The Singapore tech startup ecosystem stands 18th on the Global Startup Ecosystem Ranking created by the world-leading innovation policy advisory and research firm Startup Genome. It has a valuation of $22.5 billion USD, whereas emerging businesses worldwide are worth $3.8 trillion USD.
According to Enterprise Singapore, a developmental government agency, tech startups within the nation raised $5.3 billion USD in the first half of 2021, an increase of $1.9 billion from last year. Moreover, they closed 355 funding deals, up from 317 agreements in 2020.
The number of tech startups has been on the rise because the country has positioned itself as a fertile ground for investment with favourable working conditions. Professional services firm PricewaterhouseCoopers (PWC) says Singapore’s startup ecosystem success can be measured by its unicorns, companies valued at over $1 billion USD. The growth of these highly-valuable businesses is inspiring others to venture into the tech field.
Other factors working in the country’s favour, according to PWC, are the ease of doing business, a modernised infrastructure, and its strategic location in Southeast Asia. In addition, universities and companies are improving the level of tech talent, with people encouraged to innovate and solve societal problems. The concentration of investors has boosted local startups and attracted foreign-based ones, such as Grab, to relocate.
Overcoming the challenges of COVID-19
Health and economic wellbeing not only became the order of the day when the COVID-19 pandemic struck but also encouraged the early adoption of various technologies. The government allocated $352 million USD to bolster companies’ digital transformation efforts to deal with the outcomes of the virus.
Moreover, the demand for cashless and contactless transactions boosted the financial technology (fintech) sector as the desire for disruptive solutions increased. The Monetary Authority of Singapore (MAS) announced $125 million SGD to help financial institutions and fintech startups cope with COVID-19. Movement restrictions and the need for cross-border transactions ensured the industry would take centre stage for a while.
Regardless, the digital economy took off, as eight out of ten Southeast Asian internet users bought items online. Since the pandemic started, 60 million people have become digital consumers, with 20 million joining in the first half of the year. Thus, as per Google’s eConomy SEA report, 2021 is set to be the busiest deal year, with investors flocking to the region to grab a piece of the pie.
Presently, the Global Startup Ecosystem Report (GSER 2021) shows that Singapore has the highest median funding ranges. For example, the total early-stage funding stands at $2 billion USD, whereas the global average is $548 million USD. The median seed round is $600,000 USD and Series A rounds typically secure $4.8 million USD, against the worldwide averages of $480,000 USD and $3 million USD, respectively.
Rich families in Southeast Asia are said to be interested in investing in the next potential unicorn. Many investors are seeking to capitalise startups, connect them with Special Purpose Acquisition Companies (SPACs), and list them on a foreign stock exchange. Venture capital firms expect investments from wealthy people will accelerate innovation and enhance tech ecosystems.
A bright future
Bloomberg ranks Singapore as one of the most innovative cities, establishing a home for 3,800 tech-enabled startups. It has become a hub for entrepreneurial talent, inviting over 200 investors and hosting 190 accelerators and incubators to mentor, support, and boost businesses. Consequently, the country is now the tech gateway to the rest of Southeast Asia.
Furthermore, the government is working closely with stakeholders and investing millions of dollars in the startup ecosystem. It is pumping $300 million SGD and raising the early-stage funding ceiling to $4 million SGD, according to Startup Genome.
The Singaporean government’s Open Innovation Network and the Global Innovation Alliance are boosting the local startup community and helping with expansion into the worldwide market, respectively. This has allowed fifteen companies, including Nium, Grab, Carro and Ninja Van, to become unicorns.
Many of the unicorns operate in finance, while the rest deal with eCommerce and logistics. In Singapore, three technology sectors are growing: fintech, agritech and cleantech. The innovations in these industries are enabling financial convenience and solutions to tackling the challenges of environmental sustainability and food insecurity.
Despite funding gaps and increased regional competition, the nation’s tech startup ecosystem has all the necessary ingredients to thrive. The country continues to attract new businesses and investors with money to spare. The government’s policies and backing are also fostering related brands to support existing industries.
Ever-increasing advances in technology, such as artificial intelligence, will permit many of the emerging tech startups in Singapore to produce significant solutions. As a burgeoning population continues to accelerate their adoption of the internet and mobile networks, opportunities for tech startups will abound.