Singapore start-ups to 'seek more funding' in 2018

KPMG sees increased canvassing for regional and global expansion

Singapore recorded 17 VC deals totalling US$205 million (S$271 million) in the fourth quarter of 2017, according to a report. PHOTO: ST FILE

Local start-ups are likely to increase canvassing for venture capital (VC) funding this year for regional and global expansion.

The move comes after many new firms here raised seed money in recent years to build their businesses predominantly for the Singapore market, or as a prototype for larger roll-outs, said Mr Chia Tek Yew, head of financial services advisory at KPMG Singapore.

Mr Chia added: "In 2018, these companies are going to seek more aggressive funding for expansion into the rest of Asean and also into the larger markets of China, Japan and the West (the US, UK and continental Europe)."

Such funding sizes are usually larger and geared towards "market access and client acquisition".

Mr Chia also expects more early-stage corporate VC funds will be launched here this year as well as the regrouping of funds to focus on later-stage deals. "Late-stage transactions will continue, with investors placing larger but safer bets on companies with proven business models and the strongest path to profitability," he added.

Singapore recorded 17 VC deals totalling US$205 million (S$271 million) in the fourth quarter of 2017, 57.2 per cent higher than a year earlier, according to a KPMG report out yesterday.

It also found that even as deal volume fell by 41.4 per cent from the previous quarter, deal value was up by nearly 40 per cent.

  • 17

    Number of VC deals recorded by Singapore in the fourth quarter of 2017; they totalled US$205 million (S$271 million), 57.2 per cent higher from a year ago.

  • 112

    Number of deals for Singapore for the whole of 2017, which totalled US$1.2 billion. The second quarter of 2017 was the strongest performing quarter with US$724.3 million invested across 33 deals.

Singapore saw 112 deals totalling US$1.2 billion last year. The second quarter was the strongest performer with US$724.3 million invested across 33 deals. Last year, there were eight exits which yielded US$1.6 billion in total, and seven funds that collectively raised US$732.9 million.

These numbers reflect "strong investment appetite and good return-on-investments that will continue to fuel the growth of the Singapore ecosystem", said Mr Chia.

In Asia, VC investments reached an annual high of over US$48 billion last year, of which US$13.9 billion came from China. The three largest deals in China were in electric car company Nio (US$1 billion), ride-sharing company Didi Chuxing and online retail services provider Meituan-Dianping (US$4 billion each).

Globally, total VC investments hit a decade high of US$155 billion last year, led by deals in the United States, which soared past the US$83 billion mark, making it the strongest year of VC investment for the country ever.

Notably, a common trend across regions last year was that despite higher deal values, deal volumes plummeted as investors focused on placing bigger bets on a smaller number of companies.

In the next few quarters, cross-industry solutions will become a key focus of VC investments globally, the report found.

Mr Chia said: "The applicability of innovative technologies - whether artificial intelligence and machine learning or blockchain - to different sectors will likely keep investors focused and investment high regardless of any pauses among specific industries.

"The tech sector will also continue to take a lion's share of overall investments."

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A version of this article appeared in the print edition of The Straits Times on January 19, 2018, with the headline Singapore start-ups to 'seek more funding' in 2018. Subscribe