Navigating the startup ecosystem in SingaporeBy Thomas Laboulle
As Singapore looks ahead to thriving in a post-pandemic world, the local startup ecosystem is set to figure prominently in spurring and sustaining economic growth for the city-state.
Prime Minister Lee Hsien Loong, speaking at the recent National Day Rally 2021, noted that Singapore companies and entrepreneurs must make their mark in the new global economy and seize the burgeoning opportunities in a rapidly evolving world.
Home to over 3,800 tech-enabled startups and 190 intermediaries, including accelerators and incubators, Singapore is no stranger to the private equity and venture capital scene. In fact, it is widely recognised as one of the most developed startup ecosystems in the world, valued at an incredible US$22.5 billion thanks to strong government support and funding for its flourishing network of entrepreneurs, universities and investors. To put it into perspective, the global average sits at less than half of that figure.
While the early onset of the COVID-19 pandemic may have led to a tumble in the average number and value of deals completed, new sectors like healthcare, bio-technology and software-as-a-service (SaaS) have emerged as key battlegrounds for businesses to compete in. In Singapore at least, the outlook remains positive. According to a report by Startup Gnome, the median value for a Series A round in Singapore averages around US$4.8m, against a global average of US$2.7m, a clear indication of a maturing ecosystem. As startups and entrepreneurs alike navigate fundraising in an increasingly interconnected and globalised playing field, here’s what they need to keep in mind:
Balance business priorities with fundraising
A fundraising effort is always time-consuming, especially when done in-house. Yet, keeping momentum on the business side is often what matters most as investors tend to take a wait-and-see approach before making a decision to invest. It is therefore essential to stay focused on the activities that are contributing to the immediate top-line and driving business growth. That may mean learning to say “no” and postponing certain opportunities - including fundraising - until the time is right. Asking questions like whether the prospect can generate revenue in the short-term, or if it is relevant to your target audience can be helpful in assessing suitability and ensuring that you stay aligned to your business goals.
Employee experience is key
Undeniably, the startup ecosystem in Singapore has progressed significantly over the last five years. Accelerated venture capital activity in the region and continued government support, including a US$18.6 billion fund for research and development investments in strategic domains, have helped narrow the gaps in funding opportunities between the initial and later rounds. Today, the biggest pain point for startups is talent acquisition and retention, where demand far outstrips supply. With remote working coming into picture coupled with restrictions in foreign visas, competition for quality hires is fierce. The employee experience needs to begin right from the first interview and go beyond onboarding. Having the right work culture in place is critical to ensure that all employees, who will now come from a diversity of backgrounds and locations, feel engaged and connected to the company.
Select the right investors
Finding a mix of investors with local, regional and global experience is particularly valuable. From experience, startups are not spending sufficient time in seeking out the right investors. With a plethora of options crowding the startup space, it is tempting to choose the investor with the biggest cash flow. But more often than not, their most important investment comes from their experience and guidance, especially in a region as fragmented as the Asia-Pacific, as well as access to key markets, which will serve the company well in later stages of growth. Entrepreneurs should be playing the long game, and pursue backers who share similar values and are aligned on the roadmap to success.
Most importantly, we need to understand that the best practices from Silicon Valley cannot simply be replicated wholesale. After all, startups and entrepreneurs are operating in a uniquely-Asia-Pacific landscape that is undergoing rapid change as we speak. That said, there is much to look forward to. Recent figures from Enterprise Singapore highlight that tech start-ups here had raised US$3.9 billion in the first half of this year, up from US$2.5 billion in the same period last year, attesting to a strong growth momentum in the post-pandemic era. Together with robust government backing and an increasingly experienced ecosystem of players, startups in Singapore are well-poised to capture the wealth of opportunities ripe for the taking in tomorrow’s digital age.