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On the face of it, VC funding has roared back in Asia this year after a lull in 2016.

As of May 5, VC-backed Asian tech companies raised US$19.3 billion in 458 deals this year, according to venture capital research firm CB Insights. On a quarter-on-quarter basis, funding more than doubled in Q1 2017. And the deal count crossed 300 for the first time since Q1 2016.

At the current scoring rate, the number of deals will rebound to the 2015 level after a drop last year. Total funding is projected to be more than double that of 2016 and over 50 percent higher than in 2015.

Taken as a whole, the picture looks rosy. But drilling down into the Asian investment data released today by CB Insights reveals some crucial gaps which are hurting startups.

Series A crunch

Series A deal share continued to slide, making up just over a fifth of all deals in Q1 2017 compared to one-fourth in the same quarter last year. The struggle to raise a series A round in time has been the undoing of many an early stage startup over the past year.

Seed stage deal share is also down from the Q1 2016 level, but has remained steady at a little over one-third over the last three quarters. It’s at the series A stage that startups are facing a painful crunch.

See: 25 failed startups and what you can learn from them

This is compounded by a sharp drop in the median size of early stage deals from US$1 million in the last two quarters of 2016 to US$500,000 in the first quarter of this year. A shorter runway at the seed stage and a squeeze in series A rounds show why so many startups are finding themselves between a rock and a hard place.

Late stage bonanza

It’s in the late stage rounds that the gravy days are back. The number of US$50 million plus rounds hit a five-quarter high of 34 in Q1 2017. If the current pace holds up, the mega rounds will be close to the 2015 level by year-end.

The median size of late stage deals bounced back to US$100 million in Q1 2017 after hitting a trough in the second half of 2016. This was on the back of mega deals like that of Flipkart which raised US$1.4 billion from Tencent, eBay, and Microsoft, after a difficult year for Indian ecommerce companies as American giant Amazon made deep inroads into the market.

See: Thrillers to tragedies: India’s ecommerce pioneer on what ails Flipkart, Snapdeal

Other big deals of the first quarter included US$1.5 billion in convertible note financing for Chinese video streaming site iQiyi from Baidu, Sequoia Capital China, and other investors. US$1.1 billion for Alibaba spin-off Koubei, which helps users discover deals in restaurants and other local venues, US$500 million for online used car marketplace Uxin, and US$450 million for bike-sharing startup Ofo round out the top five.

The US$1.4 billion funding round for Indian mobile commerce and payments company Paytm by SoftBank last week, and US$5.5 billion for Chinese ride-hailing app Didi last month continues the late stage funding spike this year.

See: 12 trends that will define 2017

Southeast Asia trails China and India in deal flow

Coming back to deal flow, China and India led with an average of 98 and 96 deals respectively from Q1 2016 onwards. Southeast Asia trailed with an average of 47 deals over the same period of five quarters.

India’s big jump in funding in the first quarter of this year came on the back of Flipkart’s mega deal of US$1.4 billion. But even without that, the aggregate deal value crossed a billion dollars for the quarter, bolstered by a US$365 million round for ride-hailing app Ola, and Alibaba’s US$200 million funding of Paytm’s ecommerce arm. And SoftBank’s mega investment in Paytm’s parent company, One97 Communications, keeps the momentum going this quarter.

See: Paytm founder prepares for his next pivot, which could be the biggest yet

In Southeast Asia, funding more than doubled in Q1 2017 from the last quarter of 2016. But it was still way below the US$1.46 billion invested across 53 deals in the third quarter of last year, dominated by the US$750 million round for ride-hailing app Grab and US$550 million for its Indonesian counterpart Go-Jek – not counting Alibaba’s billion-dollar investment for a controlling stake in ecommerce site Lazada.

With Go-Jek’s new US$1.2 billion round led by Tencent, Southeast Asia will join the mega deals party this year in Asia.

Note: The CB Insights data covers funding in VC-backed tech companies in the following countries and regions of Asia: Bangladesh, Bhutan, Brunei, Cambodia, China, Hong Kong, India, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, Nepal, North Korea, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Timor-Leste, and Vietnam. It does not include funding from the following countries: Afghanistan, Armenia, Azerbaijan, Bahrain, Cyprus, Georgia, Iran, Iraq, Israel, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Maldives, Oman, Palestine, Qatar, Russian Federation, Saudi Arabia, Syrian Arab Republic, Tajikistan, Turkey, Turkmenistan, United Arab Emirates, Uzbekistan, and Yemen.

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