Singapore accelerators: Searching for sustainability

“I think this game has been won,” says Anne Marie Droste, a director with Entrepreneur First, a self-styled company builder that recently expanded into Singapore with a view to turning local deep technology talent into start-ups. “Y Combinator (YC) is the best accelerator in the world. This means other accelerators around the world must find a niche to guarantee deal flow.”

Droste’s perspective is based on a conviction that the accelerator market is worldwide: the best accelerators will attract the best start-ups, assuming those companies have globally relevant business models. This view is not shared by everyone, but Singapore appears to be plotting a course from generalist to specialist. While the transition is influenced by global forces, there are also various local nuances at play, notably around the sustainability of the traditional accelerator model.

JFDI.Asia was the first accelerator to set up shop in Singapore, arriving in 2010 with a program modeled on that of US-based TechStars. It achieved some success with a generalist model, but the sixth and final batch of start-ups graduated in December 2015. Hugh Mason, one of the founders, is now applying accelerator skill sets to other scenarios, for example working with corporates on venture builder programs.

“Our accelerator worked for a while, but then the market moved on,” he says. “As the ecosystem matures and the knowhow you are sharing becomes more widely available you have to up your game. Some accelerators grow their scale and others take on more mature companies. The other issue is that a lot of the obvious stuff that made dotcom 1.0 has all been done. The accelerators that survive in Singapore will have some genuine expertise in a particular domain.”

Feeding frenzy

The combination of JFDI’s early momentum and government funding also prompted more accelerators to enter Singapore – educational institutions trying to leverage their supply of raw talent, real estate developers looking to add value to co-working spaces, and corporates seeking exposure to new technologies. The net effect was too many groups fishing for deals in a relatively shallow talent pool.

Entrepreneur First is an example of how certain accelerators are trying to avoid the congestion. Founded in London, the firm targets start-ups at an earlier stage than traditional accelerators, often identifying someone who could be a strong entrepreneur before the individual in question has seriously considered such a career path. The competition is therefore not so much accelerators as companies that employ such individuals.

“We have a massive data set on what individuals look like before they start companies,” says Droste. “We also have a very reliable and proven process for turning individuals into companies.” The focus on deep tech is a function of the talent pool; Singapore has a strong competency in scientific research, and these researchers fit Entrepreneur First’s founder profile.

This is a gamble because the city state doesn’t have a history of producing this type of company, but it is also a means of differentiation. Unframed, which focuses solely on technology companies that have a clear social impact angle, has taken a similar approach. It started out as a pure accelerator, but then introduced a training academy, whereby start-ups choose to join whatever tracks best suit their needs.

“With a very rigid program, it is difficult to meet the needs of all start-ups,” explains Larry Tchiou, founder of Unframed. “At the same time, our flexible training programs mean we can reach out to more entrepreneurs, including those not yet ready for an accelerator. We collect information from a large pool of candidates and track them at multiple points throughout their lifecycle. Typical accelerators can only collect information during their call for applications.”

Furthermore, Unframed felt that it would be difficult to achieve critical mass on the back of one or two accelerator programs a year. The firm has backing from several sponsors, but the academy generates additional short-term cash.

This economic consideration was also pertinent to JFDI. As a traditional accelerator, it raised capital with a view to generating returns, but the timeline to exit is unclear in Southeast Asia. As a result, partnerships with corporates, in the form of sponsorship as well as outsourced accelerator programs, are now pursued by a majority of firms active in the Singapore market.

Startupbootcamp Asia falls into the latter category. The accelerator program is supported by a consortium of corporates, which cover costs and offer industry expertise. Startupbootcamp is also a specialist, focusing exclusively on fintech.

Fintech fight

However, the firm is in an interesting position because most sector-focused accelerators established over the last couple of years have targeted fintech. A number are backed by financial institutions that want to keep track of the technologies that could disrupt their business models.

Steven Tong, a managing director with Startupbootcamp Asia, admits there is not enough quality in the ecosystem and this results in start-ups being recycled. Several have moved on to corporate accelerators, the suspicion being they are attracted by the “free money” on offer. But he doesn’t see a great deal of direct competition: fintech start-ups require a level of support that generic accelerators struggle to provide, and founders recognize that corporate programs aren’t always the best place for them.

The general view is that there will be a shake-out. JFDI’s Mason characterizes the corporate approach to innovation as a five-stage process that runs from obliviousness to start-ups, through captive VC funds, hackathons and in-house accelerators, and ends with a new CFO deciding to shutter the operation because it isn’t creating any value. He estimates Singapore is 6-9 months away from that final stage.

Nevertheless, this doesn’t answer the more fundamental question as to whether the traditional accelerator model can work in Singapore. “There are relatively few professional accelerators, groups that really do it for a living, and I don’t see that changing any time soon,” says Startupbootcamp’s Tong. “Also, the accelerator model is way overdue an overhaul. It worked at the start but it may not work that well now.” 

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• Topics
• Southeast Asia
• Venture
• GPs
• Singapore
• JFDI
• seed