Indonesian Startups Struggle to Secure Funding as Singapore Attracts Investment
Funding for startups in Indonesia has seen a drastic decline throughout 2025. This phenomenon is attributed to a weakening of investor confidence in the domestic digital business ecosystem compared to neighboring countries.
Foreign investors are now more inclined to invest in Singapore. A report from the Southeast Asia Startup Funding Report 2025, released by DealStreetAsia, confirms this regional disparity in investment allocation.
Throughout the period, total startup funding in Indonesia reached only US$340 million, equivalent to Rp5.72 trillion, or just 6.3% of the total investment value for startups across Southeast Asia.
1. Singapore’s Dominance in Funding
Investment figures in Indonesia still lag significantly behind Singapore. Singapore dominated startup funding in Southeast Asia throughout 2025.
The report details that Singapore recorded 283 startup funding transactions, with a total funding value of approximately US$4.20 billion, or Rp70.75 trillion, during the period.
This significant difference in funding signals a need for comprehensive regulatory improvements to attract venture capital from around the world and revitalize the investment climate for technology companies in Indonesia.
2. Regional Financial Ecosystem Hub
Economist at the Center of Economic and Law Studies (CELIOS), Nailul Huda, analyzed this phenomenon. According to him, Singapore has become the primary financial hub in Southeast Asia for many multinational digital companies.
The mature financial ecosystem makes it attractive for large technology companies to establish their headquarters there. “Companies like Meta and Google have their Southeast Asian headquarters in Singapore,” said Nailul Huda.
In addition to large technology corporations, many global Venture Capital (VC) firms have also chosen Singapore as their hub. The favorable regulations make these venture capitalists feel more secure and comfortable operating their businesses in the country.
3. Strategy for Accessing Global Funding
The higher investor confidence in Singapore has forced startups to adapt. Many Indonesian startups have established joint ventures legally based in Singapore to facilitate access to foreign funding.
Venture capital often passes through Singapore before entering the domestic market. “There are several rules and incentives in Singapore that make development there more advanced than in other countries,” explained Nailul Huda.
Financially, Singapore’s business climate offers the regulatory certainty that large investors seek. Investment flows from venture capitalists generally pass through Singapore before gradually flowing into Indonesia or Malaysia.
4. Shift in Funding Trends
In terms of funding stages, the recovery in transactions during the second half of 2025 has shifted significantly. The majority of funding is now focused on later-stage funding, which typically requires more mature business fundamentals.
Conversely, the volume of early-stage funding transactions has gradually decreased. This sharp decline in the second half of the year has significantly impacted the Indonesian startup ecosystem, which has long relied on early-stage funding.
This shift in global investor risk appetite poses a significant challenge for local founders. Domestic startups are urged to quickly achieve clear profitability to survive the threat of funding liquidity in the future.
5. Prospects for the Rise of Financial Services
Throughout 2025, Southeast Asia saw the emergence of only four new unicorn startups. The majority of these companies with valuations above US$1 billion are based in Singapore, not Indonesia.
The four new unicorns are Ultragrn.ai, Synut, Thunes, and Ashita Group. They are actively involved in key strategic sectors such as green technology, cross-border payment services, and integrated manufacturing and trading industries.
Despite the lack of new unicorns, there is great hope for the domestic digital financial services sector in the future. “The financial sector, such as digital banks, Buy Now Pay Later (BNPL), and online lending, can still support our digital ecosystem,” he concluded.