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Southeast Asia’s Digital Economy Sees Slower Private Funding Growth Despite AI Boom

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Private funding for Southeast Asia’s digital economy rose 15% year-on-year to $7.7 billion in the 12 months to June 2025, lagging the global private investment growth rate of 25%, according to a new report by Google, Temasek Holdings, and Bain & Company.

While the figure marks an improvement from 2024, it remains about 70% below the region’s 2021 record high of $27 billion, reflecting a slower recovery from the post-pandemic investment cooldown.

The report found that funding is increasingly concentrated in late-stage rounds, with the share of seed-to-Series B deals dropping from around 30% to 20% over the past year.

This year’s edition expanded its coverage to include Brunei, Cambodia, Laos, and Myanmar, alongside Indonesia, Thailand, Vietnam, Singapore, Malaysia, and the Philippines — a region of nearly 700 million people and one of the world’s fastest-growing internet markets, driven by a young population and rising smartphone use.

Despite the funding slowdown, AI startups remain a bright spot, attracting 32% of all private capital in the region during the first half of 2025 — up slightly from 30% in the second half of 2024. Over 680 AI startups secured more than $2.3 billion, with Singapore hosting more than 495 of them.

The report also highlighted rapid data center expansion, as countries rush to build infrastructure for the AI boom. Data center capacity in Southeast Asia is expected to grow 2.8 times, surpassing the 2.2 times growth forecast for the wider Asia-Pacific.

Malaysia leads this expansion, with 2,415 MW of new capacity planned — more than half the region’s total 4,620 MW — attracting major investments from Microsoft, Amazon, Google, Tencent, Huawei, and Alibaba.

Meanwhile, TikTok plans to invest $4 billion in data hosting facilities in Thailand, while Google and Amazon are each investing $1 billion and $5 billion respectively in the country, underscoring the growing competition in Southeast Asia’s digital infrastructure landscape.

OpenAI Eyes $500 Billion Valuation in Potential Employee Share Sale

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OpenAI, the creator of ChatGPT, is reportedly in early talks for a private stock sale that would let employees cash out shares, potentially valuing the company at about $500 billion—up significantly from its current $300 billion valuation. The transaction, which would occur before any initial public offering (IPO), aims to allow current and former employees to sell several billion dollars worth of shares.

The move highlights OpenAI’s rapid growth, driven by its flagship ChatGPT product, which has doubled revenue in the first seven months of 2025 to an annualized run rate of $12 billion, with projections to reach $20 billion by year-end. OpenAI now boasts about 700 million weekly active users, up from 400 million in February.

This potential share sale follows a primary funding round announced earlier this year targeting $40 billion, led by Japan’s SoftBank Group, which is obligated to fund $22.5 billion by year-end. The remaining portion of the round has already been subscribed at the current $300 billion valuation.

Amid fierce competition for AI talent, tech giants like Meta are investing billions in startups such as Scale AI to secure top executives, underscoring the high stakes in the AI race. Other private companies like ByteDance and Databricks have similarly used private share sales to refresh valuations and reward employees.

Existing OpenAI investors, including Thrive Capital, are reportedly considering participation in the employee share sale. Thrive Capital declined to comment.

OpenAI is also planning a significant corporate restructuring to move away from its capped-profit model, paving the way for a potential future IPO. However, CFO Sarah Friar emphasized that any public offering would only occur when both the company and market conditions are favorable.

EU Seeks Private Investment to Lead Quantum Technology by 2030

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The European Union is turning to private funding to strengthen its position in quantum technology, aiming to reduce dependence on the U.S. and China, EU tech chief Henna Virkkunen announced Wednesday. Quantum computing promises vastly faster processing speeds than traditional computers and could revolutionize various sectors, potentially generating trillions of dollars in value over the next decade, according to McKinsey.

Virkkunen highlighted that while Europe has already invested over 11 billion euros ($13 billion) in public funding for quantum technology over the past five years, only 5% of global private investments flow to Europe. To address this gap, the EU plans to intensify efforts to attract private capital in the coming months.

The EU Quantum Strategy also calls for greater collaboration among member states to pool expertise, enhance research and infrastructure, and support a vibrant ecosystem of startups and scale-ups. A key focus is helping startups avoid acquisition by foreign entities or relocation to regions with better funding opportunities.

Looking ahead, the European Commission intends to propose a “Quantum Act” next year to build on the strategy and further promote Europe’s quantum ambitions.