The Death of VC: Is Venture Capital Broken — Or Just Finally Honest?

There is a number that should be on every founder's radar right now: 9%.

That is the share of seed-funded startups that successfully raised a Series A in 2025. A decade ago, the rate sat between 15% and 20%. The funding ladder that the startup world was built on — seed, then A, then B, then exit — has not disappeared. It has just become nearly impossible to climb for anyone outside a very specific set of sectors and geographies.

This is not a blip. It is the result of a structural breakdown that has been building since 2022, and the data is now too large to explain away.

The numbers

Global VC fundraising peaked in 2022 and has since fallen 70%, hitting $66.7 billion in 2025 — the lowest level in over a decade. For the first time in recorded history, the number of active venture capital firms declined, falling to 2,984. Many of those still standing are what the industry quietly calls "zombie funds": fully deployed, unable to return meaningful capital to their limited partners, and unable to raise a new fund. They are alive on paper.

They are not writing new checks.

The firms that are writing checks are doing so in a dramatically concentrated way. In the first quarter of 2026, AI companies captured 80% of all global venture deployment. Four companies — OpenAI, Anthropic, xAI, and Waymo — absorbed 65% of total investment on their own. This is not a market with winners and losers distributed across sectors. It is a market with four winners and everyone else.

For Southeast Asia, the picture is grimmer still. Venture funding in the region fell 42% in the first half of 2025 — the steepest correction among all emerging venture markets globally. In Singapore specifically, startups raised 34% less capital in 2025 than in 2024, and the number of deals dropped 35%. Seed-stage funding in the region collapsed by 50%.

How it broke

The proximate causes are familiar: high interest rates made bonds attractive again, pulling capital away from the riskier end of the asset class. A dried-up exit market — too few IPOs, too few large acquisitions — meant limited partners were not getting their money back, and so they stopped committing new money. Caution compounded.

But the deeper cause is structural. The traditional venture model was built on a specific set of assumptions: that startups needed large amounts of capital to scale, that the path to returns ran through public markets, and that a fund's job was to back the best companies in each round and ride the ladder up with them.

Each of those assumptions has cracked.

Capital efficiency has improved dramatically. The median amount of funding required to reach unicorn status fell to $42 million in 2025 — down from $87 million at the 2021 peak. Some of the most interesting companies being built right now are raising less, not more, and growing faster for it.

The exit path has changed. Secondary markets — where investors trade existing stakes in private companies rather than waiting for an IPO — hit $226 billion globally in 2025. In the first quarter of 2026, the value of venture secondary transactions surpassed the value of all US public listings for the first time. Liquidity is moving around the IPO, not through it.

And the biggest rounds are no longer going to venture funds at all. The companies requiring $50 to $100 billion in capital — the frontier AI labs — are now funded primarily by the "Magnificent 7" tech companies acting as strategic investors, and by sovereign wealth funds. A $500 million VC fund cannot compete. It has been structurally excluded from the rounds that define the next era.

What this means for founders in Singapore

If you are building a startup in Singapore or Southeast Asia in 2026, the honest answer is that the old playbook is not coming back.

The investors who are still active are operating with a different mandate. Profitability is no longer a dirty word: 39% of regional venture firms now rank it as their top consideration when evaluating a deal. Exit strategy clarity, which was rarely discussed at the seed stage five years ago, is now a conversation that happens in the first meeting.

The founders adapting are doing several things differently.

They are treating VC as one option among several rather than the only credible path. Revenue-based financing — where founders receive capital and repay it as a percentage of monthly revenue, without giving up equity — is projected to exceed $40 billion globally by 2027. In Singapore and the region, providers like Choco Up and Jenfi are filling gaps that traditional early-stage funds have left. Venture debt, government grants through Startup SG, and hybrid instruments are all part of the toolkit now.

They are building for profitability before fundraising, rather than fundraising to fund the

search for a business model. This is not a conservative or unambitious approach. It is the approach that gives a founder leverage: a profitable business does not need capital on anyone else's terms.

They are staying lean longer. The founders who hit Series A in 2025 were not the ones who spent the most — they were the ones who spent the least while proving the most. Capital efficiency is not a constraint right now. It is a competitive advantage.

The counter-argument worth taking seriously

Not everyone agrees that VC is broken. The bulls make a fair point: total venture capital deployed globally grew to $425 billion in 2025, a 30% increase from 2024. The money did not disappear. It concentrated.

If you are building in AI, in deep tech, or in defence technology, the environment is not hostile — it is, in some ways, the most capital-rich moment in history. Sovereign wealth funds and corporate strategics are writing checks that no venture fund ever could.

The counterargument also holds that the correction is healthy. The 2021 peak was distorted by near-zero interest rates and an excess of capital chasing too few quality companies. A return to selectivity is not the death of an asset class — it is the asset class growing up.

That reading may be right. But it does not help the founder building a B2B SaaS company in Singapore who cannot get a Series A meeting. The market is not broken for everyone. It is just broken for most people.

What comes next

The VC model is not dying. It is bifurcating.

At the top: massive capital for a small number of companies in frontier sectors, funded by players who were never really VCs to begin with.

In the middle: a shrinking, increasingly selective pool of traditional venture funds that will back fewer companies, later, with more requirements attached.

At the base: a growing ecosystem of alternative capital, bootstrapped companies, and revenue-first businesses that do not need VC to build something real.

For founders in Singapore and Southeast Asia, the practical takeaway is this: the question is no longer how to raise venture capital. It is whether you need it — and if you do, whether you have built the kind of business that the 2026 version of a VC actually wants to back.

The era of “raise first, figure out the business later” is over. The era of “build something that works, then decide how to finance the next stage” has begun.

That is not the death of venture capital. It is, arguably, a better deal for founders who know how to play it. My Journey with SEED Ventures

As I reflect on my journey with SEED Ventures, I can't help but notice a double whammy in the startup ecosystem. On one hand, startups are becoming increasingly bullish, often fueled by an unwavering belief in their potential. On the other hand, investors are growing more cautious, leading to a stark contrast between the two forces at play.

This divergence is striking. Startups often exhibit a mindset akin to "my baby is the cutest," where founders are deeply invested in their visions and believe their ideas are worth millions. This passion is commendable, yet it sometimes blinds them to the realities of the market and the financial landscape.

A Structural Breakdown

This is not merely a fleeting trend; it is a structural breakdown that has been building since 2022. The data supporting this observation has become too substantial to ignore. As startups continue to push for valuations that may not align with the current economic climate, investors are approaching with increased caution, carefully scrutinizing every opportunity.

In conclusion, the current landscape presents a unique challenge for both startups and investors. While the optimism of founders is essential for innovation, it must be tempered with a realistic understanding of market conditions. As I navigate this complex environment in my own practice, I remain committed to fostering a balanced approach that encourages growth while acknowledging the cautious sentiment of investors.

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