The Next Silicon Valleys: Singapore as a Gateway to Southeast Asia

Repetition never spoils the prayer: The three most important criteria for investing in a home are location, location, location. And given it takes an ecosystem to build industries, we think the same can be said for founders and companies contemplating headquarter sites, expanded operations, or simply new investment opportunities. As the world shifts in response to technological change, macroeconomic conditions, and geopolitical stances, some regions have plainly excelled in the Darwinian adaptations essential to sustaining thriving entrepreneurial ecosystems.

In the United States, Silicon Valley is still king of the hill for technology companies and the epicentre for startup financing thanks to a concentration of venture capital firms, top talent, fertile training institutions, and reverberative exits. Across the Atlantic, London remains home to nearly 70 per cent of the United Kingdom’s private equity and venture capital investors in spite of Brexit, attracting some $20 billion in funding last year — double the amount raised in any other European city.

Less well known, Lisbon has become a serious player in enterprise finance. The city has been increasing capital raised by a blistering 30 per cent annually over the last seven years, launching more unicorns (privately held companies with a valuation of $1 billion or more) than Spain, Italy, and Greece combined. Outside of North America and Europe, India has built competitive entrepreneurial ecosystems in Bengaluru-Karnataka, Delhi, and Mumbai. Last year, the most-populated country in the world minted 24 new unicorns — and all told, the economy is home to 115 of them with a total market cap exceeding $350 billion. And while Bengaluru-Karnataka is ranked the highest at 20 among the list of top global ecosystems, India’s upward trajectory will undoubtedly continue.

The Tiny Southeast Asian Colossus

Dominant economic ecosystems rely on a trinity of funding, talent (existence, training, and active locales and lifestyles for them), and institutional support (notably government and enterprise). That brings us to Southeast Asia, a source of rapid global economic growth over the last half-century, and an emergent hotspot for entrepreneurship in the last decade. As the world’s fifth-largest economy, the eleven Southeast Asian nations, alone, have a market size of about 650 million people — larger than both North America and the European Union. With a record of nurturing 37 unicorns, it has steadily developed its digital economy, global market reach, and lead role in various high-tech niches, such as agriculture, finance, e-commerce, Al, and gaming.

Solidifying its position with a constantly expanding consumer base and crucial centre for trade and production, Southeast Asia is estimated to reach a $1 trillion market value by 2030, according to the 2022 e-Conomy report by Google Temasek, and Bain and Company. Currently, Southeast Asia constitutes 8% of global exports and attracts 10% of foreign direct investment.

Capital Deployment

Amid the COVID19 pandemic, Southeast Asia attracted VC and private equity firms to inject capital into the ecosystem annually with an increasing number of deals that reached nearly $15 billion between 2020 to 2022. Firms closed 23 funds to raise $3.03 billion in the first half of 2022, surpassing the capital raised in the whole of 2021. Even with the ongoing funding winter, a period of lower capital inflows to startups, Southeast Asia has endured, raising $516 million in tech startup funding in the first quarter of 2023.

While the whole Southeast Asian region has grown in population and GDP — as well as in the number of companies that have made initial public offerings — Singapore stands out among the countries. Recognised as Asia’s financial centre since 2022, the city-state ranks in the top five ecosystems for V0 funding in the Asian Rim (and the only one in Southeast Asia), having raised $26 billion in total over the past four years compared to the global average of $6.6 billion. As the gateway to the rest of Southeast Asia for both domestic and international founders, Singapore accounts for two-thirds of the region’s total VC funding and houses nearly half of the Asia regional headquarters of multinational corporations — not to mention over 4,000 tech start-ups. 

Vishal Harnal, Managing Partner at 500 Global, a multi-stage venture capital firm, notes how “Singapore recognised the role of startups in economic development early on, and this is one of the reasons [why] Singapore receives the lion’s share of equity funding. For Q2 2023, Singapore’s share of equity funding value was over 58% of total SE Asia equity funding." 500 Global’s investments extend well beyond early-stage funding. For example, their early investments in the start-up, eFishery, in 2018 “led to [their] recent growth investment in the company’s Series D, a round that valued the aquaculture company at over US$1 billion. Today, eFishery contributes 1.55 per cent to Indonesia’s 2022 GDP in the aquaculture sector. This is significant because Indonesia has the second-largest fishing and aquaculture industry behind China.” With outsized impacts from individual companies like eFishery, the ripple effect spreads throughout the region to increase GDP, opportunities, and technology adoption.

Talent & Training Grounds

Several major multinational technology companies, such as Google, Meta, Johnson & Johnson, Mastercard, and Pfizer, have relocated their Asian headquarters to Singapore over the last decade, yielding new talent domestically. Mature technology company headquarters have created a safe haven for international talent to securely explore the region alongside local talent.

Additionally, Singapore expands its talent network through elevation by association: its regional economic integration allows entrepreneurs to leverage nearby partnerships to secure talent and supply chain resilience. For example, Singapore’s proximity to the Malaysian state of Johor and the Indonesian island of Batam, as well as a strong network of partners and trade agreements, eases business headquarter setup in Singapore while developing cost-competitive manufacturing and tech talent in the latter two locations.

Not only do companies benefit from a robust talent pool, but local and international employees also have access to professional training from a network of over 190 incubators and accelerators. Singapore has invested cumulatively $739 million from 2015 to 2020 towards education and training through top universities and institutes that provide a wide range of specialised degree programs. With over 100 professional conversion programs across multiple disciplines, mid-career professionals are able to develop skills in evolving fields and partake in global leadership development and management.

Government Policies & Enterprises

Alongside funding and tech talent opportunities, Singapore bolsters founder support through streamlined bureaucracy and consistent government support, as seen in the work of agencies such as the Singapore Economic Development Board (EDB). With tools specifically designed for founders and companies to use Singapore as a springboard, Christine Giam, partner at EDBI, the EDB’s investment and venturing arm, explains that EDB facilitates residency for global founders with an interest in starting and scaling their companies from Singapore.

“We have ONE Pass, a five-year visa that comes with spousal privileges, as well as Tech.Pass, a specialised two-year visa for tech leaders. For later stage start-ups, we have Tech@SG, which fast-tracks work visa applications for core team members (of qualified companies) moving to Singapore. These, along with the EDB’s other forms of support—information, connections, and incentives—are why Singapore can be such a force multiplier for regional expansion."

Fuller government support has yielded companies that are both industry and culturally-defining across the region. For the property technology company, Ohmyhome, which was the first Singaporean company listed on Nasdaq this year, Southeast Asia’s growing population and housing boom sparked purpose in addressing the different pain points in local housing markets. Co-founder and CEO, Rhonda Wong, remarks that because “housing demand rises with the increased purchasing power of ASEAN’s middle-class, which is set to double by 2030, [Ohmyhome has built] an integrated platform with end-to-end solutions and services [...] that is highly scalable."

Additionally, other companies have enhanced large, complex industries within the region. Wai Mun Lim, the founder and CEO of Doctor Anywhere, a Singapore-founded healthcare technology platform that raised $65 million in series C funding, mentions how “if you walk into any of the hospitals in Southeast Asia, even under the same branding, under the same company, [...] the systems are not even connected. [...] They wouldn’t keep the same [health] records there." To address “connectivity, accessibility, and affordability" of both local and regional healthcare, Doctor Anywhere combines the necessary functions, such as “the video call, payment system, electronic healthcare record system, ability to have doctors prescribe and store the health records of users, and [...] logistic function to deliver the medication,” notes Lim. 

Innovative thinking and commitment to users and their needs shape Southeast Asia’s landscape beyond the tech ecosystem.
 

Lifestyle

Southeast Asia’s rapidly growing work environments and the arrival of expats foster both individual development and community building. In Singapore, Kaiyuan Tang, an engineering lead at Meta, became a permanent resident because of opportunities for personal career progression: “When I came here as a software engineer, I led a small workstream and [was able] to mentor other engineers. Since transitioning into the role of manager three years ago, I have been growing and supporting a team of diverse backgrounds, including many local hires.”

Other relocators were attracted to Singapore because of its family-friendly attributes. Allen Shim, the former CFO of Slack and now-angel investor, moved to the country with his family, stating that “the emphasis on public safety and a strong community [...] makes our daily lives less anxious. Since it is a multicultural society, my family is gaining a greater global perspective and appreciating different customs, cuisines, and traditions.”

Like Shim, those relocating with children have plenty of educational options with 30 foreign system international schools and childcare centres for additional support. To account for the quality of education, Singapore places pupils three years ahead of their American peers in courses, such as mathematics, and directly exposes students to top universities, such as the National University of Singapore and Nanyang Technological University, respectively ranked as first and third in Asia by Q8 Asia University Rankings in 2021.

Socially, Singapore boasts a vibrant landscape: thriving hawker culture that has been recognised by UNESCO for its culinary heritage and multicultural significance; green spaces that comprise 47 percent of the archipelago’s land; and strong sports enthusiasm ranging from physical to e-sports that deem the nation as the healthiest in Asia. Residents have a myriad of recreational activities to choose from, which is one of the reasons why Singapore has been ranked as one of the best cities to live in for the seventh year in a row by HSBC’s Expat Explorer Survey.

Challenges & Recommendations

As founders, investors, and companies look towards Singapore and Southeast Asia to launch or springboard operations, there is a set of distinct challenges: high cost of living, regional diversity that challenges scaling, and rapidly evolving competition amidst cultural evolutions.

Singapore has ranked at the top of the world’s most expensive cities for the eighth time within a decade. According to the Economist Intelligence Unit, “the city-state has the world’s highest transport prices, owing to strict government controls on car numbers. It is also among the most expensive cities for clothing, alcohol, and tobacco, thanks to its success as a premier location for business investment." Global macroeconomic conditions, such as high inflation, COVID-19 pandemic restrictions, and political conflicts, continuously increase the cost of living. Prices have risen by 8.1 per cent in local currency, a new benchmark rate in the last two decades.

The high cost of living impacts consumption patterns and the pace of digital adoption, which vary across the region. Hans Tung, Managing Partner at GGV Capital, an investment firm, advises that “one of the keys to unlocking the potential of Southeast Asia is [...] to understand how each individual market works, how the markets are interrelated, and how businesses can connect and collaborate."

For companies, like Super, the first social commerce platform in Indonesia, that rely on technological accessibility outside of urban settings, understanding the target audience is crucial for success.

Steven Wongsoredjo, co-founder and CEO of Super, noted “the smartphones that people in rural areas [use] have limited capabilities and storage to house some of the apps and features that startups are trying to offer." To attract and retain users, Super had to “rethink the way we built for [users] in the beginning. [We had] to really drill deep into what is the one action that would bring the most value to the users, strip off every other feature that doesn’t contribute to that action so as to reduce the load from their mobile devices, [and] still offer an elevated and enjoyable mobile experience." 

“Speed is the name of the game [for an industry that is] evolving so rapidly,” explains Anni Cai, an investment advisor at Peak XV (formerly Sequoia India and Southeast Asia). Cai recommends that:
 

Younger generations accelerate evolutions. 65 per cent of the middle class is under the age of 30 and digitally savvy in Singapore, priming a labor force that offers cost-competitive and skilled talent. Neighbouring Southeast Asian countries, such as Indonesia, also have similar demographics. Currently, half of Indonesia’s population, roughly 125 million, is below 30.

Winston and William Utomo, the founders of IDN Media, an Indonesia-based media platform company, “focused on the unique value propositions, emphasizing specialization in millennial and Gen Z audiences and [their] ecosystem business model." Like Singapore, Indonesia also possesses diverse, wide-ranging audiences that require adopting localization efforts. “We hire local talents in each city, understand cultural nuances, and tailor content accordingly. This approach ensures that our content resonates with specific markets, fostering deeper connections,” notes Utomo founders.

As other Southeast Asian governments commit to their domestic startup ecosystems, Singapore faces ripe competition. Enterprises like Indonesia’s IDN Media and Ruanguru, an education platform, also serve as inspiration for the region through a new, younger blend of founders that prioritises purpose and profit, both in their corporate structures and government affiliations. 

Ruanguru’s co-founder and COO, lman Usman, comments on how their foundation focuses on education quality to buoy its expansive platform and alleviate “issues like teacher shortages and unequal access to education for disadvantaged students.” By targeting education, Ruanguru feeds into the “Golden Indonesia vision for 2045, [which aims to be] a top-five global economy with an emphasis on human capital [and] aligns with the demand for a digitally adept workforce."
 

Southeast Asia is still ascending to its peak. “Major companies are coming to the region and being created on the ground and are talent-hungry — meaning that young professionals don’t have to leave the region to join a major multinational, and startups can provide a living wage and rapid personal growth,” remarks Eddy Chan, founding partner of lntudo, an Indonesia-based venture capital firm. “For international talent, Southeast Asia offers opportunities for upward mobility and a more dynamic lifestyle."

Southeast Asia, and Singapore in particular, provide a lengthy list of reasons to attract leading entrepreneurs, investors, and companies. From access to strategic capital and proactive regulatory support from the Singaporean government to vast opportunities for top talent to grow professionally and personally, the country is the prime gateway for entrepreneurship. Although founders, investors, and companies reap the benefits that Singapore and Southeast Asia have to offer, the real value of those operating in the area is bolstering the ecosystem for future generations of intrepid thinkers to engage in their own innovative ideas, push forward development, and increase momentum for the larger Asian Pacific region.

This article is also available on Goldhouse Venture’s website. An earlier version of this article was also published in the Milken Institute Review.