Private equity and venture capital firms in Asia-Pacific find it increasingly difficult to raise new funding as institutional investors become more selective, leaving fundraising exits behind as the industry’s biggest challenge, according to a new survey.
survey published by DealStreetAsia And Vista Fund SolutionsIt found that 57.5% of 105 founders, managing partners, investment managers and other private equity executives identified capital formation as the industry’s key source of friction, compared with 26.4% who cited exits and 14.9% who cited capital deployment.
The findings show that Asia-Pacific’s private equity sector is no longer constrained by a lack of investment opportunities, but by increasing difficulties in raising, retaining and recycling capital through successive funding cycles.
Pressure is becoming increasingly evident in limited partner (LP) engagements. While 40 percent of respondents said less than 40 percent of investors in their previous funds had recommitted capital to their most recent vehicle, nearly a quarter reported re-raising rates of 20 percent or less. Only 19.3% of respondents completed fundraising for their most recent fund within 12 months.
“The issue in Asia today is not just whether there are enough companies to invest in. The issue is whether managers can raise, retain and recycle capital through successive funding cycles,” said Andi Haswidi, head of research at DealStreetAsia and author of the report.
David Anderson, vice president of Asia-Pacific at Vistra Fund Solutions, said the weakening of LP commitments was among the survey’s key findings.
“More than 40% of managers reported that less than 40% of existing LPs reinvested in the next fund,” Anderson said during the launch of the report.
Despite fundraising headwinds, investors remain generally optimistic about the region’s long-term prospects.
The report, titled Turning Friction into Capital Flow: APAC PE/VC Edition 2026, found that India is Asia-Pacific’s most attractive market for private equity investment, followed by Japan, mainland China, Singapore and South Korea.
Researchers introduced an Opportunity Index and Friction Index to assess both investment potential and implementation risks across 15 Asia-Pacific markets.
India presented the strongest investment opportunity due to market scale, liquidity and long-term growth prospects, while Singapore was ranked as the easiest market to navigate due to its regulatory clarity and institutional infrastructure.
Cambodia, Indonesia, Vietnam and the Philippines recorded the highest implementation risks; Investors cited governance concerns, regulatory uncertainty, weak exit pathways and macroeconomic risks.
The survey also revealed notable differences between private equity investors and venture capital investors. While private equity managers remain optimistic about Southeast Asia, particularly Vietnam, Malaysia, Indonesia, Thailand and the Philippines, venture capital investors have been more cautious due to concerns about exits, follow-on financing and the maturity of the ecosystem.
Quest Ventures managing partner James Tan said venture investors are increasingly relying on mergers and acquisitions, secondary sales and offshore listings as IPO markets remain subdued.
“The IPO window is incredibly narrow as public markets demand profitability rather than pure growth,” Tan said. “We operate in what I call an asset-rich but liquidity-poor market, where converting paper valuations into cash distributions is a huge challenge.”
The report concluded that while Asia-Pacific remains one of the world’s most attractive regions for private equity investment, success depends on fund managers’ ability to manage governance, regulatory, liquidity and operational complexity rather than simply identifying high-growth markets.
