Capital has gone cold, and startups have become more honest
Originally written in Chinese. Translated with AI, reviewed by Gary. Read the Chinese original →
A few days ago I was chatting with a friend from Taiwan, and I asked him what the startup investment scene there is like now.
He answered in one word: cold.
He said that these days, if your return isn't better than TSMC's, it is very hard to raise money. Especially since NVIDIA set off the AI boom, TSMC's share price has kept climbing. Many LPs and people with capital look at the secondary market and think: if the public market already has such a clear, strong bet, why put money into a startup that is riskier, takes longer and is more likely to fail?
Southeast Asia is much the same.
Whether in Singapore or Malaysia, the primary market has clearly cooled a lot over the past few years. Many investors aren't completely out of money. They have become more careful, and less willing to fund projects that are still telling a story but haven't truly validated demand.
The interesting part is that by the end of our conversation, we reached the same conclusion.
Even though this is a funding winter, the environment for building a business is actually better than it was three years ago, five years ago, or even ten years ago.
It sounds contradictory, but that is the reality.
When the market was hot and money was plentiful, it looked like the happiest era for founders. Show a bit of progress, a bit of traction, and someone would quickly rush in with money. If you didn't take it, your competitor would. There was even a very blunt line going around: if you won't let me invest in you, I'll invest in your competitor.
In the end, many founders looked like they were building companies, but were slowly turning into full-time fundraisers.
People who set out to solve a problem started studying how to tell a story. People who wanted to build a great product started spending their time on pitch decks, valuations, market size and fundraising timelines. People who wanted to serve their customers well were pushed to keep charging forward, because if you didn't, someone else would use their capital to crush you.
The whole environment pulled people in a strange direction. Everyone talked about growth, strategic losses, grabbing the market first, speed over quality, raising money over doing the work. Losing money was fine, because the next round would cover it. Unstable customers were fine, because the priority was to make the numbers bigger. Many people spent more time understanding investors than understanding users.
Now it's different.
Money is no longer easy to raise. You could even say hot money has almost disappeared. On the surface that makes building a business harder. But from another angle, it has removed a lot of noise.
When capital stops flooding in, founders finally get a chance to quiet down. You can no longer get by on a story, or hope to cover problems with the next round. You have to go back to the fundamentals. What does the user actually need? What really hurts for them? Is what you offer something they will keep paying for? Does your business actually work on its own?
That is a healthier environment for building a business.
Because building a business was never meant to be a contest of who raises money best. It is supposed to be this: you see a problem and you seriously solve it. You find a need and you meet it with product, service, efficiency and experience. You don't exist for the next funding round. You exist so the business can stand on its own feet.
When there was too much money, many projects didn't die from a lack of opportunity. They died from too much of it. Money came too fast, competition came too fast, the pace was pushed too fast, and founders never had time to see clearly what they were actually doing. Today, precisely because the market has cooled and everyone has slowed down, founders finally have room to work out what is truly worth doing, and which problems are worth committing to for the long term.
So if someone still wants to start a business today, I actually think this is a very good time.
Not because this era is easy, but because it has finally become more honest.
It won't easily reward empty stories, and it won't give everyone endless illusions. But it will push you closer to reality, push you to understand users better, and push you to take product, cash flow, efficiency and value more seriously.
And those are the real roots of a business.
Cold capital doesn't mean fewer opportunities. Very often it just means the bubbles that shouldn't have existed are receding. The people who genuinely want to build things finally have room to grow.