Singapore accelerators: Corporate orientation

The high speed of incubator and accelerator proliferation in Singapore, like a time-lapse video of plant growth, has helped reveal a number of slower developments. While this process naturally includes a glimpse at the future of gradually evolving technologies, it also provides a bellwether for much of the wider investment industry.

Singtel Innov8 is encapsulating a number of these themes by partnering with a start-up program at the National University of Singapore to launch a cybersecurity incubator. For many industry observers, the essential takeaway is clear: Increasingly competitive and technical company development environments are encouraging private investors to specialize and engage other stakeholders in new ways.

At the same time, ICE71, as the incubator is known, reflects a growing eagerness among corporates in legacy industries to cozy up to their technological disruptors. Singtel Innov8 is the venture arm of venerable telecom giant SingTel, which has been dabbling in cybersecurity since 2016 when it set up a 10,000-square-foot dedicated training facility in Singapore’s Tampines residential district.

Go with the flow

ICE71 extends a recent raft of similar moves in the city-state by the likes of PayPal, Hewlett Packard Enterprise, Insurance Group Australia, and DeClout. In December, Japanese e-commerce giant Rakuten added to the momentum by helping US accelerator business Techstars set up a Singapore program, its first in an Asian city.

“This is a natural iteration of the business model that’s happening right now for accelerator programs,” explains Oko Davaasuren, director for Techstars’ Asia Pacific start-up programs. “More and more, these larger corporations are seeing the need to innovate faster and be able to interact with the innovation ecosystem faster, so an accelerator naturally becomes one of the mechanisms they can use to do that.”

Techstars began operations in 2006 by setting up sector-agnostic, accelerators with a tight geographic focus such as Techstars New York City. Since teaming up with Microsoft in 2011, this strategy has given way to more vertically oriented, corporate-backed programs with heavyweights including Disney and Amazon. Around 60-70% of the organization’s various accelerator cohorts are now sourced from outside the home city of any given program. 

The regionally inclusive Singapore program with Rakuten is said to be the first of its kind to focus on messaging platforms with support from a global brand. Rakuten, which separately manages its own VC unit, sees patience for long horizons as one of the key advantages of corporate backing versus commercial VC financing in company creation.

This thesis is echoed by PayPal, which brought its Start Tank program to Singapore in 2016 in an attempt to defend itself from disruption in areas such as machine learning, blockchain and cybersecurity. The financial technology giant reciprocally offers scaling support via a substantial existing regional footprint and professional input.

“Small businesses benefit from having a small consulting team take an outsider’s look into their operations and plans as a sounding board for ideas and as specific domain experts in areas that the businesses may be lacking,” says Anupam Pahuja, general manager of PayPal’s Singapore development center. “They are also able to gain access to our mentors and partners.”

Real alignment?

The key pitfall of this approach – which may ultimately limit its potential to reshape VC – is in the low likelihood of corporates extracting practical benefits from seed-stage entrepreneurs. Corporates worried about future growth in the context of encroaching disruptors will eventually need to pursue more acute strategies that define exactly how to realize targeted results.

Rainmaking, a globally active incubator provider that operates in Singapore through the Startupbootcamp brand, has nevertheless indicated that it would not launch a program without multiple corporate partners. The scaling and mentoring benefits are too great to do without. However, the firm believes accelerator operators must do more to assist corporate partners in clarifying their objectives while reducing cultural friction with independently minded entrepreneurs.

Sam Hall, Rainmaking’s managing director for ASEAN and a program director for Startupbootcamp in Singapore, sees his company as sitting at the confluence of the start-up and corporate ecosystems. This “pilot collaboration” approach requires the participation of companies that have matured to at least the Series A stage in order to have a demonstrable business impact for the corporates.

“Often, internally run corporate accelerators really don’t lead to much success for the corporates that are doing them,” says Hall. “Generally, the approach to corporate innovation over the past 5-10 years has been to create an innovation lab and run a start-up competition. They’ve done a lot of events and had a lot of companies pitching, but they haven’t really been able to engage and develop solutions with these companies that have manifestly impacted their businesses.”

In this light, incubators and accelerators may need to begin reassessing themselves, at least in part, as corporate innovation consultancies. This role will largely involve helping corporates be realistic about the best motivations and methods for pursuing start-up partners.

“If you can make [a corporate accelerator] work as a marketing play, well done for you, but I’ve not seen anyone do it,” says Hall. “If it’s an HR ploy about culture and behavior in the company, that’s fine but again, I don’t think we’ve really seen success there – and that’s not an innovation agenda.”

One of the standout successes among outside accelerators setting up shop in Singapore highlights perhaps a more fundamental headwind for the corporate takeover of start-up development. Entrepreneur First, a UK-based accelerator operator with a resolute philosophy of self-sufficiency, launched a Singapore unit in 2016 and now attributes more than half its business to the program. A Hong Kong office was set up last month to capitalize on the momentum.

“We want our talent to have free rein with their ideas and what they want to build,” says Lavina Tien, a general manager at Entrepreneur First. “If we had a corporate looking over us, there would definitely be some conflict of interest. With a bank, for example, we might be inevitably driven toward fintech, and we don’t want that. We want to let things grow a bit more organically and see where the cohort takes us.”

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Southeast Asia
• Venture
• Early-stage
• Technology
• Singapore
• SingTel Innov8
• TMT