Singapore’s start-up infrastructure sets it apart: Analysts

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SINGAPORE: E-commerce is driving a new wave of startups in the region, and Indonesia and Malaysia are closing the gap with the Republic in attracting startup investments. Both countries saw a growing number of venture capital deals in the first quarter of 2015.

Analysts have cited a rising middle class as a key reason behind increased investor interest in the region. However, they also said that Singapore’s infrastructure and support network for startups will continue to set it apart from its peers.

According to startup database Techlist, which aggregates startup data in Asia, the e-commerce space saw the highest growth in the first quarter of this year, with the number of deals involving e-commerce startups doubling from the previous three months.

Indonesia led the way with 136 e-commerce startups, while Singapore was second with 67. Overall, Singapore still led the charts for the number of venture capital deals, but the numbers suggested that Indonesia and Malaysia are beginning to close the gap.

Techlist data has showed that the number of venture capital deals in Indonesia grew 70 per cent quarter-on-quarter, while deals in Malaysia more than doubled. Singapore saw about the same number of deals as the previous quarter.

Techlist’s Head of Business Development Jason Lin said: “Singapore had a relatively early headstart in terms of startups and funding in venture capital especially with huge support from government organisations such as SPRING, ACE, NRF. But generally as a whole in Southeast Asia, with a rising middle class, smartphone adoption, internet penetration rates, it’s no surprise that these countries are actually catching up so quickly.”

While the venture capital community seeks growth opportunities within Southeast Asia, the Singapore Venture Capital and Private Equity Association (SVCA) said Singapore stands to gain from regional startup growth.

It said Singapore’s infrastructure makes it ideal for successful startups, such as Zalora and GrabTaxi, to base themselves in the Republic and serve the region.
“In Singapore, we have the ecosystem in place – whether from tax incentives, grants, in terms of the workforce and talent and also the whole surrounding infrastructure for management and becoming more like a hub for Southeast Asia,” said SVCA Director Doris Yee.

“So you will see that there are also foreign funds investing in Singapore companies, and these tend to be very large-ticket investments for example, companies like Zalora, GrabTaxi which are using Singapore to serve the entire region. So from that perspective you will also see growth. For these large-ticket items which have a global footprint or a Southeast Asia footprint, when they grow to a certain size, then it becomes natural to also use Singapore as a hub,” she added.

According to SVCA, there were around 140 venture capital deals in Southeast Asia in 2014, with an aggregate deal value of about US$1 billion.

– CNA/dl

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