According to a media release published by Enterprise Singapore on 17 October 2019, venture investments in Singapore based startups are growing at a significant rate even while other sectors of the economy have slowed down. During the first nine months of 2019, investments in startups overall increased at a rate of 36% compared to the same period in 2018.
The most notable increase occurred in early-stage (Series A) funding, which reached $886.1 million SGD—nearly double that of the previous year. Growth stage (Series B) investments reached $12.5 billion SGD—an increase of 33%. Investment in startups all over Southeast Asia is gaining momentum, and investments in Singapore are at the forefront.
Government involvement in Singapore investments
Startup SG has developed several government-sponsored programmes to invest in Singapore’s local businesses and technologies. There are different programmes for different types of businesses. Some of these programmes, such as Startup SG Founder and Startup SG Accelerator, include mentorship and incubator programmes in addition to the financial aspect.
With Startup SG Equity, the government co-invests in Singapore-based technology startups in partnership with qualified third-party investors. The goal of Startup SG Equity is to buoy investments in Singapore technology startups that have the potential to become leaders in intellectual property at the forefront of the global market. There are two levels of investment parameters in the SG Equity scheme, with an investment cap of $2 million SGD for general tech startups, and $4 million SGD for deep tech startups.
What are deep tech startups and why are they important?
Most startups these days are technologically based. Digital tech startups claimed the vast majority of Singapore investment this year, capturing 93.2% of total capital.
Deep tech startups are different because they create new technology instead of using pre-existing technology to manifest new ideas. Shallow tech, such as websites, mobile apps, and e-commerce are easier, cheaper, and faster to develop—but the influence of even the most successful shallow tech will never have the far-reaching effects of the most successful deep tech companies.
Deep tech encompasses technologies such as artificial intelligence, biotechnology, robotics, electronics, machine learning, and quantum computing. These innovations can be applied in diverse areas where there is vast potential to change and hopefully improve humanity on a massive scale. Deep tech startups could forever change Agriculture, green and eco-technology, aerospace, new materials, and biomedical technology.
Despite these companies being on the precipice of changing the world, it is challenging to find investors due to the complicated nature of this technology. Investors often lack the experience and expertise necessary to comprehend the outlook for these types of companies.
The industry to watch
As deep tech becomes more mainstream, interest in deep tech startups will grow for both investors and entrepreneurs. From January to October 2019, deep tech startups saw a 25% increase in investments compared to the same time period last year.
The deep tech startups seeking investments in Singapore are a mix of international and locally founded businesses. The proprietary information is not easily replicated, so the projected ability to scale and compete globally is almost limitless. But for deep tech startups to become successful—they require significant investments. Lengthy, expensive periods of research and development are required before they are market-ready.
“While the numbers are still small, it is encouraging to see emerging VC interest in the deep tech domains. Globally, we see that an ageing, wealthier population, as well as urbanisation and climate change will create a growing demand for new, innovative solutions. On the back of this, we expect to see more deep tech startups being formed – be it through spinouts from our Institutes of Higher Learning or incubators and accelerators – to address these needs.”Edwin Chow, Enterprise Singapore’s Assistant Chief Executive Officer for Innovation and Enterprise
Deep tech startups are companies based on scientific advancement and innovation in engineering. The technology is often developed with the idea of disrupting current industries and making a global impact. While these industries are currently comprised of approximately only 4% of the total of Singapore investments, it would be foolish to ignore a field with such substantial projected growth.
The three fastest-growing sectors of deep tech startups are (1) advanced manufacturing, (2) urban solutions and sustainability, and (3) healthcare and biomedical sciences. Agrifood tech has also experienced significant investments and growth. Investment in Singapore is preparing the city to be a world leader in food, medicine, and clean living—and undoubtedly, deep tech startups are the city’s ticket to advancement. Society needs 21st-century advancements to solve its 21st-century problems.