The Asian Pie: the startup ecosystem in Singapore Posted at 0:00, Fri, 18 March 2016 in Industry Insights
Inspired by my colleague and London-based Sophie Cohen’s blog on the startup scene in Europe, I’m excited to kick-start something similar in this part of the world, starting with my home, Singapore.
The Lion City roars …
Singapore is reaping the seeds recently sowed through a concerted push – coupled with the right infrastructure, initiatives and incentives – to build an innovation-centric economy. At #10 on the Global Startup Ecosystem Ranking, we are known to be a sizzling hub for investment and startups. Singapore is the gateway to expand into the much bigger SEA market, reaching upwards of 600 million people.
The Lion’s treats …
● Setting up a company is a breeze. Singapore is #1 on The World Bank’s Ease of Doing Business rankings.
● Efficient tax system. With a maximum corporate tax rate at 17%, this is a big lure for startups in new ventures. There are also no capital gains or dividend taxes.
● Attractive tax incentives. To name a few, the [Startup Tax Exemption SUTE, and Angels Investors Tax Deduction Scheme (AITD)
● Support for innovation. In Singapore you’re incredibly well supported, with everyone from academic institutions and private bodies lending a hand. Support can be anything from mentoring new businesses through entrepreneurship programs to being set up within the Founders Institute.
● Commitment in becoming a Smart Nation. Strong government support in building and expanding spaces for like-minded tech folks to congregate is one such initiative. JTC LaunchPad@one-north saw a doubling in capacity of Block 71 and the addition of BASH to Block 79.
● Growing number of accelerators and incubators. These are pivotal in sustaining early-stage tech companies. Joining pioneer JFDI, new kids on the block include Muru-D and Rockstart. Hot on the heels after the growing emergence of Fintech and Cybersecurity, there are Startupbootcamp FinTech and Life.SREDA.
● Capital is available. Capital was virtually non-existent in 2010, yet only 6 years later and it has become abundant. Singapore accounts for more than 55% of total private equity and venture funding in the region. More than $9b was deployed in 2014 with venture capital investments in excess of $1b.
Money, Money, Money …
The government, through the National Research Foundation, plays a crucial role in providing funds to entrepreneurs:
• Government schemes. Entrepreneurs, get enchanted here: National Framework for Research, Innovation, and Enterprise, SPRING Singapore and National Research Foundation
With Singapore being #4 in 2015 Venture Capital & Private Equity Attractiveness Index, smart money is trickling in from VC/PE local and abroad riding on the increased appetite and government incentives for startups:
• Equity financing. Budding startups should check out the Map of Active VC (MAVA) for the VC landscape and search tools on your funding needs.
Silicon Valley of the East…
In creating its own version of Silicon Valley in the city, our government has put enterprise development as one of its top agenda. We are now witness to more than 50,000 startups in Singapore, of which 5,640 (10.6%) are in tech.
With all the lion’s treats in place, Zach Tan’s Singascape provides a good overview for aspiring entrepreneurs on how the treats journey through Singapore’s startup ecosystem.
● Temasek – Singapore’s sovereign wealth fund, a major player in the Singapore’s VC industry. It has pumped $190m into the local VC market: $100m to its subsidiary Vertex Venture Holdings, and $90 million to 4 local VCs.
● NSI Ventures Part of Northstar Group, a SEA PE firm with 5 funds over $2b. Typical investments at series A or B stage. Latest addition to their portfolio: Jualo, Grain, Crayon Data
● Monk’s Hill Ventures Partnership of seasoned entrepreneurs backing top entrepreneurs in post-seed companies in Silicon Valley and Asia. Latest partnership: Playlab, Zipmatch, Compare88
● Jungle Ventures Singapore-based VC focused on building category leaders across early stages in Asia. Latest investment activities: SnapBizz Cloudtech, Moglix, CatchThatBus
● Golden Gate Ventures An early stage VC investing across SEA at seed, series A and bridge rounds. Latest funding: MyMusicTaste, Xfers, Aptoide
Internationally, Silicon Valley’s heavyweight Sequoia Capital, and private equity players such as Tiger Global have also propelled strong VC growth in the region. Here’s a quick glimpse at their activities in the region:
• Sequoia Capital Led a $6m series-A funding on Carousell. Latest funding: Kfit, GoJek. Its newest $920m fund is said to be the largest raise for India-specific investments.
• Tiger Global Led a series-C round of $65m funding on Grab. Latest venture: TVF Play. Bulk of its $1b invested in 2015 was geared towards India and SEA countries.
Other key investors are 500 Startup, August Capital, East Ventures and Pix Vine Capital. Notably, the investments tend to focus in e-Commerce, marketplace and enterprise, largely with software-based companies.
Singapore resident, Eduardo Saverin (of Facebook co-founding fame), dubbed the billionaire investor, has also invested in about 5 local tech startups since his arrival in 2009 including anideo, Nitrous.IO, Redmart, 99.co, TechinAsia.
Our success stories …
Dreams do come true! The below statistics are encouraging testaments to inspiring entrepreneurs on our robust startup ecosystem, having the ability to turn lucrative ideas into successful businesses that can go global.
Top 3 funded start-ups:
o Lazada. E-Commerce. Series F. Total funding $686m.
o Grab. Transportation. Series E. Total funding $680m.
o Zalora. E-Commerce. Series C. Total funding $238m.
Billion Dollar Unicorn Club
o Garena Online
o Viki. Acquired by Rakuten for $200m
o Nonstop Games. Acquired by Candy Crush Saga King for $84m.
Top of mind and highly relevant in our business is talent crunch. Contrary to rosy reports on easy access to talent here, we have had our fair share of roadblocks in getting available and qualified talent in Singapore.
Culture fit is often quoted as the main concern. Founders tend to place more emphasis on candidates to prove their experience within startups, than their relevant skill sets. One other hurdle that can’t be left unmentioned, is the risk-averse mindset of local talent – some under family pressure – to seek stable employment.
When the current demographics of the top 50 startup’s founders are foreigners, Singapore’s strict foreign talent employment policy in having the quota set on hiring foreign workers complicates talent solution finding, and is viewed by many “in the way” of the government’s move to build a Smart Nation.
What do you know about the Asian startup scene? We’d love to hear from you on Twitter @MitchelLake
● Asean Up
● Infocomm Investments
● Tech in Asia
Image credit: tech.co