Where are the opportunities in Asia’s private markets & venture landscape?

Asia's private market investment landscape presents compelling opportunities amid global economic realignments. Private market investments in the region, particularly in Southeast Asia and India, demonstrate resilience with selective capital deployment strategies gaining prominence. We examine current market dynamics, capital allocation trends between venture capital and venture debt, and emerging opportunities in secondary markets across the region.‍

Southeast Asia & India’s Venture Market Landscape: CY2024

Venture Capital

During CY2024, India stood fourth in terms of cumulative venture funding with investments of ~US$14B and continues to maintain a significant position in the APAC region, ranking second after China. The total funding in the SEA region during the same period stood at US$4B, with Singapore, Indonesia, and Thailand collectively contributing around 90% of the investments.‍

The numbers position India as one of the largest destinations for VC funding in funding in the Asia-Pacific region. The rise of high-growth sectors such as FinTech, RegTech, and Climate Finance continues to attract capital, as global investors seek new opportunities in emerging markets. Established startup hubs like Bangalore, Mumbai, and Delhi NCR continue to attract the bulk of the capital.

"Looking ahead to 2025, we see strong indications of continued revival in venture capital funding, driven by global investor interest in India's startup ecosystem.” Sohil Chand, Founding Partner and CIO of LC Nueva Fund comments.‍

He adds, “We also expect high-growth sectors such as RegTech, which enhances regulatory compliance, and FinTech, which promotes financial inclusion, to be in high demand. While solutions in climate finance and insurance targeting net-zero goals are also likely to offer significant opportunities, these trends reinforce a positive outlook for early-stage investments.”‍

Additionally, India’s secondary market is evolving as a direct function of the maturing primary market, offering investors a pathway to access established business models while enabling early backers to realize returns. This dynamic has created a liquidity engine that is reshaping the investment landscape by balancing risk and opportunity in India’s vibrant venture ecosystem.

According to Chand, “India’s secondary market is not only a game-changer for domestic investors but also for global capital. International funds are increasingly recognizing India’s potential and using the secondary market as an entry point to diversify and capitalize on the country’s economic growth.”‍

Investors are also increasingly looking to diversify their portfolios and de-risk through this market. Chand says, “When you invest in a company through secondary deals, you’re entering at a stage where early-stage risk is behind you, and the business model has been validated. For example, on our first fund, LC Nueva Fund, we prioritized startups with clear unit economics and defined paths to profitability, and many of our portfolio companies achieved or are approaching EBITDA-positive status. We then started LC Nueva Momentum Fund as a follow-on fund that focuses on reinvesting into existing high-performing portfolio companies, investing into adjacent sectors, and capitalizing on secondary market transactions. These strategies allow us to diversify our portfolio while maintaining focus on high-potential opportunities.”‍

Venture Debt

Over the last few years, startups have started to balance their equity and debt financing and consequently, venture debt has emerged from being an alternative financing instrument to becoming a strategic capital solution, particularly in an environment where equity valuations face increased scrutiny.‍

Venture debt financing has continued to post healthy growth both in Southeast and India. A recent DealStreetAsia report also observed a significant shift towards debt financing. Startups in Southeast Asia secured 16 debt deals in the fourth quarter of 2024, pushing the annual total to a six-year high of 54 deals, valued at $1.85 billion, a 150% increase compared to the previous year. ‍

“By our analysis, Southeast Asia witnessed an increase in VC funding activity during Q3 and Q4 2024, and venture debt funding in the region has continued to remain active” commented

Ankit Agrawal, Executive Director, Portfolio Manager at LC Venture Debt Fund. ‍

Examining Southeast Asia’s activity, Agrawal says, “In Southeast Asia, Fintech, Energy and Consumer sectors have led investment activity. New emerging themes related to Crypto, Enterprise Applications, Infrastructure Tech, and Blockchain are gaining significant momentum and we expect to see a surge in funding activity.” ‍

Comparatively, India’s venture debt market has also continued to grow with cumulative investments totaling US$1.2B in CY2024, a growth of almost ~50% y-o-y and contributing almost ~10% of the overall venture equity funding.

“As per our estimates, the cumulative venture debt activity in India could easily cross US$1.5B in 2025. Startups are using venture debt for acquisitions, demand generation, and sustainability-focused innovation. We expect founders to align business models for predictable growth that leverages venture debt effectively.” said Agrawal commenting on the rise in popularity of the asset class in India. ‍

Commenting on the sectors of interest he says, “In India, we’ve seen sectors such as Consumer Tech, SaaS and Fintech sustain investors’ interests in 2024. Quick commerce has also stood out, securing substantial investments from investors. We expect sustainability-tech to remain a prominent and rising theme in the upcoming quarters.”‍

The venture landscape in Asia continues to evolve, offering investors multiple avenues to participate in the region's innovation ecosystem and economic expansion. Institutional clients in Northeast Asia are increasingly turning their attention to venture debt as a compelling investment strategy, despite the lack of clear regulatory frameworks. This growing interest in venture debt stems from its unique risk-return profile, providing more stable yields and lower risks compared to equity-based investments, particularly in high-growth economies.‍

Won-Ki Kim, Global Head of Institutional Sales for Lighthouse Canton's Asset Management business

comments, "While the regulatory environment around venture debt remains ambiguous in some regions, institutional investors are becoming more willing to navigate this in pursuit of consistent returns. At the same time, there is a noticeable shift in how institutional clients view India. Rather than seeing it as part of the broader Southeast Asian landscape, India is increasingly recognized as a standalone market with distinct dynamics."‍

Investors who employ disciplined approaches, focusing on operational efficiency, sustainable growth, and strategic capital deployment, will be best positioned to generate compelling risk-adjusted returns in venture debt investments in Asia’s private markets.