SINGAPORE – The start-up scene here has much to show for in 2021, producing an impressive string of built-in-Singapore unicorns, which are private companies now valued at more than US$1 billion (S$1.4 billion).
Despite the economic headwinds induced by the pandemic, technology companies like PatSnap, Carro, Nium and others have achieved remarkable growth, carving out dominant positions regionally and even globally – in areas such as e-commerce, intellectual property, fintech, the biosciences and property tech.
Following in the footsteps of tech giants Grab and Sea, local start-ups are now making confident strides along a well-beaten path from seed and Series A funding rounds to a high-profile public listing.
Collectively, the tech community – what some have called Singapore Tech Inc – is flying the national colours high.
But how has Singapore done it – and how should the country ensure ongoing success on this front?
What the tech community needs
Singapore may not have a large marketplace allowing start-ups to scale quickly in a single jurisdiction – an important enabler for tech companies that make it big in the United States, China, India and the Euro zone.
But an awareness of its size handicap could also drive Singapore to work harder on other qualities that matter to the tech ecosystem here.
Some of these factors have underpinned the country’s prosperity for decades and are not unique to tech: A well-educated population; a safe and vibrant city; respect for the rule of law and an open economy.
Others are ingredients specific to tech.
Take regulations. Outside of tech, they tend to be designed to discourage unwanted behaviour on the part of companies. This is true for the ground rules in tech too. But in tech, regulation to encourage innovation – wanted behaviour – can often be just as central an objective.
Nowhere is this clearer than in fintech, given the closely regulated nature of the financial industry.
To support the emergence of fresh ways to deliver finance, the Monetary Authority of Singapore (MAS) embraces forward-thinking regulations – drawing up rules that would breed new fintech services ahead of time, and ahead of other countries.
One example is the fintech regulatory sandbox, which allows the MAS to issue licences to young companies that show they can turn an idea into an operation that runs smoothly and safely. Giving licences only to companies with past credentials can slow innovation, because established firms have to think about legacy infrastructure and business processes.
Another example of progressive regulation is allowing the national digital identity platform MyInfo to be used by companies to onboard new users and perform Know Your Customer checks. This lowers costs and helps start-ups to scale.
Regulating in a way that fosters innovation and competition has been a comparative advantage of the Singapore tech masterplan. As new areas of tech emerge, such as artificial intelligence, cryptocurrencies and the metaverse, Singapore would do well to keep up its brand of balanced regulation – that is, emphasising both stability and inventiveness.
A second key ingredient is capital.
Start-ups are not ready for public market investors – many have yet to break even. They draw their capital from a unique universe of funds willing to take bold bets on disruptive firms that, if successful, would have an outsized impact on society, while potentially returning ten, 100 or 1,000 times the investment when they eventually undertake an initial public offering (IPO).
Singapore has offered the right incentives for such funds to relocate here, creating a hub for venture capital, private equity and family offices. Variable corporate companies, or VCCs, are an example of a new type of entity rolled out by the authorities in recent years to attract global capital by offering more flexibility in the way funds are structured.
A diverse funding ecosystem is vital, because it is not just capital that tech start-ups need but experienced capital.
One VC fund may be specialised in e-commerce platforms, spending years analysing the space and developing good intuition about which e-commerce idea might work, and which might not. Another might be focused on insurtech, and yet another could have a special interest in electric vehicles.
A strong tech start-up fundraising community exists today in Singapore. The broadening and deepening of this community should go on.
An admiration for innovation
Finally, the talent. Once regulations and capital are in place, it is the people who dream dreams and make them reality. That includes people working as engineers and programmers, who we would more readily think of as tech talent.
But behind every expanding tech start-up is a bigger team that includes product managers, UX/UI designers, digital marketers and data analysts.
Many of these tech professionals are in Singapore today. Others may be working in hubs like the Silicon Valley, Beijing, Mumbai or London. To succeed, Singapore should draw from a wide pool, and schemes like Tech.Pass – a visa for tech leaders and experts – are powerful both substantively and symbolically, as an announcement of Singapore’s tech ambitions.
With time, more Singaporean parents and students will hopefully aspire to these jobs. Many already do. Tertiary institutions should also work with tech companies to design curriculum that is not overly textbook-focused, and paints a realistic and exciting picture of what tech start-ups do.
The final ingredient is culture. A tech ecosystem can only flourish if the regulations, capital and talent are embedded in and nourished by a culture that admires tech innovation.
Among the population, there has to be an appreciation of tech not just because tech start-ups are cool or successful, but also because of the difference they could make to our lives.
Every seamless tech-enabled service taken for granted, from ride-hailing to wealth management, was the result of grit and ingenuity by a start-up somewhere. If that start-up is a Singapore one, will Singaporeans take pride in that fact?
In the long run, a groundswell of support will make the growth of Singapore’s tech ecosystem more sustainable.
- The writer is chief commercial officer of digital securities exchange ADDX (formerly known as iSTOX).
