SINGAPORE – The Singapore Venture Capital and Private Equity Association (SVCA) reported that Indonesia and Malaysia saw a growing number of venture capital deals in the first quarter of 2015. Analysts cite a rising middle class as the key reason for increased investor interest. Analysts also point out that Singapore’s infrastructure and support network for startups will continue to set it apart from its Southeast Asian peers.
There are several Singaporean government initiatives that spur innovation and entrepreneurship in such as MDA i.Jam, which provides fund matching up to SGD $100,000 by founders or incubators, and National Research Fund Technology Incubation Scheme, which co-invests up to 85% of the investment by a recommended incubator. Apart from giving grants, the government has also focused on building the environment and ecosystem for entrepreneurs to blossom and succeed by creating Block projects. Block projects are physical infrastructures for entrepreneurs and start up support services to co-exist; think of it like a connected college campus where everything you need to build your company is within a few steps and the rental rate for space is offered at a deep discount.
Compared to Silicon Valley, the Singaporean government has played a relatively big role to instill entrepreneurship. “The government in Singapore is so progressive and entrepreneurial, it really demonstrates enthusiasm and excitement in everything it is involved in, including startups,” says Selacorp’s managing director David Selakovic. “I’ve been a citizen here for over 15 years and have lived in various cities throughout my life; I think Singapore is the best run government in the world.”
However, some argue that Singapore’s startup scene is overrated and that the local media has made an art out of proclaiming that Singapore is the best in everything, even when that is not necessarily the case. Yes, it’s a top financial center. Yes, it has one of the lowest unemployment rates in the world. All the positive things the media put out often hides the country’s weaknesses. It’s a tiny market that’s at odds with the region. The cost of doing business in Singapore is very expensive—it’s not uncommon for Singaporean companies to hire talent from other regions where cost of living is not as high.
There is no doubt that Singapore’s government, infrastructure, intellectual capital, and reputation are at the top of the world. Without these competitive advantages, the economy and market would not be as favorable. As proven in similar situations in the past, it was necessary for the government to jump in and garner startup attention. Governments often have to compete with each other for venture capital, and Singapore clearly understands that. Its relatively corruption-free governance attracts investors and talent into the region.
“One weakness of Singapore is that the local market is just too small. It’s a great testing ground to prove your startup model and raise funds due to the wide availability of venture capital funding here, but after you succeed at that the only way to grow is to expand to countries where you will find the demand,” Selakovic says.