Funds raised by Singapore’s early-stage emerging tech start-ups down 28% in 2022

SINGAPORE – Early-stage emerging technology start-ups in Singapore raised US$253 million (S$338 million) in funding in 2022, down 28.1 per cent from the US$352 million raised in 2021, said government-owned tech investor SGInnovate.

The number of funding deals fell 17.2 per cent, from 58 in 2021 to 48 last year, as start-ups were hit by uncertain economic conditions, SGInnovate said on Monday in its report on the sector’s landscape in 2022.

Amid the tough climate, the average size of seed rounds fell across three key verticals – sustainability, agrifood and advanced manufacturing.

Among them, advanced manufacturing may have been hit by “a shift in investors’ interests to other verticals and a general slowdown in the manufacturing industry”.

Bucking this trend, health and biomedical sciences start-ups in Singapore raised US$5.2 million in seed funding on average in 2022, more than double the US$2.1 million in 2021.

However, there were fewer new players as only nine start-ups were incorporated in the sector in 2022, down from 19 in 2021 and 28 the year before.

“This could indicate that start-ups in this sector are facing challenges beyond fund raising, including perennial talent gaps,” SGInnovate said, referencing its 

report released in 2022 on bridging the talent gaps in the biotech sector.

“These factors may result in a ‘winner-raise-all’ scenario where a small number of start-ups raise larger rounds to capture limited resources.”

Challenging outlook

Despite the gloom, Singapore is still expected to produce a “steady pipeline” of emerging tech start-ups, with 35 new players founded here in 2022.

SGInnovate estimates that this figure could eventually be revised to about 60, as more start-ups may have been founded but are still in stealth mode.

In the 2021 edition of the report, SGInnovate had identified 36 emerging tech start-ups incorporated that year. However, this number was subsequently revised to 63 to account for the start-ups that exited stealth mode.

Emerging tech start-ups are likely to continue facing a challenging fund-raising environment this year.

Mr Tong Hsien-Hui, executive director of investments at SGInnovate, advised start-ups to look into alternative funding mechanisms and co-development opportunities.

“Besides extending their runway to focus on product development, this also allows start-ups to minimise the impact on their valuations until the macroeconomic environment improves,” he said.

But overall, Mr Tong is still optimistic. He added: “Companies leveraging emerging technology to solve difficult problems – in fields such as clean energy production and diversifying our food sources – are likely to continue seeing strong investor interest in 2023.”

SGInnovate also sees “green shoots” in agrifood.

The sector accounted for the largest proportion of emerging tech companies incorporated in Singapore in 2022, with 14 new players. Of these, six were spun off from the National University of Singapore, which continues to support foodtech research.

Investor interest is also strong. Last year,

Next Gen Foods, a plant-based protein start-up,

raised a US$100 million Series A round.

“Greater investor interest in this vertical may also be linked to government initiatives and priorities, such as Singapore’s ‘30 by 30’ food security goals, announced as part of the Singapore Green Plan 2030,” SGInnovate said.

 The “30 by 30” goal is for Singapore to produce 30 per cent of its nutritional needs sustainably by 2030.

THE BUSINESS TIMES