It is one of the world’s leading financial hubs but Singapore is now looking to add a little entrepreneurial spirit to cement its place in the global business landscape
Any enterprise with international ambitions can ill-afford to ignore Asia; the commercial opportunities that it presents are nothing short of enormous. It’s little wonder a temporary economic downturn in China can send shockwaves far beyond its 1.3 billion inhabitants.
And lest we forget that for every Facebook, Google and Apple that’s been spun out of Silicon Valley, there’s been a Samsung, Sony and Nintendo emerging from the East.
Nevertheless, the companies grabbing the headlines of late have been the likes of Airbnb, Uber and Tinder, all of which reside in sunny San Fran. Aside from Alibaba, startup success stories from Asia have been conspicuous by their absence in the mainstream Western media.
Take Singapore, the densely populated city-state that lies off the southern tip of the Malay Peninsula. The country is currently ranked as the easiest place to do business by the World Bank, a title it’s held for nine years. This means the city is already set up pretty well for any western business with its eyes on Asia. “It has a highly-educated, English-speaking population, a strong business climate, excellent infrastructure, a stable political environment and a competitive tax regime,” says Nick Aston, managing director for Asia at World First, the foreign exchange company. “And crucially, for our business, there is a large number of import and export companies, as well as a wealthy local population who are buying a lot of properties abroad.”
Also ranked as Asia’s most influential city and fourth in the world by Forbes, one would expect Singapore to be an entrepreneurial hotbed in the mold of London and Silicon Valley. Yet while some of the world’s biggest financial players and other global brands have a presence in the country, it has struggled to both attract and create some of the forward-thinking brands of the future. But that’s starting to change.
Engineering an ecosystem
Infocomm Investments, the investment division of the Infocomm Development Authority of Singapore (IDA), the Singapore government’s tech arm, has recently released a $200m fund to help European startups gateway into Asia and in turn build the entrepreneurial ecosystem in the country. “Rolls Royce, GlaxoSmithKline and others have big footprints in Singapore but we’re trying to be attractive to startups and scaleups too,” says Steve Leonard, executive deputy chairman of IDA. “That’s why we are spending time with UK organisations like Entrepreneur First, Imperial Innovations, Cambridge Enterprise and Founders Forum. We want to be another node on the network along with London and San Francisco.”
This is just one part of a concerted effort from Singaporean authorities to really build the country into a technological hub to be reckoned with. As well as actively investing in the companies it believes can propel Singapore forward, the government has been hard at work constructing an infrastructure that makes the city an even more attractive place to both launch and grow an enterprise.
Suffice to say, the backing of the government hasn’t gone unnoticed by the companies setting up shop in Singapore. Metail, the London e-commerce startup, has recently established its Asian operation in the country and the company’s managing director for Asia, Kelvin Au, believes the help from above is one of Singapore’s biggest selling points. “What the government is doing in Singapore is really driving the ecosystem here,” he says. “It is not just establishing spaces for startups and putting in money and resources; it is really trying to link up the whole ecosystem by establishing connections between entrepreneurs. universities and investors.”
Singapore’s proximity to some of the world’s biggest growth markets also makes its an incredibly compelling proposition for startups. While the local economy is a good place to begin your Asian expansion – Singapore has the world’s highest percentage of millionaires, with one out of every six households having at least $1m in disposable wealth – the population of Singapore only hovers around the five million mark. This means its real value is as a hub from which to gateway into neighbouring countries like Malaysia and Indonesia.
“When you look at e-commerce growth, Asia is the number one,” says Au. “That’s been driven not just by mainland China but also by South-East Asia. It’s a region where you can very quickly and easily tap into a population of 600 million in just one go.”
Predictably, if there’s one area where Singapore’s startup spirit is really starting to bare its teeth, it’s fintech. With the majority of the world’s largest banks having headquarters in the city, there is ample access to the people that fintech startups need on their side in order to grow.
But what’s compelling about the Singaporean fintech scene is its roots, which differ markedly to London. “In London, fintech has very much been pushed by the crisis in 2008,” says Markus Gnirck, co-founder and global COO of Startupbootcamp Fintech, the fintech accelerator. “There wasn’t a crisis in Singapore but you still have people leaving the banks and starting fintech startups or at least becoming angel investors to really share their knowledge.”
Startupbootcamp Fintech has recently opened a Singapore branch while becoming the first company to take investment from the IDA’s $200m fund. Gnirck believes the country’s rich financial heritage and a fintech-friendly government make Singapore the ideal base for Startupbootcamp Fintech in Asia. “What is really compelling about Singapore is that the regulator is very nicely involved in everything around innovation in fintech,” he says. “It is officially supporting the programme with its people. It is coming in every second week to meet startups and it has an open ear to questions about the regulatory framework. That’s quite unique in a way.”
This view is shared by Sidd Gandhi, founder and CEO of KyePot, a fintech startup and Startupbootcamp Fintech alumnus. As he explains, being based in Singapore has been something of a selling point to investors. “We get so much interest when investors hear we are in Singapore and based out of an ecosystem that has government support,” he says.
The government is undeniably doing its bit to make Singapore the startup capital of Asia but there’s still a long way to go before it spawns the next Google. While there’s ample early stage investment available from the government, VC firms and private investors, the involvement of the bigger overseas players remains crucial.
The likes of Sequoia Capital and Golden Gate Ventures already have a footprint in Singapore but other West Coast investors still don’t have much incentive to look far beyond their immediate vicinity. “One of the challenges we face is not terribly different to London,” says Leonard. “Ultimately, a lot of the funds on the US West Coast are quite happy to focus within a relatively localised area. After all, if you can put money into an Airbnb or an Uber, why would you spend a lot of time and energy understanding what opportunities might exist in South-East Asia?”
The mindset of investors in and around Singapore has also held things back to a certain degree but there are signs of progress. “Investor appetite in Asia still remains very risk-averse compared to Silicon Valley but massive strides have been taken in the last three years so I’m confident that we will see a big shift soon,” says Vince Tallent, chairman and CEO of Fastacash, the mobile payments company. “It always takes a while for investor appetite to change.”
One thing’s for certain: Singapore is aiming to become a startup hub like no other. “We are not trying to replicate Silicon Valley or anywhere else,” concludes Leonard. “We’re trying to think about the right thing for our environment.”