised to be buoyant in 2025, driven by expected rate cuts and more investments targeting South-east Asia.

Start-ups that can show sustainable growth will have a competitive edge, given that investors have generally grown more prudent in recent years, they added.

"Investors are prioritising companies with strong fundamentals, clear unit economics and proven market traction - this means that start-ups have to demonstrate a clear path to profitability and sustainable growth to secure funding," said Mr Chua Kee Lock, chief executive of Temasek-backed venture capital firm Vertex Holdings.

This comes after a prolonged funding winter that has gripped the global start-up ecosystem since 2021, as persistent high interest rates and geopolitical uncertainty, due to events such as the Russia-Ukraine war, drove investors towards safer assets.

Mr Chua said that South-east Asia and specifically Singapore will continue to attract significant venture capital funding in 2025 despite these global challenges.

"Singapore's strong fundamentals and proactive government support position it as a leading start-up hub in the region."

Mr Willson Cuaca, co-founder and managing partner at East Ventures, said that funding will persist in 2025, but the money is "getting smarter".

"Success in securing funding is not about chasing and blindly throwing around the latest buzzwords like artificial intelligence (AI) in your start-up... What truly matters is addressing real and impactful problem statements as well as large addressable markets," he said.

Cloud communications start-up Toku is one firm that has experienced the shift in funding landscape.