• Global venture funding dropped by 35% in 2022, but venture capital firm 500 Global remains bullish.
• "Now that there has been a switch or transition to a different way of doing business, a different modality, we are switching playbooks again," said Vishal Harnal, managing partner at 500 Global.
• The global VC firm invests in early-stage tech companies and manages more than $2.7 billion in assets.

Global venture capital firm 500 Global is bullish on the VC sector, even as venture funding took a hit in 2022 as economic uncertainties loomed.

"There is definitely a drop in the allocation towards ventures this year, but it really depends on which markets you are investing in, and what the opportunities set in those markets are," said Vishal Harnal, managing partner of 500 Global, on CNBC's "Squawk Box Asia" Monday.

According to data compiled by Crunchbase, global venture funding in 2022 totaled $445 billion — lower by 35% compared to the previous year.

"But I wouldn't go so far as to say that there is a funding winter," Harnal told CNBC's Martin Soong and Sri Jegarajah.

The firm manages more than $2.7 billion in assets. Some of the startups they invested in during their early stages include Australian graphic design software Canva, Southeast Asia's ride-hailing firm Grab and Indonesian fish farming tech startup eFishery. Grab has since listed on the Nasdaq.

Harnal said entrepreneurs have gotten used to getting cheap capital in the last decade. "That has funded certain types of behaviors," he said.

Startups are mostly unprofitable, as they prioritize growth over profitability in the initial years, which usually translates into burning cash.

However, with global economic headwinds slowing growth, startups have been forced to renew their focus on profitability and be more cost-efficient.

"Now that there has been a switch or transition to a different way of doing business, a different modality, we are switching playbooks again," said Harnal.

There is currently an unprecedented amount of "dry powder" of $15 billion in venture capital, especially in Southeast Asia, he said, referring to cash reserves for deployment when needed.

"The question we ask ourselves as investors is that, is that capital enough to tide companies over whatever we are seeing right now for the next two to three years? What are the opportunities that present themselves during times like this?" asked Harnal.

Harnal gave the example of how opportunities in a bear market playbook differ from one for a bull market.

"That changes the way capital flows into venture capital funds so there may be less capital coming from non-institutional investors that aren't used to investing in ventures," he said.

But long-time VCs remain bullish toward investing in tech companies.

"For institutional investors who have decades-long experience investing in VCs but have done it across market cycles before, that capital allocation really isn't shrinking," said Harnal.

He added that private valuations, such as venture capital valuations, are underwritten with a far longer term time horizon and VCs are less affected by daily news cycles or companies' financial results.

"We are taking a much longer term view on technology, which takes a while to adopt," said Harnal.

"While there has been a drop [in private valuations], it is nowhere close to what you are seeing in the public markets."