Q&A: Infocomm Development Authority's Steve Leonard

Q: Singapore created the Technopreneurship Investment Fund (TIF) in early 2000s and other initiatives followed, but in recent years there seems to have been a concerted push to become a technology hub. Why?

A: We think the timing is good and we have a very important agenda. The "smart nation" agenda requires a huge amount of innovation. It's not about us saying, "Start-ups are important to us, so please try," but having an environment that is open to new ideas. We don't want to just consume tech, but to build tech, such as integrating existing technologies and creating something new. Eventually we want other countries to talk about the technologies Singapore has developed and how they can be important to them.

Q: The smart nation scheme has identified key areas such as big data and analytics, the Internet of Things and wireless networks. What does this mean for local start-ups?

A: The smart nation vision includes creating standards, which will focus on developing communication tools, data processing, information security and wireless usage. This creates opportunites for start-ups to innovate, build new services and enable new market possibilities. IDA will also work with research institutes to achieve this vision. The Singapore government has already committed S$16.1 billion ($12.8 billion) over five years from 2011-2015 for research and development across biomedical sciences, chemicals, energy and electronics. Again, this creates huge potential for start-ups - businesses can be built in any of these areas.

Q: Has Singapore studied how other governments use incentives to develop technology hubs?

A: Singapore can't just simply copy other tech hubs like Silicon Valley, but we think we have many of the ingredients to build a real hub for tech product start-ups. We don't want to copy, we want to learn. China, for instance, is in a different situation in terms of market size and population, so the approach towards nurturing start-ups may be different. Silicon Valley, meanwhile, took more than 15 years to get where it is now. What we are pursuing in Singapore will also take time to achieve. Furthermore, we need a strong combination of several ingredients. Silicon Valley has good universities, lots of active investors and it's a great place to live. It is also worth looking at the role of government. Back in the early days of Silicon Valley, the government played a very important role, building laboratories for US military research, which led to breakthroughs in areas such as radar technology. The government put in the initial effort and then technologies gained traction in the private sector, but it took years for things to finally work.

Q: What has IDA been doing to help create an optimal start-ups ecosystem, particularly in terms of early-stage funding?

A: In addition to private VCs, there is seed funding provided by the National Research Foundation (NRF) under the Early Stage Venture Fund (ESVF) initiative. The government recently invested S$60 million, which will be matched by capital from six private investors to create an investment pool for early-stage companies before they raise Series B rounds. A number of VC funds have also been set up to focus on Series A rounds. However, our concern is we need to make sure we're building enough companies that deserve Series A funding. Instead of putting more money into average companies, we are looking to improve quality and build companies' capabilities. Some steps have already been taken in this direction.

Q: Singapore-based start-ups have to attract substantial interest from international VC investors. Why is this?

A: Sometimes VCs misunderstand the position of Singapore. They look at it and think the market isn't big enough, but that's missing the real story. We don't think of Singapore as the only market. There are more than 600 million people within a short flight of Singapore, and 4.3 billion within 6-7 hours' radius. We offer access to a lot of these markets through our established relationships. If you want to register a company and be sure that your intellectual property is safe, Singapore is the place. I wouldn't argue with VCs that say they want to go to China because it's a big market, but from Singapore it is possible to do business with San Francisco, London and China. And then we have our goal to become the world's first smart nation. International VCs should be interested in this environment - the research institutes, students, corporations and government are making efforts to drive innovation.

Q: How important are IPO exits to Singapore start-ups?

A: That is an area we still have to work on. We have trade sale exits but we don't have a long history of public floats on NASDAQ or the Hong Kong and Singapore exchanges. Our first goal is to make sure we work on the things that we can do. Public market exits are not our primary concern. We have to make sure the companies we support are interesting, strong, and global enough that VCs want to be involved with them. The international venture capital firms can then offer advice on the best exit routes for these companies.

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• Topics
• Southeast Asia
• Venture
• Early-stage
• Singapore
• Southeast Asia
• Venture
• seed