Potential investors are giving unicorns the cold shoulder treatment.
Grab's headline-grabbing $750m venture capital financing, the largest in the history of Southeast Asia and private equity, may have got a lot of us in Singapore wondering what can we do to be tech billionaires, or as they call it in the industry, unicorns.
Unfortunately for many would-be unicorn treaders, despite the influx of money, including Venturecraft Two, a $50m fund aimed at boosting medtech and ICT startups in the region, it seems to be getting harder, not easier to get financing. Michael Lints, venture partner at Golden Gate Ventures, says, “Although there are more and more investment pouring into the regions, it is getting increasingly difficult for startups to attract potential investors and secure funding through each phase.”
Geeman Yip, CEO of BitTitan, concurs that funding is harder right now on a global scale. “More people are investing in later stage companies for more stability. When you look at the Singapore market, there are a lot of early/seed stage companies. I’ve frequently been to the startup events around Singapore and many are still in their infancy or idea phase.”
In contrast to others finding the issue a challenge, Hugh Mason, CEO of venture partner JFDI.Asia, adds that this is a healthy sign of an ecosystem growing up. Too many weak companies were starting to get funded because there was little downside risk for investors. “In my view the quiet withdrawal of the important tax breaks that got things started is well-timed. "Venture capital" can't just be about "capital" - there has to be "venturing" too. In the short term, like quantitative easing, generous tax breaks on angel and VC funding take away the downside on investment but the risk if measures like that continue too long is that it creates a dependency culture amongst startups and investors, drawing in uninformed investors who really can't add any value and should be not taking risks at this stage anyway, and results in a lot of weak companies,” he says.
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