As Geopolitics Shakes Venture Capital, Asia Must Take Charge of Its Tech Funding

For all its technical firepower, Asia remains undercapitalised. With funds no longer flowing freely, it needs a financial system that serves its purpose

In just two months, we’ve had news that US venture capital company Andreessen Horowitz is
reportedly
launching a US$20 billion megafund to invest in artificial intelligence (AI) and Chinese battery giant Contemporary Amperex Technology Limited (CATL) completed a US$5.2 billion initial public offering (IPO) – the
world’s largest
this year and a
major boost
to Hong Kong’s subdued markets.

But behind these headlines, venture funding across Asia fell to just US$65.8 billion last year, its lowest since 2014.

For context, OpenAI alone
raised $40 billion
in its latest funding round, illustrating America’s ability to mobilise vast capital around frontier companies aligned with national ambition. Innovation remains global but capital no longer flows freely or evenly.

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Venture capital, once global and market-driven, is now a tool of industrial strategy, moving to the cadence of geopolitics. Flows are now hemmed in by ideology, security reviews and digital red lines. Asia is now a capital battleground.

The United States no longer simply invests in technology – it curates it, fences it and favours its own. Since 2023, Washington has accelerated its programme to
restrict outbound investment
in Chinese AI, quantum computing and chip ventures. In Texas, state agencies have been ordered to divest from China.

Recently, the Trump administration
scrapped
the Biden-era AI diffusion rule to extend chip export restrictions to countries beyond China. The reversal signals not necessarily a softening, but a shift towards bilateral negotiation. The churn reflects a deeper truth: capital now moves in lockstep with national agendas, not market logic.

Even when US capital flows into China, it increasingly does so under scrutiny: US venture capital firm Benchmark Capital’s reported US$75 million stake in the Chinese-developed Manus AI – seen by some as a
breakout candidate
after DeepSeek – is
under US Treasury review
. Venture capital, once a borderless commons, now has coordinates and customs.

A decade ago, the landscape looked very different. Institutions like
Yale
, Princeton and the California Public Employees’ Retirement System were enthusiastic backers of Chinese venture capital funds. That era, built on a fragile harmony of openness and returns, is over. China’s crackdowns on companies like
DiDi
, data sovereignty campaigns and the Covid-era estrangement have all eroded trust.

The shift is visible in the architecture of venture funds.
Sequoia’s split
into Sequoia US, HongShan (China) and Peak XV Partners (India and Southeast Asia) was not a rebrand but a firewall.
GGV Capital
and
Matrix Partners
followed, restructuring their exposure to
avoid entanglement
in US-China tensions. Global venture, once optimised for arbitrage, is now governed by alignment.

Yet the centre of innovation isn’t collapsing – it’s diffusing. Chinese-origin researchers power foundational model laboratories in Silicon Valley. China now accounts for
over 70 per cent
of global AI patents. DeepSeek delivers open-source large language models that prize efficiency over brute force. CATL isn’t just a battery maker – it’s the linchpin of the global transition to electric vehicles.

But for all its technical firepower, Asia remains undercapitalised. Fundraising hit a decade low last year. The region leads in STEM (science, technology, engineering and mathematics) graduates and patents, but many of its best companies still rely on foreign capital. Talent is abundant. Technology advances. Capital lags.

Governments are responding. Hong Kong Investment Corporation is backing
biotech
and
AI
; Malaysia’s Khazanah is investing in greentech and AI; Singapore’s
GIC and Temasek
have bets in biotech and advanced manufacturing.

Late last year, Japan announced a YEN2 trillion (US$13.88 billion) plan to promote investment in AI and semiconductors; in February, Indonesia launched sovereign wealth fund
Danantara
to invest in sectors such as renewable energy and food production. These suggest Asia is not just building technology – it is beginning to fund it on its terms.

For Hong Kong, the implications are acute. IPO volumes are
rebounding
off a low base, but the future depends on whether capital can be mobilised around foundational industries – AI, semiconductors, energy storage – not just financial engineering. The next wave of listings may not be about monetising growth, but about anchoring regional sovereignty.

Asia’s challenge isn’t to prove it can innovate. It already leads in electric vehicles, robotics, solar tech and semiconductors. The task is to build capital systems as advanced as its supply chains. In the US, megafunds bundle cash with infrastructure, offering not just money but graphics processing units (GPUs), data and policy access. Asia must build its own stack: anchoring capital, computing and commercialisation locally while staying globally connected.

As US-China decoupling hardens, neutral corridors are forming. Singapore, India and the
United Arab Emirates
are emerging as non-aligned nodes, trusted to scale ideas across ecosystems without tripping political wires. The next era may not belong to any bloc. It may belong to those who build bridges.

We’ve entered the era of industrial policy via term sheet. Today’s capitalisation tables are expressions of statecraft. The Cold War had missiles. This one has venture rounds and GPU clusters. What matters isn’t just who builds the future but who finances it, secures it and shapes its rules.

This isn’t decline; it’s redesign. Asia has the talent, track record and, perhaps for the first time, political will to shape a financial system that reflects its ambition. If it succeeds, it won’t just power the AI age. It will help define its values.

Innovation endures. But capital is no longer neutral. The winners won’t be those who raise the most, but those who raise with purpose – and deploy with sovereignty.

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