S'pore attracts $1.2b in venture funds

About 80% of venture funds raised by Internet firms in South-east Asia has been invested in Singapore start-ups

Singapore is soaking up most of venture funds being invested in South-east Asian start-ups, according to new research.

Industry monitor Techlist said that about 80 per cent of the US$1.07 billion (S$1.5 billion) of venture funds raised by Internet companies in the region last year was invested in firms here. That is financing of about US$851 million (S$1.2 billion).

The share of investments was about 93 per cent and 94 per cent for 2012 and 2013 respectively.

But 2013 was the year things really took off in absolute terms, with venture funding rising to US$787 million, up more than fourfold on the US$181 million invested in 2012.

Most of the money raised since 2012 was poured into e-commerce, on-demand services and real estate services, said Ms Vanessa Tan, product manager of Techlist, which tracks start-up funding and investors in Asia.

Seven Singapore Internet companies have played a particularly large role. Taxi booking app GrabTaxi has led the way, raising US$350 million last month to augment the US$330 million it collected in four rounds of financing last year.

E-commerce players as a group received the most funding. Online shopping mall Lazada bagged US$346 million in 2013 and another US$250 million last year, fashion and beauty e-tailer Zalora collected US$238 million in 2013 while luxury e-commerce site Reeboonz raised about US$40 million, also in 2013.

Online market place Qoo10 received US$82 million this year while online real estate firm PropertyGuru raised US$176 million last year and car-sharing service iCarsclub attracted US$70 million last year.

This is good news for Singapore's start-up ecosystem, said Spring Singapore executive director Edwin Chow, as it shows that the "financing environment for Internet companies is maturing".

"Private money from venture capital firms is now willing to back potentially disruptive business ideas," said Mr Chow, who oversees funding and development of start-ups.

However, Singapore's dominant share of the South-east Asian venture funding pie may not last. Ms Tan said countries like Indonesia and Malaysia are also developing their start-up ecosystem and will overtake Singapore.

Mr Chua Kee Lock, group chief executive of Vertex Venture Holdings, Singapore's largest venture capital firm, said the quality of start-ups and founders is improving, which is a sign that the Singapore ecosystem is maturing.

There is increased interest in Singapore start-ups from foreign investors because Internet companies like Uber-rival GrabTaxi and luxury e-tailer Reebonz have caught their eye.

The foreign firms are "opportunistic", interested in specific deals, but if they are serious about investing in South-east Asia, then they should have a dedicated team in the region to suss out the good start-ups, he added.

Vertex is singled out by industry observers for having invested in the most start-ups in what is called the growth round. This refers to the point when a start-up is ready for business expansion or to introduce a product or solution to the market.

Vertex has invested in six start-ups this year, including PatSnap, Paktor and Tickle Media.

A version of this article appeared in the print edition of The Straits Times on September 17, 2015, with the headline 'S'pore attracts $1.2b in venture funds'. Print Edition | Subscribe