APAC startups haven't quite cured the VC hangover

Five years after VC markets hit their global peaks, APAC startups still seem to be in a holding pattern. Dealmaking declined for four straight years following 2021, signaling a widespread pivot away from venture-style risk. But that tide has shifted in 2026, and it will go down as the first year in which investment rose, according to new PitchBook research. The data suggests a recovery is underway, but a deeper look reveals that APAC's startup ecosystem may not be back to full health. The cohort of companies funded in the 2020 to 2021 boom has had less success raising multiple rounds or navigating an exit. Within this group, 20.4% raised two or more rounds, and just 9.7% successfully exited. That compares with 24.4% raising two-plus rounds and a 14.9% exit rate for the cohort funded in 2016 to 2017. The boomtime companies also haven't failed at the rate one would expect given the broad pullback from venture. Within the 2020 to 2021 group, 40.3% of companies remained active but had not raised subsequent capital, compared with 32.5% in the 2016 to 2017 group. And 7.5% of companies in the 2020 to 2021 cohort went out of business in the four years following 2021, compared to 15.7% in the 2016 to 2017 segment. The data suggests that APAC companies were pushed towards capital efficiency and were able to extend their runways. What remains unclear is whether the lean times made companies operationally and financially healthier. The decline in APAC company attrition—coalescing with the rise of AI threatening the SaaS models, Sino-US geopolitical tensions, food and oil price inflation, and public market volatility—may suggest that many active APAC startups are still trying to find their footing as the market recovers. This article originally appeared on PitchBook News