first impressions of the singapore investment scene
As readers of our newsletter will know, I arrived in Singapore at the start of March as our first staff member on the ground in Southeast Asia.
It’s been a whirlwind couple of months getting settled in (just please don’t ask about getting my bank account set up!) It has also been a great chance to get out and meet many of the key members of the tech startup and investment eco-system.
There are of course similarities between Singapore and NZ, the co-working spaces, incubators and accelerators feeding into early and then later stage VC funds are all very familiar. The difference of course is in volume and scale.
co-working incubators and accelerators
There are several co-working spaces, each with hundreds of pre and post-funded companies. What is also noticeable is that these spaces are often differentiated by their position on the value chain, from largely pre-funded (see Blk71) up to well funded companies looking for centrally located corporate style offices that retain the networking advantages of a co-working space (like Collective Works).
international startup hub
The co-working spaces also play host to some of the huge numbers of incubators and accelerators in the country. Having met with many of them, it is apparent that they are taking in a majority of their companies from outside of Singapore. When we refer to the Singapore eco-system we are really talking about the Southeast Asian eco-system – Singapore being the logical hub for companies around the region to set up, raise funds and do business. Also noteworthy is the increased presence of businesses from outside even the Southeast Asian region. Many of the new incubator intakes include companies from Europe, Japan, Australia and India, signalling that Singapore is becoming a global tech hub.
As has been well documented, the amount of funding options in Singapore for tech companies is exponentially greater than we see in NZ. It is almost impossible to go a week without coming across a new VC fund or corporate venture arm being set up! This allows for much greater specialisation in many of the funds, both in terms of life-cycle and product (e.g. Seed Funds for B2B software offerings, FinTech focussed Series A funds, Series B+ only funds etc).
new areas of focus
With all that said, most members of the eco-system are saying that there has been a slight slow-down in funding activity in the region in the last quarter or so (the numbers quoted by the leading tech media sites and our own experience do back that up). This may partly be the result of many of the funds either focussing on follow on investments or raising/closing their next set of LP money. This does make sense as the rapid proliferation of investment activity began around 2011 which coincided with Lee’s arrival in Singapore, so the first wave of investment funds are expected to be in that later stage of their life-cycle.
Secondly, there has been to date a real focus on e-commerce investments in the region and that vertical has started to become consolidated among a few larger players (see Redmart, Lazada and Alibaba). My impression is that investors are taking a slight pause in order to determine the next great growth market – with early returns suggesting FinTech and A.I.
It has been an absolute blast getting to meet so many people who were always names on an email before, and I think it is going to be an interesting time to be in the region as it experiences a slight transition in investment focus. Small city state it may be, but it feels like I’m in the middle of one of the world’s leading tech hubs. Will check back in and let everyone know how it is shaking out!