Singapore-based AI start-ups draw most funding in Southeast Asia: report

Singapore is leading the AI race in Southeast Asia, a region emerging as an artificial intelligence hotspot as start-ups draw significant investments and major players seek expansion, according to an industry report.\nSome 680 AI start-ups attracted more than US$2.3 billion of investments across Southeast Asia in the 12 months to June, accounting for 32 per cent of private funding in the region, research from Google, Singapore’s state investor Temasek and management consultancy Bain & Company released on Tuesday shows.\nSingapore led the pack, with 495 start-ups having secured US$1.31 billion in funding based in the city state, according to the e-Conomy SEA Report 2025.\nFlorian Hoppe, a partner at Bain, told This Week in Asia he expected the growth to continue. “It’s easy to access Singapore. It’s an East-meets-West place for many people, so we’d expect it to continue as an easy funding hub.”\nPointing to the region’s multiculturalism as a selling point to fuel AI’s growth, Hoppe said: “Asean is extremely resource-rich and has a young and upcoming population. That’s a big upside of Southeast Asian companies, they learn to deal with different environments and potentially scale to a bigger stage globally.”\nFock Wai Hoong, head of Southeast Asia at Temasek, said the region’s ability to adopt technology quickly and the fast pace of AI’s integration in businesses made it an attractive investment destination.\nWith more than 4,600 megawatts of data centre capacity in the pipeline, Southeast Asia’s capacity is expected to grow by 180 per cent upon completion of planned projects, ahead of the 120 per cent rise projected for the rest of Asia-Pacific, according to the report.\nData centre capacity is expected to grow the most in Malaysia, where 2,415 megawatts of new capacity is planned.\n\nTech titans have started to build cloud infrastructure and expand data centres into the region, with capital investments from Google, Microsoft, Nvidia and Amazon Web Services.\nSapna Chadha, Google’s vice-president for Southeast Asia and South Asia Frontier, said: “There’s a local pull, from a data localisation perspective, that’s creating [demand for data centres] in Thailand and Indonesia.\n“On the hardware side, 5G is expanding. The grid has become more reliable in the region, and this is creating the right and necessary conditions for growth.”\nHoppe urged regional cooperation and seamless regulations amid the fast-paced transformation across industries driven by AI. “One of the risks we’re seeing is [Asean] becoming a region of warehouses and data centres. We need to have economic centres of gravity.\n“Any transformation like this has risks and opportunities, and we need to build companies here that can drive and manage change.”\nThe report – an overview of the region’s digital economy and tech developments – was expanded this year to cover Brunei, Cambodia, Laos and Myanmar, in addition to Indonesia, Thailand, Vietnam, Singapore, Malaysia and the Philippines.\nThe 15 per cent rise in private funding for AI investments in the region to US$7.7 billion in the 12 months to June, however, lagged the 25 per cent growth in private equity and venture capital investments globally.\n\n\nSingapore is projected to record the largest growth in funding for the next five years, followed by Vietnam and Malaysia, with sectors such as software, services, AI and deep tech attracting the most funds.\nSingapore last month announced an initiative to help AI start-ups scale more quickly in the region and globally, in a partnership with Microsoft and the National University of Singapore.\nMore than 150 start-ups are expected to benefit from the initiative, which will allow them to receive mentoring, connect with investors and build on Microsoft’s cloud computing platform while refining their products.\nThis was part of Singapore’s plan to be a hub connecting Asia’s growth markets with the rest of the world, as well as a platform where talent and capital meet to address global challenges, Deputy Prime Minister Gan Kim Yong said at the initiative’s launch last month.\nOnline spending in the region is expected to rise by 15 per cent to US$300 billion in gross merchandise value this year from 2024, more than seven times larger than in 2016, according to the report.\nArtificial intelligence is among the drivers of the increase, with 75 per cent of consumers having used tools such as image search and chatbots to help with their purchases. AI-assisted recommendations influenced 62 per cent of purchases in e-commerce.\nChadha urged businesses in the region to utilise AI to maximise efficiency. “AI integration and intelligence adaptation are no longer future concepts; they’re a real present-day competitive advantage,” she said.\n