Singapore needs to do more to remain as startups’ top gateway to Southeast Asia



SINGAPORE in 2017 cemented its place as a key player on the global startup map, having emerged as the preferred gateway to South-east Asia, a base from which global startups and investors venture into the rest of the region’s burgeoning markets and entrepreneurial ecosystems.

But the Republic will need to take on an even more dynamic regional role this year, to ensure the competitiveness and vibrancy of its startup ecosystem, industry players told The Business Times.

Katarina Hasbani, board member of non-profit advocacy group Female Founders, said a “noteworthy” trend last year was the rise in global entities that expanded to Singapore, or grew their presence in the Republic and used it as a launchpad into the region. Among them were e-commerce giants Amazon and Alibaba, and co-working space operators WeWork and UrWork.

“While not a new trend, it shows that with a strong international reputation, Singapore continues to be appealing as a springboard for commercialisation in South-east Asia and the wider Asia-Pacific region.”

Kuldeep Singh Rajput, founder of health analytics startup Biofourmis, which in December raised US$5.5 million in Series A funding, said Singapore’s next step is to foster regional connections and business opportunities outside the local market.

South-east Asia is an accessible and lucrative port of call, for a start. Hian Goh, founding partner of Singapore-based venture capital firm NSI Ventures, noted that in 2017, Chinese investors put more money into the region’s startups, and more second-time entrepreneurs relocated from the US and China to start companies in South-east Asia.

Ms Habani said: “That’s where the opportunity is, in terms of end-users and economic growth. For example, Singapore’s startup hub BLOCK71 launched recently in Jakarta – a move that makes sense because of the growth opportunity presented by that market.”

BLOCK71 Jakarta is a 1,500 sq m facility in Kuningan (a city 200km east of Jakarta), which is modelled after Singapore’s BLOCK71, which supports innovation and entrepreneurship development in both Singapore and Indonesia. Launched in July, it is a partnership between NUS Enterprise, the entrepreneurial arm of the National University of Singapore (NUS), and the Salim Group.

Lim Hng Kiang, Singapore’s Minister for Trade and Industry (Trade), said then that BLOCK71 Jakarta marked an example of what Singapore hopes to achieve with overseas partners to build a Global Innovation Alliance, a global network to promote innovation, which was a recommendation by the Singapore Committee on the Future Economy (CFE) in 2017.

Mr Rajput added that another move for Singapore is to attract more innovative talent and companies to its startup ecosystem; this can be done through schemes such as EntrePass, a business visa that facilitates an entrepreneur’s relocation to Singapore to set up shop.

“Younger or millennial entrepreneurs, for instance, can bring new-age wisdom to the scene,” he said.

Singapore-based startups, however, continue to face difficulties in recruiting talent, particularly from overseas, noted Mr Goh. “Singapore should allow foreign talent to continue to relocate, and have local companies hire the best and brightest from all around the world, without having to face work permit issues.”

The continued proliferation of co-working spaces will support Singapore’s role as an innovation hub and bridge to South-east Asia, industry players added.

The number of such spaces hit as many as 120 by the end of last year; rumours are floating of a dozen more launching in the first quarter of this new year.

Kong Wan Sing, chief of Singapore-based co-working space operator JustCo, said: “For overseas companies that want to expand into Singapore and Asian markets and see Singapore as a good launching place, co-working gives them the quick starting point and flexibility they need at the early stage and the immediate connection to the community.”

Arnaud Bonzom, venture partner at startup accelerator 500 Startups, said to expect a flush of money this year with venture capital firms raising new funds. NSI Ventures, which invests in Series A and B rounds, said in December that it has raised an initial US$75 million for its second fund, taking total assets under management to over US$150 million.

“We will also observe more competition among investors, which are now trying to differentiate themselves by providing more support to their portfolio companies.”

Mr Bonzom added that Singapore tech unicorns with operations across South-east Asia did exceptionally well last year. Ride-hailing app Grab raised over US$2 billion in Series G funding, the largest round ever raised in the region. Internet company Sea debuted on the New York Stock Exchange in a US$884-million initial public offering, while e-commerce site Lazada received an additional US$1 billion investment from its owner, Alibaba.

The tech sector has been one of the largest contributors to private equity and venture capital deals in the region in the last three years, said a Duff & Phelps report last month. Such investments into tech companies in South-east Asia grew by about nine times from US$672 million in 2015 to US$5.9 billion in 2017.

Asked about private equity and venture capital trends in 2018, Kai Niklas-Schneider, managing partner (Singapore) at law firm Clifford Chance, said: “We will see some tech activity. There’s a strong tech element in South-east Asia, which complements what’s happening in China.”

Ivan Tan, group director for South-east Asia and Oceania at IE Singapore, affirmed that Singapore is in a “good position” to be the gateway for global startups and investors into South-east Asia. He told BT: “We must continue to enhance this.”

IE Singapore, for instance, has launched its Go Sea Award, which matches students to startups under a regional overseas internship programme. It has also inked several partnerships, such as the one with C asean, the accelerator arm of Thai Beverage in Thailand, which runs immersion programmes to familiarise Singapore startups with the Thai tech ecosystem.

Mr Tan said that the benefits of Singapore being more plugged into the region’s ecosystems include the creation of network effects, which will encourage the flow of ideas and investments into each country, and increased opportunities for its companies, such as in finding partners or scaling up in new markets more quickly.

“A vibrant startup ecosystem in the region will create good jobs for our people and boost economic growth for Singapore. It enables our companies to take advantage of technological changes through partnerships and become more competitive.”

READ MORE: China a good place for Singapore’s tech startups, says IE Singapore

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