MAS said that it will help crypto firms set up local bank accounts, on top of leveraging blockchain adoption.

The Monetary Authority of Singapore (MAS) managing director Ravi Menon said in a Bloomberg interview that they will step up to help cryptocurrency firms that are facing problems setting up local bank accounts.

Menon acknowledged that activities of crypto firms are ‘quite opaque,’ making banks want to be extra careful in establishing the nature of such firms. However, he also said that the crypto scene still bears many ‘obscure’ and ‘dangerous’ aspects for investors.

This means that the city-state is still not open to a ‘lax’ regulatory environment eyeing to lure more startup players in the country, he noted. “What we are trying to do is to bring the banks and cryptocurrency fintech startups together to see if there is some understanding they can reach.”

Also read: Singapore nabbed Asia's fintech crown from Hong Kong in 2017

In Singapore, crypto players are hurdling through some challenges brought about by regulations and price volatility.

“Government and regulatory powers have become more skeptical of the validity of the coins,” CMC markets sales trader Oriano Lizza told Singapore Business Review.

“In the near-term, cryptos specifically will continue to face legislative issues and I feel investors are becoming more savvy and weary to the potential downside of the markets.”

Despite this, Lizza is quite positive that Singapore’s main focus is surrounding the adoption of the blockchain technology and its ability to enhance areas, such as payments and digital storage. “I feel that Singapore is looking to position itself at the forefront of the fintech space globally and is leveraging blockchain technology and related matters to do so,” he said.

Also read: Meet Singapore's cryptocurrency czars

Amidst challenges from price volatility which affects its value of digital assets holding, token platform DigixGlobal remains positive and actually thinks that Singapore has a ‘business-friendly climate.’

“We plan to explore other types of assets to add to our product offerings. We also intend to explore foreign markets in the region and where much of our user base sits,” a spokesperson from DigixGlobal said.

Singapore’s welcoming business climate was also echoed by fintech firm Quoine, which just launched its global digital asset platform in September that will enable trading and exchange services for G3 currencies such as SGD and AUD.

“We aim to provide financial services to all in this new crypto economy, and that means working hand in hand with governments, regulators, and other industry stakeholders to grow the crypto ecosystem in a safe and sustainable manner,” the firm's spokesperson revealed.
 

muru-D’s untimely exit raises concern about corporate reliance of accelerator models.

Accelerator programmes have steadily become a mainstay in Singapore’s thriving startup ecosystem. But just like the firms they nurture, accelerators also struggle to find their niche and ensure their own sustainability as they grapple with the same risk of going bust just like the most promising startups.

The discontinuation of the Singapore operations of Telstra-backed accelerator programme muru-D in July 2018 illustrates this point quite well. Backed by Australian telco giant Telstra, the accelerator programme was abruptly shut down mere months after completing its third cohort.

Although Telstra did not disclose specific reasons for the shutdown, muru-D Entrepreneur-In-Residence Craig Dixon said in an earlier blog post that the programme’s untimely end was brought about by the “complete reliance on its corporate sponsor.”

“I think relying on one sponsor is inherently risky, the epitome of the adage "Don't put all your eggs in one basket". A corporate-backed accelerator is unlikely to be core to the C-level strategy and shifting winds from quarter to quarter can mean the end of even the most successful corporate accelerator,” Dixon told Singapore Business Review when reached for further comment.

Most of the accelerator programmes in the city state are supported by one corporate sponsor, he added, which may pose a problem as these programmes need to strike the balance between nurturing startups and ensuring that the sponsors are receiving sufficient value for their investment.

The role of corporate entities in accelerator programmes have grown in recent years with the share of accelerators in Asia and Oceania planning on generating earnings through corporate partnerships or sponsorships rising from 57% in 2015 to 66% in 2016, according to the Global Accelerator Report 2016.

The report added that corporate funding has outpaced non-corporate financing into accelerator programmes after accounting for 52.1% of global capital injections in 2016.

Although corporations have proven time and time again that they can add significant value to startups, corporate and time-bound priorities may sometimes clash against startups whose disruptive ideas may take some time to gain traction, suggested Hugh Mason of JFDI.Asia.

“Firstly, most power and money in a corporation is held by business units who must hit their KPIs next quarter,” said Mason. “So they need off-the-shelf, tried-and-tested solutions, not startups that 'fail fast' and can only ever show real impact in a few years.”

The nature of the corporate world which rewards playing it safe and by the book could also hamper startups seeking to introduce new ways of doing things.

“[C]orporations are brilliant at scaling up things that are already working but generally very poor at searching in an agile way for truly transformational opportunities. They have the resources and mindset for 'execution' in a way that minimises risk but lack the resources and mindset to 'search' in uncharted waters for the truly new solutions,” added Mason.

Future-proofing the accelerator
The accelerator programme traces its roots to US-based Y Combinator who introduced the cash-for-equity model in 2005 which involves investing seed money in exchange for equity. Over ten years later, the world has seen a proliferation of such programmes to match the number of startups with nearly 600 accelerators in operation around the world that have invested in US$206.74b in startups, according to the Global Accelerator Report 2016.

“The growth of accelerator programs has certainly outpaced the supply of startups in Singapore in recent years with both the public and private sectors funding multiple initiatives,” observed Jupe Tan, managing partner, Asia Pacific at Plug and Play Tech Center.

Accelerators programmes focus on providing startup founders with learning opportunities and funding support in addition to giving them an invaluable space to connect with various stakeholders like corporates, government, angel and VC investors, clients and mentors.

Also read: JLL and Lendlease launch proptech accelerator

“Startups at different stages have different challenges, from funding to product development to human capital,” added Tan. “There will always be a role for accelerators to play in terms of helping startups to grow and to identify and plug knowledge gaps.”

In fact, a survey by NUS Entrepreneurship Centre notes that nearly half (47.9%) of Singapore-based startups have tapped on support schemes like mentoring, incubation and accelerator programmes for their growth requirements in 2017.

“It is critical for Singapore to nurture home-grown accelerators and collaborate with established international accelerators to enable our local startups to access global resources, networks and markets,” said Michelle Kung, executive director of Business Angel Network of Southeast Asia (BANSEA).

Also read: Singapore trumps Silicon Valley as top place for startup talent

Despite their growing importance and patronage in Singapore’s startup ecosystem, accelerators grapple with operational costs of maintaining their programme as they cannot simply wait for exits to fund their operations given the rare and drawn-out nature of exits in generating ROI. An earlier report by Ministry of Trade and Industry (MTI) economists Chia Keat Loong and Reuben Foong confirms this as out of the 460,000 startups formed during 1998 to 2017, only a mere 984 were able to publicly list on the stock exchange a few years after formation or exit through acquisitions.

“I believe that in an ideal world a startup accelerator would live off of startup exits. However, since exits from startup investment typically take 3-8+ years (assuming a successful exit) there needs to be a short to medium-term funding strategy,” said Dixon.

Such model never quite worked for Mason’s JFDI.Asia whose accelerator programme was widely considered as a pioneer in what was then Asia’s nascent startup ecosystem but eventually shut down in 2016. The company has since remodelled into a corporate venture partner but not before raising $3m and investing in 70 startups.

“Like many of our peers outside the USA, we never found a way to recirculate risk capital fast enough to make JFDI a self-sustaining business. In the US, some Techstars accelerators have been able to virtually guarantee that one startup from each of their batches will realize value within 18 months or so after the program finishes. So the accelerator’s investors get 2-3X back on their money and everyone is happy to roll the dice again. In Asia, the time to exit is more like 6-8 years and the valuation at exit is perhaps 30% of that it would be in the US. So any accelerator trying to sustain itself independently will find it very tough going in this part of the world,” the firm said in a 2016 blog post.

To ensure their sustainability, accelerator programmes across the world have been taking a leaf out of JFDI.Asia’s book and shunning startup exits as their main income-generating method. In fact, the percentage of accelerators in Asia & Oceania relying on such model fell from 63% in 2015 to 42% in 2016 in line with a downward trend observed in USA & Canada, Europe, Latin America and Middle East.

Alternative business models have therefore emerged to dilute reliance on rare exits with accelerators instead charging for mentorship, subletting spaces, hosting events and working with corporations.

Despite the invaluable role corporations must play to oil the gears of accelerator programmes turning away from exits, Dixon suggests that this function could be watered down through the presence of multiple stakeholders in order to avoid corporate overreliance that hastened muru-D’s exit.

He brings the accumulated experience and lessons from running muru-D as he sets up accelerator programme, Accelerating Asia with fellow co-founder Amra Naidoo - one that aims to fill the gap left by muru-D and go beyond its shortcomings as it leverages on a partnership independent of one particular corporate partner.

“[W]e partner with corporates and other organisations to provide innovation consulting services specific to areas that engage with startups. The advantage to this model is that we can diversify our revenue streams and maintain our independence. If one of our partners pulls out, our program will continue, and we can focus on founders as our top priority, always,” he said.

The majority of Plug and Play’s 50 programmes around the world also operate on the same multiple corporate partner model in addition to being stage-agnostic. “This lets us aggregate more tech focus areas and problem statement, making it more attractive to startups and more cost efficient for corporate sponsors,” he adds.

For JFDI’s Mason, there is no ideal model as one size won’t fit all when it comes to accelerator programmes and the varied startups they nurture. “So a successful accelerator must balance all the interests faced by stakeholders locally and provide value to all: to startup founders, to mentors, to sponsors, to investors and the community from which it draws talent.”  

Check what sector is mostly affected.

Britain's vote to European Union has sent shockwaves through the world on Friday, but analysts in Singapore are more positive that the city should come through this episode with few scratches.

Here's what analysts think:

Everyone's devastated by the sudden crash in March.

According to PropNex Realty, private home sales slowed more than 33% in March after picking up last month, given the cautious mood and overall fewer new launches. 

Developer sales remain fairly muted in the month of March with a total of 724 units launched and 480 units sold (excluding ECs); and only one new residential project— The Santorini, entered the market last month.

The tight supply situation is a result of developers adopting a deliberate stance to time their launches and possibly adjust their pricing strategy appropriately before putting their product on the market.

Including ECs, developers found buyers for 535 homes, which also reflected a fall of 30% from the previous month’s figure of 769 units.

Singapore Business Review compiled outlooks from analysts to see if April bodes well for home sales.

Alice Tan, Head of Research, Knight Frank Singapore:

We expect new sales volume in April 2014 to improve, on the back of more new launches and fairly positive market interest to date. Lakeville, launched in first weekend of April, was a success with all units released in the first phase sold. Sky Habitat will be re-launching at lower prices this weekend starting at $1,370 per sq ft, and it is likely to be very well received, given its good location in Bishan and near the Bishan MRT station.

These two projects are expected to support new sales performance in the OCR and RCR.

Apart from these 2 projects, several other projects are also conducting re-launches for example Alex Residences and The Skywoods. This will bring some prominence to these projects which were first launched some months ago.

The rate of sales in the CCR is expected to remain muted, with modest volume of new sales supporting the clearance of existing unsold units in the region. New sales volume is expected to be between 50 and 70 units in April. There are no new major launches in the CCR expected in April.

Moving forward, several highly-anticipated mid- to large-scale projects by established developers will also be launching in second quarter or beyond: Waterfront @ Faber in Clementi by World Class Land, Commonwealth Towers by CDL and Hong Leong Group, CoCo Palms by CDL, Highline Residences at Kim Tian Road by Keppel Land, and, and Marina One Residences by M+S.

With the TDSR in place, local buyers are increasingly price quantum sensitive, and it is important for developers to price their projects optimally, particularly big projects, in order to achieve strong sales.

Second quarter new sales volume is expected to improve from the first quarter, to between 2,200 and 2,500 units, as market interest gradually return with anticipation of developers’ attractive offerings for their new launches.

Tricia Song, analyst, Barclays:

We believe projects that are located within 100-200m of MRT stations and in areas not already saturated with previous supply will still remain more popular. The Straits Times reported on 15 April that 1,500 people flocked to the first-day preview (13 April) of Commonwealth Towers next to Queenstown MRT station.

This is a 43-storey condominium on Commonwealth Avenue. It is set to launch in 1 May, with completion by late 2017. With full condo facilities, this 99-year leasehold project will offer 845 units of 1-4BR apartments ranging in size from 441sqft for a 1BR to a 1,302sqft 4BR.

Buyers can choose from units offering a variety of views such as the city and Southern Ridges. The project will be jointly developed by members of the Hong Leong Group – Hong Leong Holdings, City Developments Limited (30% stake; CIT SP; UW; PT S$9.08) and Hong Realty.

The land was purchased via the Government Land Sale tender in Feb 2013 at S$883psf per plot ratio. We estimate breakeven at S$1,395psf and a selling price of S$1,600psf. We expect if the developer were to price it below this level, interest could be better than expected. Projects in that location – namely Queens and Alexis – have been transacting at S$1,358psf and S$1,839psf, respectively over the past year, while projects around Redhill MRT station (a station nearer to town) saw transactions of S$1,323-1,729psf.

Chia Siew Chuin, Director of Research & Advisory, Colliers International:

 With developers focusing on moving units in previously launched projects, there were only two new projects launched in March. They are the 597-unit The Santorini located in the Outside Central Region (OCR) and the 28-unit Ascent@456 located in the Rest of Central Region (RCR), both of which were fully launched. Developers did not launch any new projects in the Core Central Region (CCR).

Overall, the units launched in the CCR, RCR and OCR respectively took up 1.5%. 11.9% and 86.6% of islandwide new launches of 724 units (excluding ECs).

The increase in new homes sales in both the CCR and RCR failed to mitigate the fall in project sales in the OCR, leading to a decline in the overall sales volume islandwide.

The number of new homes sold in the OCR was halved to 299 units in March. Although the fully-launched The Santorini sold only 76 units, the project still come in top in terms of sales tally amid a slow market with few project launches. Homebuyers picked up the remaining 223 units from previously launched projects such as Rivertrees Residences, The Glades and Urban Vista.

Sales in the RCR and CCR improved 44.3% and 1.9%, respectively. The improvement in sales volume was due to homebuyers picking up units from previously launched projects. These include Eight Riversuites (44 units sold), Guillemard Suites (14 units sold), and Bartley Ridge (12 units sold) in the RCR, as well as Hallmark Residences (13 units sold), Liv on Wilkie (9 units sold) and Goodwood Residences (8 units sold) in the CCR.

Units sold in the CCR, RCR and OCR constituted 11.3%, 26.5% and 62.3%, respectively, of islandwide new sales of private homes in March 2014.

Now that the TDSR has been in play for nine months, the dust has somewhat settled and buying volume is likely to improve in tandem with the anticipated launch of attractive and well-located residential projects.

Nonetheless, there appears to be little respite for the private residential property market at least in the short term. This is in view of the continued enforcement of the cooling measures, the tentative recovery of the global economy, as well as longstanding concerns of potential interest rate increases and a mounting supply of homes. In light of various headwinds, the theme of affordability will persist and homebuyers are expected to remain highly selective in their purchases.

Taking into consideration the healthy interest seen during the launch of Lakeville in early April, primary market sales volume is expected to climb to the region of 500-800 units in April before improving further in the following months.