Funding to startups in Asia in the first half of 2023 dropped 50 percent from the previous year — spurred on by fewer large, late rounds, and mirroring the global venture market, Crunchbase said Thursday.

The research solutions provider said in a report that the funding in the region dropped from more than $73 billion in the first half of 2022 to only $36.3 billion for the first half this year.

Deal volume also slowed, dropping 40 percent from 5,402 deals in the first half of 2022 to only 3,237 for this year’s first half.

For the second quarter, funding in the region also dropped 44 percent from the same quarter last year — from $32.8 billion to $18.5 billion.

Meanwhile, deal flow dropped a similar amount year to year, falling from 2,508 to 1,564 — a 38 percent decline.

However, Crunchbase said the second quarter actually realized a slight uptick from the first quarter in terms of dollars.

The second-quarter dollar figure was actually a 4 percent increase from the first quarter.

Dealmaking, however, dropped 7 percent from the 1,673 deals announced in the first quarter.

According to Crunchbase, late- and growth-stage funding were the main culprits for the overall decline in venture dollars.

Late stage and growth funding dropped from $18.4 billion in 246 deals in the second quarter last year to only $10.2 billion in 144 deals for the second quarter this year — a 45 percent decline in dollars and a 41 percent drop in volume.

The decline is even worse when looking at the entire first half of the year.

The first six months this year saw late and growth rounds totaling $19 billion, an astounding 53 percent drop from the $40.8 billion raised in the same half last year.

The decline in the late stage is significant — especially in terms of dollars — since such growth rounds are the most valuable.

The second quarter’s dollar figures were actually an increase from the previous quarter, which saw only $8.8 billion in such late rounds.

Despite the drop-off year to year, Crunchbase noted that the region did see some impressive rounds in the quarter.

It noted that in May, China-based Shein, the popular fast-fashion startup, reportedly raised $2 billion.

Meanwhile, last month, India-based renewable energy firm Avaada Energy locked up a $1.3 billion funding round.

In April, Seoul-based autonomous mobility firm 42dot raised a corporate round worth approximately $787 million.

“Nevertheless, not even those large raises could raise the funding tide,” it said.

For the sixth straight quarter, early-stage funding also dropped, according to Crunchbase.

Startups in Asia raised only $6.8 billion in 529 early-stage deals in the second quarter.

That was a decline of 8n percent from last quarter’s $7.3 billion, and a whopping 42 percent from the second quarter of 2022 which saw $11.7 billion raised in similar rounds.

However, deal volume only dropped 4 percent from last quarter, but 35 percent from the second quarter 2022, which saw more than 800 early-stage rounds announced.

Angel and seed deal dollars also hit their lowest point since early 2021, according to Crunchbase.

In the second quarter, such rounds totaled only $1.5 billion, down from $1.6 billion in the first quarter, and down $2.7 billion from the second quarter of 2022 — a fall of 42 percent.

While seed rounds don’t really change the total dollar numbers for overall funding, they do affect volume, said Crunchbase.

In this case, deal counts barely dropped quarter to quarter, with 891 angel/seed rounds announced in the second quarter compared to 964 in the first quarter.

However, deal volume was down 38 percent from the same quarter last year, which saw 1,445 such deals announced.

“The good news is startup funding in Asia was up in the second quarter compared to the first quarter of the year, and the percentage drop in funding is starting to decrease in the region,” said Crunchbase.

However, it noted that is mainly because the free-spending times of 2021 are sliding further back in the rearview mirror.

It said the continuous drop is still concerning, as numbers are off even 2020’s pace.

“Of course, the ever-increasing tensions between the United States and China likely are not helping funding activity,” it said.

According to Crunchbase, those tensions seem to have led to venture capital giant Sequoia Capital to break into three distinct businesses — Sequoia Capital, China-based HongShan, and India and Southeast Asia firm Peak XV Partners — as U.S. investment in tech in China is getting trickier as pressure between the two superpowers rises.

“It will be interesting to see if that breakup further disrupts venture investing in the region, or if the new, separate entities can attract the same wealthy limited partners the Sequoia name has made a habit of doing,” it said.

One thing to continue to pay attention to, according to Crunchbase, is China’s initial public offering (IPO) market.

With Alibaba’s plan to split up and likely public float its units, it said there has been a renewed hope that Ant Group could see its indefinitely suspended IPO restarted.

It noted three years ago, the fintech giant’s $34 billion-plus IPO was scuttled by increased regulatory overview of tech companies by the Chinese government.

“Such a move could be a boon for the tech sector, and that type of exit could get investors salivating,” it said.

However, there are certainly strong headwinds right now in the Asia funding market and navigating through them may only get more difficult, it added.

Total funding into SEA tech startups falls 71 percent year on year to $2.3B in first half, says Tracxn