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| The Daily Pitch |
| VC, PE and M&A |
| Your edge on global private capital markets |
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| AI startups in APAC region defy VC slump |
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By Melanie Tng, APAC Private Capital Analyst
AI and machine learning startups in Asia-Pacific are attracting a growing share of VC funding, even as overall dealmaking remains subdued, according to our latest analyst note on the region.
Total deal value in the sector rose 18.6% year-over-year in 2024, though there has been a slight pullback in 2025 as trade uncertainty has clouded APAC markets.
Still, investors are prioritizing AI as a safer, more strategic play while pulling back elsewhere. Rising development costs for large models in the US have also pushed global investors to look to the APAC region, where strong hardware supply chains and lower costs offer a more efficient route to scale. |
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China, South Korea, Japan and Taiwan continue to attract the bulk of late-stage funding—aided by corporate backers and state-linked funds willing to anchor larger rounds. Many investors are skipping new early-stage bets and instead concentrating capital in established AI ventures already close to commercialization.
AI's share of total VC dealmaking in the region has increased each year since 2021, even as deal counts have fallen across most other sectors. The median Series C for an AI startup has reached $34.6 million in 2025, roughly 70% higher than non-AI peers.
For now, AI remains the region's rare bright spot, but its staying power will depend on whether deeper institutional capital steps in next year. |
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• GLP-1 and wellness trends are setting the stage for a rebound in consumer packaged food deals in 2026. Dive into our full report
• The recent Money20/20 USA conference made clear that the next wave of fintech innovation will be built on two converging infrastructures: blockchain rails and agentic systems. Here's our full recap
• China's Pony AI is considering pricing its shares at HK$139 (about $17.88) each in its upcoming Hong Kong IPO, a year after going public in the US. Hong Kong's listing market is showing signs of recovery. Read more
• Hg has named long-time partners Steven Batchelor and Jean-Baptiste Brian as its new co-chief executives, as Matthew Brockman and Justin von Simson step down after eight years in the top roles at the London-based PE firm. Read more |
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| One gubernatorial race looms large over world's data center capital |
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| (Josie Doan/PitchBook News) |
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By Jacob Robbins, Technology Reporter
Virginia voters will elect a new governor today, and while the race has focused on common issues like education, public safety and affordability, there's another significant one: data centers, and their impact on the cost of utilities.
Since the internet's infancy, Virginia has become the data center capital of the world. Now, the AI boom has propelled a surge of investment into expanding that infrastructure.
The race is pitting former Congresswoman Abigail Spanberger, a Democrat, against the current Republican lieutenant governor, Winsome Earle-Sears.
"The dominant issue in this campaign has been the cost of living, and you can definitely say data centers fall under that," said Chaz Nuttycombe, the founder and executive director of State Navigate.
One of the reasons Virginia remains an attractive location for building data centers is the sweeping exemption from sales taxes on purchases like servers, cooling equipment, generators and software.
There has been an interest among lawmakers to review the tax exemption, according to Lauren Bridges, a University of Virginia assistant professor who researches data centers. But those efforts have stalled under Glenn Youngkin, the current Republican governor—and former co-CEO of The Carlyle Group—who has signaled he has no interest in changing data center policy, and has already vetoed two bills focused on data centers.
Bridges said she anticipates these bills resurfacing during a new administration, adding that the proliferation of data centers is driving policy demands from constituents.
VCs operating in Virginia hope that the commonwealth will continue to invest in the region's burgeoning ecosystem of data-center-focused startups.
Over the last five years, Virginia has invested capital into fostering an ecosystem of startups to support data centers, said Grant Verstandig, who co-founded Claros, a data center infrastructure management startup, and is a GP at Red Cell Partners.
"These are tailwinds, not headwinds," he added. "This should not be on the chopping block or be a Democrat or Republican issue."
But not all local investors are so worried. "The companies I am investing in, they're using those data centers, but honestly, if those data centers could be in another state, it wouldn't impact them at all," said Michael Sutton, GP and co-founder of Arlington-based Runtime Ventures. |
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Smart reads that caught our eye.
• People are betting on the NYC mayoral race via a startup that insists it's not a betting platform. Now the state of New York wants to shut down the startup, Kalshi, for violating gambling laws. [Gothamist]
• The US just invested $1.4 billion in domestic rare earth metals. In an effort to create a supply chain that isn't dependent on China, the government invested in two startups to build a new US rare earth magnets facility. [The Wall Street Journal]
• More people are falling into the extremes of the credit risk spectrum. The percentage of American consumers taking out subprime loans is the highest it's been this decade, signaling an approaching divide and shrinking of the middle class. [Fortune] |
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