In recent years, Southeast Asia has emerged as a burgeoning hub for green startups, driven by the region's urgent need for sustainable solutions and its youthful, tech-savvy population. However, as of 2025, these startups are grappling with significant challenges, primarily due to a notable slowdown in funding. This article delves into the current landscape of Southeast Asia's green startups, the factors contributing to the funding decline, and the strategies these enterprises are adopting to stay afloat.​

The Rise and Importance of Green Startups in Southeast Asia

Green startups in Southeast Asia have been instrumental in addressing environmental concerns, from renewable energy solutions to sustainable agriculture and waste management. Countries like Indonesia, Vietnam, and the Philippines have seen a surge in eco-innovations, aiming to combat issues like pollution, deforestation, and carbon emissions. These startups not only contribute to environmental preservation but also offer economic benefits by creating jobs and promoting sustainable development.​

Funding Slowdown: A Major Hurdle

Despite their significance, green startups in the region are facing a funding crunch. According to a report by Tracxn, Southeast Asia's tech startups, including green enterprises, saw a 59% drop in funding in the first nine months of 2024 compared to the same period in 2023 . This decline is attributed to several factors:​

• Global Economic Uncertainty: The global economic slowdown has made investors more cautious, leading to reduced investments in emerging markets.​
• Shift in Investment Priorities: Investors are now focusing more on startups with immediate profitability, sidelining green startups that often require longer gestation periods.​
• Policy and Regulatory Challenges: Inconsistent policies and lack of incentives for green initiatives in some Southeast Asian countries have deterred potential investors.​

Strategies for Survival and Growth

In response to these challenges, green startups are adopting various strategies:​

• Diversifying Funding Sources: Startups are exploring alternative funding avenues, including crowdfunding, grants, and partnerships with NGOs.​
• Collaborations and Partnerships: By partnering with established corporations and government agencies, startups aim to leverage resources and gain credibility.​
• Focus on Core Competencies: Many are streamlining operations to focus on their most impactful and profitable services or products.​
• Emphasizing Impact Metrics: By showcasing tangible environmental and social impacts, startups aim to attract impact investors who value more than just financial returns.​

The Road Ahead

While the current scenario poses significant challenges, the long-term prospects for green startups in Southeast Asia remain promising. The region's pressing environmental issues necessitate sustainable solutions, and with the right support, green startups can play a pivotal role. Governments, investors, and stakeholders must collaborate to create an ecosystem that nurtures these enterprises, ensuring a sustainable future for Southeast Asia.​