ASEAN fintechs prioritize profitability over the funding bubble

Source: CritpoTendencia Original Title: ASEAN Fintechs Prioritize Profitability Over Funding Bubble Original Link: Fintechs in the Southeast Asian region (ASEAN) face increasing difficulties as a funding bubble begins to deflate. Startups linked to the artificial intelligence (AI) sector emerge from a period of rapid growth driven by the craze for tools like ChatGPT.

Now, the stage of expanding at any cost seems to be behind as the innovation ecosystem adjusts expectations and returns to more realistic criteria.

Investors are beginning to perceive that many companies are far from reaching the scenarios promised by exaggerated narratives and projections close to science fiction. This shift in perception is causing a capital retreat, assuming that numerous valuations were inflated, shaping a bubble that, naturally, is starting to decompress.

In this context, the region’s tech companies face the central challenge of achieving profitability. This is not an easy task in an environment of intense competition and reduced access to funding.

Practically speaking, to attract capital, these startups must present fresh, realistic proposals with clear business models capable of standing out amid increasingly saturated portfolios of AI-based projects.

A recent analysis examines cases like Bluente, a firm that has decided to prioritize profitability over aggressive metric expansion. This dynamic is not limited to a small group of companies but affects much of the fintech sector in ASEAN. The phenomenon is especially visible in Singapore, the country with the highest concentration of AI startups in the region.

ASEAN Fintechs Face a Dilemma About Their Future

For startups in the region, passive waiting for new funding rounds is no longer a viable option. Stopping could mean the closure of the project. Therefore, the dominant strategy is to move toward profitability without delay, in a scenario where a quick return on the abundance of capital is not anticipated.

The case of Bluente is illustrative. The company, based in Singapore, has $2.6 million in seed funding. However, its executives decided not to rely on an eventual Series A round, whose arrival they consider uncertain. Instead, they focused their efforts on attracting subscribers and building a sustainable revenue stream.

This survival mindset without external support reflects growing caution among investors. Venture capital funding for AI startups in the region has fallen by nearly 20% year-over-year.

Investors, affected by previous experiences of inflated valuations and global economic uncertainty—exacerbated by trade tensions and corporate governance issues in markets like Indonesia—have become notably more selective.

Bubble or Market Rebalancing?

The debate over whether AI is experiencing a financial bubble divides analysts. While some segments, such as infrastructure and foundational models, continue to show high valuations, the startups that manage to sustain themselves are those with real clients and concrete use cases.

Offering differentiated proposals is key to capturing investors’ attention. This has fueled a race to exploit specific niches. The most solid opportunities are found in specialized verticals, such as quantum AI applied to finance or life sciences.

Meanwhile, real demand plays a decisive role. Entrepreneurs argue that as long as there is a concrete problem in companies—such as sales automation or customer service—demand for AI solutions will remain genuine and not just the result of a speculative bubble.

Southeast Asia accounts for just 2% of global AI capital, despite concentrating nearly 4% of the world’s GDP. This gap suggests that, although caution prevails, growth potential remains significant.

Looking ahead to 2026, the key for ASEAN startups will be agility. The alternative plan for any founder today must be to achieve profitability as soon as possible.

In a market where capital no longer flows as freely as in previous years, only financially viable companies will be able to weather the correction and lead the next stage of innovation in the region.