Private equity and venture capital firms across Asia-Pacific are finding it increasingly difficult to raise new funds as institutional investors become more selective, with fundraising overtaking exits as the industry’s biggest challenge, according to a new survey.
The survey, released by DealStreetAsia and Vistra Fund Solutions, found that 57.5% of 105 founders, managing partners, investment directors and other private capital executives identified capital formation as the industry’s primary source of friction, compared with 26.4% who cited exits and 14.9% who pointed to deploying capital.
The findings suggest that Asia-Pacific’s private capital industry is no longer constrained by a shortage of investment opportunities but by growing difficulty in raising, retaining and recycling capital through successive fund cycles.
Pressure is becoming increasingly evident in limited partner (LP) recommitments. Forty percent of respondents said fewer than 40% of investors from their previous fund recommitted capital to their latest vehicle, while nearly one-quarter reported re-up rates of 20% or less. Only 19.3% of respondents completed fundraising for their most recent fund within 12 months.
“The problem in Asia today is not simply whether there are enough companies to invest in. It is whether managers can raise, retain and recycle capital through successive fund cycles,” said Andi Haswidi, head of research at DealStreetAsia and author of the report.
David Anderson, executive vice president for Asia-Pacific at Vistra Fund Solutions, said weakening LP recommitments were among the survey’s most significant findings.
“Over 40% of managers reported fewer than 40% of existing LPs reinvesting in the next fund,” Anderson said during the report’s launch.
Despite fundraising headwinds, investors remain broadly optimistic about the region’s long-term prospects.
The report, Turning Friction into Capital Flow: APAC PE/VC Edition 2026, found India ranked as Asia-Pacific’s most attractive market for private capital investment, followed by Japan, mainland China, Singapore and South Korea.
Researchers introduced an Opportunity Index and a Friction Index to assess both investment potential and execution risks across 15 Asia-Pacific markets.
While India offered the strongest investment opportunity because of its market scale, liquidity and long-term growth prospects, Singapore ranked as the easiest market to navigate owing to its regulatory clarity and institutional infrastructure.
Cambodia, Indonesia, Vietnam and the Philippines recorded the highest execution risks, with investors citing governance concerns, regulatory uncertainty, weaker exit pathways and macroeconomic risks.
The survey also found notable differences between private equity and venture capital investors. While private equity managers remained bullish on Southeast Asia, particularly Vietnam, Malaysia, Indonesia, Thailand and the Philippines, venture capital investors were more cautious because of concerns over exits, follow-on funding and ecosystem maturity.
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 tight, as public markets demand profitability over pure growth,” Tan said. “We are operating in what I call an asset-rich but liquidity-poor market, where converting paper valuations into cash distributions is a very big challenge.”
The report concluded that while Asia-Pacific remains one of the world’s most attractive regions for private capital investment, success increasingly depends on fund managers’ ability to navigate governance, regulation, liquidity and operational complexity rather than simply identifying high-growth markets.