Singapore: Start-up central

Darius Cheung recalled meeting with about 50 investors but only five could write checks of the size tenCube was looking for. The company eventually received some informal seed funding and then a formal seed round in 2010 from the government-backed Spring Seeds initiative and India-based One 97 Communications. Later that year it was sold to McAfee.

Five years on from that exit, Cheung is running Singapore-based property website 99.co, which received initial funding from several investors. He claims there is now too much seed capital chasing start-ups in Singapore.

Twelve months ago the concern was that there were insufficient Series A investors to take these start-ups from revenue generative to profitable. In this area, too, Cheung sees progress. He estimates there is $150-200 million available for Series A investments, with most companies worth backing now able to get VC support.

The momentum Singapore has achieved is the result of government initiatives and private sector participation. Lacking a decent pipeline of start-ups in which VCs could invest, the Technology Incubation Scheme (TIS) was put in place to support early-stage investors. Other programs were also introduced, while at the same time angel investors and private sector incubators began to proliferate. Similarly, the Series A gap has been filled by a combination of reconfigured existing programs - such as the Early Stage Venture Fund (ESVF) initiative - and greater interest from overseas investors.

Rakuten's $200 million acquisition of Singapore-headquartered video-streaming site Viki in 2013 and Seek's purchase of Jobstreet for over $500 million in 2014 remain by some distance the biggest exits. However, GrabTaxi (a taxi-booking platform founded in Malaysia but now headquartered in Singapore) and Razer (a gaming peripherals business based in the US but founded by a Singaporean) now command valuations of $1 billion and there are high hopes for several start-ups in the tier below.

Despite this success, the various agencies tasked with turning Singapore into a technology hub are not easing up. This week saw the official opening of an expanded JTC LaunchPad @ one-north - the local start-up cluster better known to many as Block 71. It has been expanded to accommodate 500 companies and 35 incubators, with plans to create space for 250 more. The Infocomm Development Authority of Singapore (IDA) has also launched initiatives to help local start-ups enter Europe and the US.

Finally, the Singapore Exchange has teamed up with Clearbridge Accelerator to create a capital-raising platform for small- and medium-sized enterprises (SMEs) in Asia. Full details have yet to emerge but platform should present start-ups with another source of funding.

A number of industry participants now argue that Singapore has reached critical mass: there is sufficient momentum in the market that the ecosystem can be self-sustaining. This suggests the government no longer needs to play such a forthright role as initiator, but the reality is more nuanced. Rather than throw money directly at an issue, there are calls for capital to be directed at the infrastructure surrounding it. Some programs are already focused on this; in other areas more can be done.

It is not just about providing affordable premises, but also reasonable immigration legislation (so that talent can come into Singapore), better access to international networks (so that ideas can get out and achieve scale), and a deeper appreciation of the economic contribution made by independent innovation (so that people are willing to do it in the first place). While hard infrastructure can be built in a matter of months, it must be complemented by less tangible qualities that can take years to bed down.

By making it easier for entrepreneurs to do business more people will want to be entrepreneurs.

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• Topics
• Venture
• Southeast Asia
• Early-stage
• Fundraising
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• TMT
• Singapore
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• Southeast Asia
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