Startup Exits in Southeast Asia Aren’t Really Exits

If you’ve spent time around venture capital circles in Southeast Asia, you’ve heard this one before: “There were 200+ startup exits last year.” It sounds like a maturing ecosystem. A validation. But here’s the part that never makes the press release: most of those exits don’t result in liquidity for founders or investors. They’re not exits. They’re relabelled continuations.

As someone who’s sat on both sides of the table—as operator and allocator—I’ll say it plainly: a private-company share swap isn’t a financial outcome. It’s an accounting event with a new cap table.

What’s Actually Happening Behind the Headlines of Startup Exits in Southeast Asia

Let’s unpack what these “exits” usually involve:

1. Private Share-for-Share Transactions

   • Company A acquires Startup B for “$15M.”

   • But the consideration isn’t cash—it’s stock in Company A, another private company with no current liquidity and often no defined path to IPO.

   • Investors in Startup B haven’t exited—they’ve just moved their capital one layer deeper into illiquidity.

2. Earn-Out Valuations

   • That $15M figure? It often includes the maximum value of earn-outs—contingent payouts tied to ambitious (read: unlikely) performance targets.

   • The guaranteed component might be as low as $3–5M, sometimes all in equity.

3. Acqui-Hires or Defensive M&A

   • Many deals are talent buys or structured rescues. Cash-strapped startups find lifelines in being absorbed into better-funded peers.

   • It’s often the founders who walk away with anything—leaving early investors diluted and preferred rights unmet.

This isn’t inherently malicious. But let’s not confuse continuation strategies with actual exits.

Why This Matters for Capital Planning

Here’s what I’d tell a Series B CFO or a board member evaluating exit pipelines: Scrutinize the quality of exits in your sector, not just the quantity.

Three operational realities get buried under the PR layer:

Operational Signal	What’s Really Happening	Why It Matters
Reported acquisition > $10M	Mostly equity, often in illiquid acquirer	No real return timeline for investors
No mention of upfront cash	Deal likely structured around earn-outs or retention	Contingent payouts = uncertain value
Founder stays on with new title	Talent-retention deal, not strategic M&A	Control may have shifted, but ownership didn’t change much

The Cultural Cost of Inflated Exits

These pseudo-exits distort the talent and capital market in three dangerous ways:

1. They fuel unrealistic founder expectations—making them chase vanity exits instead of sustainable businesses.

2. They mislead new investors—who underwrite deals based on inflated acquisition comparables.

3. They confuse the LP narrative—especially in SEA, where family offices and new institutional capital look for signs of market maturity.

The truth? If an exit doesn't deliver real liquidity or control transfer, it shouldn’t be classified as one. At best, it's a pivot. At worst, it's a down round in disguise.

Execution Without Ownership: The Root Problem

This isn’t just a capital markets issue. It’s an execution accountability issue.

Nobody owns the outcome. Everyone celebrates the press release.

The founder keeps their job. The acquirer gets a team. The VCs can still write a Medium post. But nobody asks: Did this create value? Did capital actually return?

As CFOs and boards, we have a responsibility to clarify what “exit” really means in our reporting, strategic plans, and internal dashboards. Not just for investor relations—but for our own capital allocation logic.

What Good Looks Like

Here’s what disciplined exit-readiness looks like inside the operating rhythm:

• Scenario-weighted liquidity modeling: Price every exit path based on actual cash + timeline, not headline figure.

• Earn-out viability audits: Require buyer-side confirmation of operational alignment before assigning value to future payouts.

• Private-equity-style deal reviews: Treat every acquisition offer like a leveraged buyout—model the implied IRR and control dynamics.

• Internal deal committee pre-screening: Exit consideration shouldn’t just go through legal. It needs FP&A, product, and post-deal integration input too.

Not All Outcomes Are Outcomes

In Southeast Asia, the narrative of startup exits is maturing—but the fundamentals aren’t there yet. Until real liquidity replaces cap table shuffling, most exits remain incomplete transactions masquerading as milestones.

As operators, we owe it to our teams, investors, and ecosystems to tell the truth about what’s happening. And as CFOs? We must restore discipline to what qualifies as an exit.

Liquidity is not a feeling. It’s a bank balance.