Singapore a Powerful Startup Ecosystem
Prof Francis Yeoh highlights what is making Singapore a powerful startup and entrepreneur ecosystem. Without any doubt one of the leading Financial ecosystems, Singapore is now leading as well the startup world with its government and organisations uniting to make it flourish as a leading innovation and entrepreneur centre in the world and special in Asia. Here are his excellent insights worth reading and bookmark:
Singapore’s startup ecosystem: Have we arrived?
In the sixth part of a special series looking at Singapore’s burgeoning start-up scene, Professor Francis Yeoh analyses why the country is now seen as one of the world’s leading centres of tech entrepreneurship.
Scott Anthony in his 2015 Harvard Business Review article attributed Singapore’s development as an entrepreneurial hub to three factors: A hospitable environment for startups, serious government skin in the game and the use of soft power to address hidden barriers to entrepreneurship.
Many foreign entrepreneurs working in Singapore would readily agree with this analysis. Frenchman Guillaume Picard, CEO of travel website eOasia, chose Singapore rather than Hongkong or Bangkok as the base for his startup company because of the country’s strategic location, good infrastructure and supportive government. The two German principals of Voice2Choice, a startup company in voice synthesis, relocated to Singapore in 2015 for the same reasons, after spending over a year developing the technology for their startup in Germany.
GOVERNMENT SUPPORT FOR STARTUPS
Extensive government efforts to develop the eco-system have clearly made an impact. Singapore’s National Research Foundation (NRF) undertook a holistic study to identify weaknesses and gaps in the local entrepreneurial landscape and came out with programmes to address specific points of failure in a 2008 initiative known as the National Framework for Innovation and Enterprise (NFIE).
Programmes such as the University Innovation Fund (UIF), Proof-of-concept (POC) grants, Early Stage Venture Capital (ESVF) and Technology Incubation Scheme (TIS) have helped to create a virtuous cycle of entrepreneurial activity over the years, complemented by various other initiatives from the Media Development Authority (MDA), Infocomm Development Authority (IDA) and SPRING Singapore.
Data from the NRF showed that the roughly S$100 million allocated to investment schemes such as ESVF and TIS (as at March 2016) enabled supported startups to attract follow-on funding from private capital of almost S$400 million, giving an impressive leverage of four times the government’s outlay.
The TIS, supporting 16 selected incubators, has had the most visible impact. Entrepreneur turned investor Leslie Loh of Red Dot Ventures (one of the 16) called it a "game changer". Serial Entrepreneur Eddie Chau described TIS as "the engine which revved up the startup ecosystem".
The TIS scheme was based on a similar programme implemented by Israel in the 1990s, which had been instrumental in turning Israel into a startup nation. NRF supports 85 per cent of a selected startup’s funding, capped at S$500,000, while the TIS incubator puts in at least 15 per cent, or about S$88,000.
Of the 145 startups invested by the 16 TIS incubators, 61 attracted follow-on funding, 34 had exits and 29 (or 20 per cent) ceased operations. Not a bad record for a new scheme! While yet more of these startups may fail in the future, 20 per cent is comfortably far from the 70 cent failure rate typical of venture capital investments.
A more important outcome of TIS is that by providing the generous investment leverage and thereby greatly reducing investment risk, the government succeeded in drawing out a sizeable number of experienced local business executives as well as investors from the region to participate in TIS and become part of the startup community. These high net worth individuals play a vital role as angel investors and mentors in various startup programmes, significantly enriching the entire ecosystem.
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