Asia editor Nick Gordon here, filling in for Allie Garfinkle. The future of AI is in Asia. At least, that’s the message you’d have gotten at our Fortune Brainstorm AI Singapore conference, which wrapped up in the Southeast Asian city last week.We covered AI’s impact on just about everything: health care, banking, agriculture, video gaming, and even K-pop. (As an aside, check out my debut as a Korean singer—thanks to some assistance from Korean AI developer Supertone).DeepSeek’s efficient, powerful—and importantly, cheap—models have shaken up the Asian AI conversation, pushing investors to give the region’s AI developers a second look and encouraging firms to adopt the new technology for themselves. Granite Asia’s senior managing partner Jixun Foo, speaking on our stage last week, credited the “DeepSeek moment” for democratizing access to AI across the region. AI optimism has also lifted Hong Kong’s stock market, as investors rush to invest in mainland Chinese AI developers like Alibaba and Kuaishou. Shares in other Asian tech firms—like TSMC, Softbank, and Korea’s Naver and Kakao—have surged amid the AI boom as well. At first glance, Southeast Asia should be an attractive home for startups. The region’s population is young, still growing, and digitally savvy. But on our conference stage, those that actually have to fund these AI endeavors were more wary. Even amid a global slowdown, venture funding in Southeast Asia plummeted by almost 80% from 2022 highs, according to CNBC. “Funding dried up dramatically as people looked for more profitable companies and steady cash flow rather than cash-burning tech companies,” said AC Ventures managing partner Helen Wong at the conference. She urged investors to be cautious. “This is not a very mature ecosystem, unlike China, where you have entrepreneurs that have gone through intense competition…here is still a bit more raw,” she said.“What’s the exit landscape here [in Southeast Asia]?” Phylicia Koh, a general partner at Play Ventures, asked during a separate panel on video gaming. “That has been a challenge, and one I don’t envy for Southeast Asia-focused VCs.”Singapore, the region’s financial hub, has had just three IPOs this year as of mid-July. Its largest, NTT DC REIT (a real estate investment trust of data centers from Japan’s NTT) raised $773 million. Hong Kong’s largest IPO—the secondary listing of batterymaking giant CATL—raised at least $4 billion.Public tech companies haven’t done too well either. In a recent issue of the magazine, my colleague Lionel Lim tells the story of one such startup, the Indonesian ride-hailing firm GoTo, whose shares have plunged by almost 85% since its 2022 IPO in Indonesia.“[Are] the capital markets here mature enough to support an exit? It hasn’t probably performed as well as investors wanted it to,” Koh added. Another reason why Southeast Asia struggles? While it’s big, it’s not quite as big as markets like China, India, or the U.S. “Why is there not a RedNote in this part of the world?” Foo asked, using the global name for the wildly successful Chinese social media platform Xiaohongshu. Southeast Asia, smaller than China (and split into different markets), lacks the network effects to supercharge a local content platform.Still, speakers noted that there are plenty of opportunities in Southeast Asia for those willing to look for them. Wong noted that while fintech and e-commerce firms may have suffered, climate and sustainability startups are still raising funds. There’s “a tremendous opportunity for a lot of much more specific, highly differentiated visions that could potentially be billion-dollar companies,” said Matthew Graham of Ryze Labs. (He, however, wasn’t interested in a company “trying to be the 19th LLM.”)And funders based in Southeast Asia are prepared to start investing again—even if not right now. “We want to be patient. We want to see the confluence of talent and market adoption, and then we’ll start investing,” Foo said.Nicholas GordonX: @nickrigordonEmail: nicholas.gordon@fortune.comSubmit a deal for the Term Sheet newsletter here.Joey Abrams curated the deals section of today’s newsletter. Subscribe here.This story was originally featured on Fortune.com