Despite a constrained funding environment in Southeast Asia, one sector of the startup ecosystem is becoming increasingly difficult for investors to ignore. Deep tech accounted for 23.6% of the region’s venture-backed deal volume in 2025, up from 18.5% a year earlier and more than double its share in 2020. This came despite the number of deep-tech deals declining from 117 to 109 as total funding rose 19% to US$999.2 million.
These statistics point to a more selective market rather than a retreat from the sector. In a regional environment where healthcare demand, the energy transition and manufacturing supply chains create problems that cannot always be solved by another consumer application, investors are concentrating capital on companies with defensible intellectual property, identifiable customers and technologies capable of solving expensive yet pressing real-world problems.
At the moment, Southeast Asia is attracting record investment, but can it turn capital into strategic leverage?
Below are five deep-tech sectors where investors are finding the strongest opportunities.
Healthtech and biotechnology are attracting the largest cheques
Healthcare was one of the clearest deep-tech funding leaders in Southeast Asia in 2025. The sector recorded 21 deals and attracted US$369 million, making it both one of the most active categories and the largest by funding value. The investment case stretches well beyond consumer telemedicine. Deep tech opportunities include molecular diagnostics, medical devices, drug discovery, therapeutics and technologies that improve the way treatments are developed.
Singapore is particularly well placed to capture this capital because it combines scientific research infrastructure with an established biomedical sector and access to international investors. Several global biotech venture capital firms have established operations in the city-state in recent years, including Polaris Partners, Flagship Pioneering, MPM BioImpact and Novo Holdings.
The region is also seeing greater convergence between biology and artificial intelligence (AI). ChemLex, for example, raised US$45 million in 2025 as it established its global headquarters and an AI-enabled self-driving laboratory for drug discovery in Singapore. For investors, healthcare offers something particularly valuable in a selective funding environment: identifiable problems with large global markets. The challenge is that clinical validation, regulation and manufacturing can complicate and extend development timelines. Companies able to demonstrate both scientific differentiation and a credible commercial pathway are therefore likely to attract the greatest attention.
Climate and energy technologies are becoming industrial necessities
Green tech was similarly prominent, matching healthtech with 21 deep-tech deals in 2025 with 21 deep-tech deals in 2025, although its US$144 million in funding was spread across smaller rounds. The sector is broadening beyond solar generation and electric vehicles as investors look towards technologies that can reduce resource use and improve industrial efficiency, including green hydrogen and carbon-related technologies. This reflects a wider challenge across Southeast Asia as countries continue to industrialise while facing growing pressure to reduce emissions from manufacturing and heavy industry.
This creates an opening for deep-tech startups that solve specific industrial problems. After all, a technology that reduces electricity use in data centre cooling or lowers the cost of industrial wastewater treatment gives customers a straightforward business reason to adopt it. Given climate technology’s challenging global fundraising environment, transition finance can therefore play a key role in helping these trailblazing projects move towards commercial deployment.
Robotics is moving from experimentation to deployment
Robotics is another area where Southeast Asia’s existing economic base creates a natural market. Factories, warehouses, farms, ports and infrastructure operators still depend heavily on labour-intensive processes. At the same time, companies across the region face pressure to improve productivity, safety and consistency. This is pushing robotics away from experimental demonstrations towards technologies built around specific industrial tasks. For example, Malaysia’s Aerodyne Group illustrates how this model can develop. Its drone-based systems have been deployed across infrastructure, telecommunications, energy and agriculture, demonstrating how robotics can become part of operational workflows rather than remaining a technology pilot.
Investor interest is also beginning to converge around embodied AI, where artificial intelligence interacts with physical machines. Applied Materials’ corporate venture arm, Applied Ventures, has identified embodied AI as a promising investment area as the company looks to support a stronger robotics ecosystem in Singapore.
The most investable robotics companies may therefore be those that begin with a costly industrial problem rather than the robot itself. If a system can inspect infrastructure faster or reduce dangerous manual work, customers have a measurable reason to adopt it.
Semiconductors offer opportunities around an existing supply chain
Southeast Asia does not need to recreate the entire semiconductor industry to build successful deep-tech companies. The region already occupies an important position in global electronics manufacturing. Singapore has substantial semiconductor capabilities while Malaysia has long been a major centre for assembly, testing and packaging. The opportunity for startups thus lies around this existing infrastructure. Chip design, advanced packaging, specialised components, semiconductor equipment, inspection technologies, advanced materials and manufacturing software can all allow younger companies to capture higher-value portions of the supply chain.
Malaysia is already trying to move in this direction. Its electrical and electronics sector attracted RM28.5 billion in approved investment in 2025, while government policy is pushing the industry towards IC design, advanced packaging and digitally enabled manufacturing. The country’s partnership with Arm also aims to train 10,000 IC design engineers, supporting an effort to move domestic capabilities beyond traditional back-end semiconductor activities.
Investors have also identified semiconductors and related supply-chain opportunities as an undervalued part of Southeast Asian deep-tech, particularly as international companies diversify manufacturing under the China+1 strategy. This gives regional startups a different proposition from semiconductor challengers elsewhere. They can build specialised technologies within an ecosystem that already contains manufacturers, multinational customers and engineering talent.
AI is becoming the infrastructure beneath deep-tech
AI remains one of the strongest investment themes in technology, but its deep-tech opportunity in Southeast Asia increasingly lies beyond generic applications. Data analytics, AI and machine learning deep-tech companies attracted US$123 million across 10 deals in 2025, with investors increasingly interested in how AI can be combined with other technologies.
This suggests a more interesting opportunity with AI acting as an enabling layer for other deep-tech sectors. For example, AI can help a robot interpret its physical surroundings, accelerate the discovery of new molecules, detect manufacturing defects, optimise energy use or analyse data collected from infrastructure.
Singapore is reinforcing this direction through public investment. The government has committed over S$1 billion from 2025 to 2030 to strengthen public AI research, including applied research and talent development. The distinction matters for investors. Building another application around a widely available model offers limited protection. Combining specialist scientific knowledge, hardware or industry workflows can be much harder to copy. The result could be a new generation of Southeast Asian companies where AI is not the final product but part of the infrastructure that makes another technology commercially viable.
The harder funding question comes after Series A
Although deep-tech may be taking a larger share of Southeast Asia’s venture market, its funding structure still reveals a significant weakness. Out of the region’s 109 deep-tech deals in 2025, 103 were early-stage transactions, representing 94.5% of total deal volume. Only six were classified as late-stage deals. Although late-stage funding improved to US$343 million, this capital was concentrated among a small number of companies.
This matters because deep-tech companies often need much more money to scale than conventional software startups. In response, Singapore is trying to reduce this gap. The government added S$440 million to Startup SG Equity and increased its deep-tech co-investment cap from S$8 million to S$12 million per startup. However, public funding alone cannot solve the region’s later-stage capital shortage. The next test for Southeast Asia’s deep-tech is therefore not simply whether the region can produce more promising startups. It is whether those companies can raise enough money to move from promising technology to large-scale commercial businesses.