The Singapore startup scene in 2022 promises to be an exciting investment destination for US investors. While the most valuable unicorns are US-based, the Asia-Pacific (APAC) region’s value of exits through company acquisition or public listing is close to North America’s over the last decade. North America leads the pack with $269.52 billion USD, APAC with $210.87 billion USD, and Europe having $28.4 billion USD worth of exits.
Singapore is America’s 17th largest goods trading partner, with 2020 reciprocal trade standing at $57.8 billion USD for goods and an estimated $35.9 billion USD for services. Furthermore, US foreign direct investment (FDI) in equity increased by 3.9% to $270.8 billion last year.
Despite the negative impact of the COVID-19 pandemic in the city-state, response measures have protected many of its citizens and businesses, kickstarting the shift to a digital economy and encouraging the growth of new tech startups.
We take a closer look at Singapore’s thriving tech startup ecosystem
Here are a few reasons why US investors in Singapore can benefit from investing in the country next year:
Gateway hub
According to the Global Startup Ecosystem Report 2021 (GSER) by Startup Genome, Singapore is the gateway to Southeast Asia and home to unicorns such as Grab, Lazada, and Sea Limited. It has over 3,800 tech-enabled businesses. Its startup ecosystem looks set to accelerate for several reasons: a high ranking in innovation, attracting entrepreneurial talent, and a strong background in science and technology.
Moreover, Singapore ranks third in regional ecosystem funding and 15th globally. It’s in the top 10 for regional ecosystem performance. These factors make the country a viable venture for US investors.
Government support for digital transformation
Singapore’s government is leading the charge for digitally transforming the entire country, beginning with how it delivers public services. It seeks to transform the country into a tech-connected nation with artificial intelligence, the Internet of Things (IoT), smart sensors, data centres, and information and communications technology (ICT) infrastructure.
Last year, the government allocated $352.49 million USD to prop up local companies during the COVID-19 crisis and enable them to adopt a digital business model. In addition, the GSER 2021 report says the Singaporean government is working with 190 accelerators and incubators, universities, and investors to support, mentor, and fund startups. This public-private backing makes investing in new businesses an easy decision.
American ties
In August, US Vice President Kamala Harris arrived in Singapore to expand economic, digital, and cybersecurity cooperation. The recent visit of US Secretary of State Antony Blinken shows the United States is keen to reaffirm its commitment to countries in the Association of Southeast Asian Nations (ASEAN), of which Singapore is a founding member.
The US and Singapore signed a free trade agreement (FTA) in 2004, which enhanced their trading relationship and resolved trade issues. In October this year, the two countries praised the impact of the FTA in establishing longstanding and robust bilateral relations.
Furthermore, there are over 4,500 US companies registered in Singapore, such as Microsoft, Google, and Apple. It signals to American investors that the city-state is a reliable partner for trade and investment.
The rise of unicorns and surge in investment
According to the Southeast Asia Tech Investment report 2020 by Cento Ventures, 64% of the total deals done in the region went to Indonesian and Singaporean startups. This funding is pushing new businesses towards unicorn status, and it informs investors that there are potentially profitable deals available.
Moreover, the Global Innovation Alliance (GIA), a network of Singaporean and overseas partners, connects local companies to foreign investors, turning the companies into unicorns through funding, acquisition, or listings on stock exchanges.
New partnerships for growth and innovation
Finally, the recent signing of a memorandum of understanding (MOU) between the US and Singapore to establish a partnership for growth and innovation will strengthen trade and investment between the two nations. US Secretary of Commerce Gina Raimondo and Singapore Minister for Trade and Industry Gan Kim Yong said the deal would bring the governments and private sectors together to develop policy and commercial ties in four key areas: eCommerce and cybersecurity, healthcare, clean energy and environmental technologies, and manufacturing.
Cooperation will help both countries recover from the economic damage caused by the COVID-19 pandemic, and startups will benefit from increased investment and government support.
US investors in Singapore should consider the country’s potential to deliver profitable returns for their targeted investments as the new year begins. The city-state has already demonstrated that it is a good partner to the United States. It is creating a stable business and regulatory environment for local and American companies to thrive.
The Singapore startup scene will be booming in 2022 as the government continues investing and overseeing the $22.5 billion USD ecosystem and collaborating with other stakeholders to establish innovative businesses that will benefit the country.