Funding for tech startups in Singapore is on the rise despite the pandemic
Venture capital (VC) funding in Singapore for startups has been on the rise even as COVID-19 has shaken global markets, and this is particularly true for new technology enterprises. Tech startups raised $11.2 billion in the first nine months of 2021; over two times more than the $5.5 billion raised for the entire year of 2020.
Alex Ng, Managing Director of seed capital firm Spaze Ventures believes that in addition to fintech, key investor focus will be on medtech, edtech, future of work, and AI. “Stakeholders will continue to utilise tech-based solutions and tools disrupting traditional models in these fields,” he projects.
Jeffrey Liu, founder and CEO of alternative revenue-based financing company Jenfi, and former founder and CEO of GuavaPass says, “Today, there are more Y Combinator-backed (including Jenfi) startups in Singapore and Southeast Asia than ever before. Plus, we can see larger cohorts from Iterative Ventures, Antler, and other Singapore-based accelerators. There is also an emergence of structured early stage investment groups, such as Singapore-based XA Network formed by senior tech and ex-tech executives.”
Singapore offers support for tech startups in all stages
As one of the most active investment hubs in the region, Singapore's unique investor community offers strong funding support for tech startups in all stages. Yinglan Tan, CEO and founding managing partner of early-stage technology VC firm Insignia Ventures Partners, says “Singapore has been leading the region in attracting venture capitalists, angel investors for decades. More recently, there’s been an influx of startup-investing family offices through a combination of co-investment schemes, tax cuts and other incentives, and a safe environment for relocating to or setting up business headquarters in Asia. These factors have made the city-state a "Sand Hill Road" in East Asia, with even startups in Northeast Asia markets like Korea and Japan raising capital from Singapore-headquartered funds.”
For tech companies looking to understand where to focus conversations, here is a stage-by-stage breakdown of the different VCs in Singapore.
VCs that support early-stage startups include Jungle Ventures, Golden Gate Ventures, and Monk’s Hill Ventures. Apart from funding, this network of VCs offers expert guidance to optimise new companies' go-to-market strategies. For instance, 500 Global programs, Global Launch San Francisco and Global Launch Singapore, in partnership with Enterprise Singapore, helps early-stage startups in Singapore enter the U.S. market, and growth-stage companies worldwide expand into Southeast Asia.
For growth or mid-stage tech startups, there are VCs like Asia Partners and OpenSpace Ventures. Asia Partners focuses on helping proven business models scale regionally, drawing upon their experience growing eight multi-billion dollar companies, out of which three are based in Southeast Asia. OpenSpace Ventures has a keen focus on helping startups build meaningful partnerships and collaborations by leveraging their connections across their rich portfolio and investors community.
Finally, for late-stage startups, a host of institutional investors call Singapore home. For example, January Capital, supports tech startups promoting digitalization and building second-order businesses, while Genesis Alternative Ventures is one of Southeast Asia's leading private lenders to venture and growth-stage companies funded by tier-one VCs. January Capital helps startups raise follow-on financing rounds and prepare for exits whereas Genesis Alternative Ventures is uniquely positioned to advocate for impactful developments with a core focus on sustainability.
Investors here are also ready to support companies in niche industries. For instance, the EduSpaze accelerator, managed by seed capital firm and startup incubator Spaze Ventures and supported by Enterprise Singapore, operates as an edtech accelerator at a local and regional level and helps global edtech startups go to market in Singapore and Southeast Asia.
Other avenues for fundraising for tech startups
Singapore is determined to foster the city-state's growing reputation as a dynamic and enabling node for tech business. Through various agencies, the government provides a host of cash grants and equity financing schemes to locally-based startups.
Through the Startup SG portal, new businesses can discover and access available avenues of support such as cash grants, equity financing, and business loans. One such avenue is Startup SG Equity, an investment fund under which the Singapore government will co-invest alongside eleven private investment partners. The fund is designed to support startups that require significant capital expenditure and may take longer to be commercially viable.
Family offices, an alternative funding source, are on the rise in the city-state owing to factors like a competitive tax regime, political stability, and global connectivity. This year in November, the Wealth Management Institute launched the Global-Asia Family Office Circle (“GFO Circle”), designed to support the growth of the family office sector in Singapore. According to reports, the number of family offices in Singapore doubled between 2019 and 2020, reaching around 400.
One example is Apricot Capital which is a family office that has been actively investing in tech startups and recently added companies like homegrown edtech Geniebook and foodtech Float Foods in their portfolio.
Getting started with your first investor in Singapore
Warm intro, cold emails, or virtual meetings - now that it is clearer where to focus, what is the best way to reach out to a VC in Singapore?
Yinglan of Insignia Ventures Partners believes that the best way to reach out to investors, especially for first-time founders, is simply networking with founders who have already built inroads in Singapore's investor community. A referral from a founder the investor is already backing can be a significant foot-in-the-door for any founder. This does not guarantee investment, but it certainly cuts the path to getting an audience and adds plus points to the founders themselves.
Jenfi’s Jeffrey adds on, “Reaching out to startups for advice and to use those conversations to obtain warm intros has worked for us in the past.”
Raghu Ravinutala, co-founder and CEO of Bengaluru-and San Francisco-headquartered conversational AI startup yellow.ai concludes, “In my experience, it’s not about the perfectly crafted elevator pitch or the fancy deck talking about your startup, rather it’s about your genuinity and transparency when you introduce yourself to the community. It’s very important to develop a foundation of mutual trust and respect. Trying to rush them into doing business with you is a big no.”
With these factors in mind and a clear understanding of the VC scene, tech startups from across the region and beyond can consider Singapore as the tech node of choice for business expansion and growth.
