From the investment trends Singapore has witnessed to its desired image as a global tech hub, the city-state now shows that it can compete with the best in other regions. According to the Global Startup Ecosystem Report (GSER) 2023, which analyses the state of startups worldwide, Singapore has moved up ten places to number eight in the world rankings. Silicon Valley retains the number one position, while Shanghai is number nine. 

Startup Genome creates the GSER Report and provides insights into emerging trends, entrepreneurial challenges, and the identity of the world’s leading startup ecosystems. The report reviews 3.5 million startups across 290 global ecosystems and combines the researchers’ experience in giving policy advice to various stakeholders. The report examined factors like startup funding, available tech talent, market reach, performance, and more.

Singapore tech startups emerge as the biggest fund magnets in Southeast Asia according to report by SGInnovate

Singapore VC trends have shifted slightly recently, with investors mainly supporting streamlined businesses with good governance. This change is vital due to the challenging global economic situation. Nevertheless, the Association of Southeast Asian Nations (ASEAN) still performs better than some other areas. In the case of Singapore, the Ministry of Trade and Industry (MIT) said in the Economic Survey 2023 Report that its economy will expand by 0.5% to 2.5%.

Differences between Singapore and other startup and VC hubs

According to the GSER Report, Singapore’s result was impressive because it had undergone a funding winter due to inflation and other factors. Even so, the country offered profitable exit opportunities, with mergers, acquisitions, and public listings being the order of the day. DealStreetAsia reported 176 deals in 2022, up 50% from the previous year. Singapore also had the highest private capital in ASEAN ahead of Indonesia and Malaysia, with 46% compared to 27% and 12%, respectively. 

Singapore surpassed Shanghai, which faces challenges such as government interference with companies, extended lockdowns because of the COVID-19 pandemic, and a prolonged trade war with the United States. Silicon Valley remains the hub to beat, generating many startups, receiving high investor interest and funds, and getting multiple opportunities for mergers and acquisitions. 

Nevertheless, Silicon Valley is a costly location to set up a business in California. The infrastructure needs improvement, the startup culture can be toxic, and larger tech companies operate as monopolies. The US economy has also been reeling from the testing global economic pressures, with inflation leading the economy toward a recession. These changes may limit VC funding and prevent founders from having enough capital to begin operations.

Several factors are helping Singapore to be competitive as a startup and VC hub:

Government funding and support

The provision of funds by the Singaporean government is helping to enable the entire country to transition to a digital economy. It has also been adopting technology into its services, ensuring the public begins transitioning to tech as it strives to build a smart nation.

Tech talent

Even though the population in Singapore is tech-savvy and early adopters, they are receiving additional tech training and upskilling to become tech experts and boost innovation.

Digital infrastructure development

ASEAN’s digital transformation drive is prevalent in Singapore, and the city-state has embraced technological solutions in various sectors. Thus, the government is upgrading the digital infrastructure, introducing solutions like 5G.

Regulatory adjustments/policy changes

Improving the regulatory climate in the country has made Singapore a welcoming startup and investor environment. For example, changes to immigration laws make it possible to attract tech experts.

Foreign investment

Investment from overseas ensures startups in Singapore have enough capital and mentorship to thrive.

Future of Southeast Asia as a startup and VC hub

According to the e-Conomy SEA Report 2022 by Google, Temasek, and Bain & Company, Southeast Asia has been less impacted by global economic trends than other regions. However, there is a significant impact on consumers in the form of reduced disposable income for buying necessities, higher prices of goods and services, and decreased product availability. 

Despite this, Singapore VC trends show investors believe in the region’s long-term progress, with the city-state expected to get a 50% increase in deal activity between 2025-2030.

Many VCs are focusing on environmental, social, and governance (ESG) policies, with 50% stating that these considerations are essential for investors and consumers. The digital economy is growing to over USD 200 billion, increasing the carbon footprint to reach 20 million tonnes by 2030. The latest investment trends Singapore is experiencing are tailored toward ESG to encourage more people to adopt these policies.

Between 2022-2025, Singapore’s compound annual growth rate (CAGR) for the gross merchandise value (GMV) will be 6%, whereas the digital economy’s gross domestic product (GDP) will be 17%. Aside from the current enablers for the region—payments, talent, logistics, investment, internet, and consumer trust—advances in regulation, digital inclusion, profitability, and tech infrastructure will help Singapore sustain its growth as a startup and VC hub.