Start-ups in Singapore raked in $5.5 billion of funding last year, despite the challenges of Covid-19.

This figure, shared by Second Minister for Trade and Industry Tan See Leng yesterday, is lower than the funding garnered in recent years.

But it demonstrates the resilience of Singapore's investment landscape and gives the Republic confidence that it can do well despite the pandemic, he said, noting that the amount is also almost three times what was received five years ago.

In comparison, Singapore start-ups drew $8.5 billion in 2019, and $14.3 billion in 2018.

Dr Tan was speaking at Action Community for Entrepreneurship's Community Day, where a study on Singapore's start-up ecosystem by the World Bank Group was unveiled.

The report highlighted the characteristics of Singapore's ecosystem, which includes strong government leadership and responsiveness to market changes, the country's strong university network and its substantial investment activity.

Singapore is a leader in South-east Asian venture capital (VC) and private equity investment, with the country accounting for more than half of the total aggregate value of VC deals in the Asean region since 2014.

The city state is also home to numerous ecosystem enablers - about 190 incubators, accelerators and related intermediary organisations - that support start-ups here. More than 3,600 tech start-ups are based in Singapore.

CHALLENGES TO SINGAPORE'S ECOSYSTEM GROWTH

While the Government's support has created a conducive environment for budding start-ups to take off, its extensive involvement could be fostering too much dependency on the public sector, the World Bank Group's report highlighted.

Some 69 per cent of start-ups participated in government schemes in 2017, a significant jump from the 19 per cent in 2010.

Too much government funding could end up propping up companies that should shut, and also does not effectively incentivise private investors to engage with start-ups, it said, noting that steps are being taken by the Government to reduce dependency risks.

Acquiring and retaining talent is another challenge that start-ups here face.

While Singapore's university system is strong, the country is inherently limited by its small size. Start-ups also face competition from multinational corporations for talent, and restrictions on the number of foreign workers they can hire are another stumbling block, the report said.

At the same time, funding gaps remain in the country's ecosystem, with Singapore ranking below the global average for early-stage funding.

Start-ups in Singapore looking to venture abroad may also find it harder to scale into a neighbouring market as they face stiff competition from regional counterparts, given that nearby countries like Vietnam and Indonesia have also started establishing their own start-up ecosystems.

But the Government has also taken steps to address this, such as by enhancing regional and global connectivity for Singapore's ecosystem, the report said.

A panel discussion was also conducted at the event, which was held at the Action Community for Entrepreneurship Ideation Centre in one-north.

The panel, which included World Bank Group senior country officer for Singapore Daniel Levine and Enterprise Singapore director of start-up development Lim Seow Hui, discussed topics such as opportunities in the region for start-ups to capture, and ways to strengthen Singapore's start-up ecosystem.

Among the suggestions raised was incentivising successful start-up founders to contribute back to the ecosystem.