As VCs tighten their purse strings on consumer startups, several firms have turned to other sources of financing
AN OIL crisis, rising inflation, and a falling currency are just some of the headwinds that Indonesian firms have had to face in recent months. One of these companies is Yoona, an organic sanitary pad brand from the archipelago.
Instead of dropping prices, the firm is increasing customers’ basket sizes by offering more promotional bundles, Yoona CEO Susanna Angraini tells Tech in Asia.
Still, staying afloat and appealing to investors are two different challenges. Firms like Yoona say it’s become harder to raise funds.
In the past, being a consumer business in Indonesia alone was considered attractive to investors due to the country’s large market, Angraini says. The bar is now higher: “These days, they want to know if you can expand outside of Indonesia, too,” she adds.
While the startup has secured a lead investor for its ongoing pre-series A round, finding other backers has been trickier to do. Though its product line of sanitary pads is profitable, the firm is getting feedback that its pace of growth is too slow. Other companies are casting their nets wider. As VCs tighten their purse strings on consumer startups, several firms have turned to other sources of financing like debt or angel investors and family offices, Kevin Wijaya, director of CyberAgent Capital, tells Tech in Asia. He didn’t specify which startups these were.
Waning investor attention for consumer plays
According to data platform Tracxn, funding for consumer startups has dropped from a high of US$6 billion in 2022 to US$580 million as of the first half of 2026.
Just four years ago, an e-grocery startup from Indonesia could raise US$120 million for a series C round. Tech-enabled coffee chains also raised good money: Kopi Kenangan raised US$96 million in 2021, following a US$109 million round the year prior.
Funds are increasingly being redirected to AI startups or in sectors adjacent to it. In the first half of 2026, Tracxn data shows that more than half of the total startup funding in Southeast Asia went to data center operator DayOne, which raised US$4.5 billion.
In fact, as B2B startups get more investor attention, the next venture cycle of Southeast Asia will be focused on productivity and not consumption.
Historically, VCs investing in consumer startups in Southeast Asia have focused on high-growth digital businesses like ecommerce, fintech, and other consumer platforms. But such investments – which depend on the potential of a startup to gain significant market share – have become harder to underwrite, as it’s now more costly to acquire customers, says Melanie Tng, analyst at PitchBook.
“Competition has grown, and the path from scale to profitability has become less clear for investors than expected,” she shares.
Add slowing economic growth, softer consumer spending, and higher oil prices due to the US-Middle East conflict, and investing in a consumer startup becomes an even trickier proposition.
In the past year, funding has disproportionately gone to well-established consumer names such as buy now, pay later firm Atome and used-car marketplace Carsome, which raised US$81 million and US$30 million, respectively.
With the exception of Konvy, a Thailand-based beauty commerce firm that raised US$22 million in May, startups in the sector have hardly received any funding in recent months, even those who have raised capital previously.
At a time when AI is the VC darling, is there still a place for a consumer startup investment in Southeast Asia?
VCs are optimistic
VCs Tech in Asia spoke to are confident that consumer startups will have a place in Southeast Asia, given the region’s emerging economies and young populations.
“Half of the world’s population live on this side of the world – Southeast and South Asia,” says Nikko Guiam, senior associate at Philippine-based VC firm Founders Launchpad. “All of these people will consume – whether food or necessities.”
The company has 19 startups in its portfolio, majority of which are consumer-facing. Its ticket sizes range from US$50,000 to US$100,000.
“It’s understandable that AI will get the investor spotlight. But in Southeast Asia, consumers still drive the economy. It will be hard to ignore for investors,” Wijaya of CyberAgent Capital says.
Kaya Founders, an early-stage investor from the Philippines, shares this sentiment. While it has begun backing B2B startups, the VC isn’t giving up on consumer bets in the country just yet.
Its second fund, worth US$25 million, aims to back consumer startups that offer health services and products as well as ecommerce platforms for specialized categories like used cars and old homes for the country’s growing middle class.
While the funding environment for consumer startups has become “quieter” than it was two years ago, it has not collapsed, says Sameer Mehta, managing director of DSG Consumer Partners. Funding rounds are taking longer to close and valuations of startups are getting more scrutiny. Still, Mehta believes these developments aren’t a bad thing. “It helps us filter for founders who are building real businesses with a real reason to exist,” Metha says.
Pivoting is key
Guiam of Founders Launchpad acknowledges that many consumer startups in the Philippines are no longer in a type of “growth mode” that VCs would like to see.
While these startups aren’t on the verge of closing, they’re staying afloat by prudently managing their cash flows. That’s not exactly attractive for a VC that is looking for outsized returns. “When you are raising funds, you need to be in a position of strength,” Guiam says.
Granted, not all startups see VC funding as the be-all and end-all, nor are all of them optimizing themselves for this.
Still, those playing the game have had to become more resourceful, pivoting their business models or embracing AI.
For instance, in response to the shrinking disposable incomes of Filipinos and rising inflation, GoRocky, a healthtech firm that sells hair products and weight loss drugs for men, lowered its prices to appeal to the middle class. Its products were previously on the premium end, targeting a higher-income segment. The company’s CEO, Kiyanusch Braun, tells Tech in Asia that GoRocky now offers more and longer installment options to keep its items affordable.
Last year, founders of Flash Coffee, a digital-first coffee chain, moved on to a new venture – helping F&B businesses build white-labelled mobile apps. The coffee chain shut its operations in Singapore, Hong Kong, Taiwan, and South Korea and sold off its Thailand business in 2023, but it still operates in Indonesia today.
Kumu, once touted to be the biggest livestreaming platform in the Philippines, is now running a pilot test on a data annotation service on its platform, allowing users to process data for a fee.
The firm, which has raised over US$100 million in funding from the likes of General Atlantic and Openspace Ventures, actively competed against TikTok in the Philippines a few years ago but now lags behind other major social media platforms.
In a LinkedIn post earlier this year, Kumu co-founder KC Montero said the company’s move to add a “data annotation layer” on its app was part of the startup’s efforts to turn its community of livestreamers into a “qualified AI workforce.” The firm didn’t respond to Tech in Asia’s requests for an interview.
What VCs want
VCs admit that growing a consumer startup and investing in one is now more difficult.
For example, startups that have pitched to CyberAgent Capital in recent months have either served too small a market or are asking for ticket sizes beyond what the company is willing to deploy, Wijaya shares. Its last two funding rounds in Indonesia, for example, were follow-on rounds. Guiam of Founders Launchpad says for a consumer startup to flourish these days, founders would need a “unique right to win.” That could be either in the form of an established investor or business network that its founders can capitalize on.
For instance, its sole investment in Malaysia, Being Juice, a retail fresh juice stall, was founded by a former Foodpanda Malaysia country manager. For Guiam, the CEO’s ready knowledge to navigate the local market increases the startup’s chances of scaling faster. Meanwhile, DSG believes products and services that AI cannot mimic will “win” in the next few years – like real-world experiences. This year, the firm invested in Triangle, a live entertainment platform in Singapore.
For now, it looks like the fittest will survive. Wijaya notes that Jago Coffee, the coffee cart chain in its portfolio, has achieved double-digit growth in revenue per month for the past year despite the difficult economic conditions in Indonesia, as it has forged a strong relationship with customers. “They didn’t skimp on quality despite the rising costs. It’s a tricky balance,” he adds. TECHINASIA
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