DealStreetAsia
India offers the highest opportunity for venture investors among Asia Pacific markets, given its scale, depth of investable companies, liquidity and long-term growth outlook, according to a new report released by DealStreetAsia and Vistra Fund Solutions on Wednesday (June 24).
The report – Turning Friction into Capital Flow: APAC PE/VC Edition 2026, which is based on a survey of 105 founders, managing partners, investment directors and other private capital executives – examines how private equity and venture capital fund managers assess investment opportunity, market complexity and fundraising conditions across Asia-Pacific.
By creating two indices – the Opportunity Index and the Friction Index-the report quantifies the opportunities and challenges, respectively, across APAC’s private capital markets.
India topped the Opportunity Index with a score of 0.78.
Japan and mainland China followed at 0.72, ahead of Singapore at 0.71 and South Korea at 0.70. These markets also scored above the APAC benchmark of 0.64, pointing to continued interest in APAC’s larger, more established or strategically important markets.
Japan and South Korea are benefiting from corporate transformation, governance reform and operational value creation. Mainland China remains too significant to overlook, given its depth of innovation. Singapore continues to stand out as a regional capital, fund management and operating hub.
When opportunity was measured against execution risk, Singapore emerged as the easiest market to navigate, recording the lowest friction score (0.32) among the 15 markets surveyed. Hong Kong followed at 0.33, ahead of New Zealand at 0.35 and Australia at 0.36. Respondents cited regulatory clarity, governance standards and institutional infrastructure as key advantages.
At the other end of the spectrum, Cambodia recorded the highest friction score at 0.66, followed by Indonesia at 0.60, Vietnam at 0.59, and the Philippines at 0.57. Governance concerns, regulatory uncertainty, weaker exit pathways and macroeconomic risks were cited among the main challenges in these markets.
Governance remains one of the region’s sharpest fault lines, according to the report. Indonesia, Vietnam, and mainland China were identified as the most governance-sensitive markets, where reporting standards, internal controls and enforcement reliability remain significant concerns for investors.
The survey found notable differences between private equity and venture capital investors in Southeast Asia. While PE managers expressed stronger conviction in Vietnam, Malaysia, the Philippines, Indonesia and Thailand, citing opportunities for consolidation, formalisation and operational improvement, venture capital investors were more cautious because of
concerns over exits, follow-on funding and ecosystem maturity.
Vietnam ranked among the top markets for PE respondents behind India, reflecting continued investor interest in the country’s operational value-creation potential. Mainland China ranked second among VC respondents, underscoring continued confidence in its technology and innovation ecosystem despite geopolitical and regulatory challenges.
James Tan, managing partner at Quest Ventures, said venture investors are increasingly focused on liquidity rather than paper valuations. “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.”
Tan said many venture investors are increasingly relying on M&As, secondary sales and offshore listings to generate returns rather than waiting for local IPO markets to recover.
