Start Singapore

Singapore's start-up scene was on a high last year with plenty of activity here and overseas.

There seemed to be an event of some kind every day or so, from entrepreneurs pitching to investors, to fireside chats with successful founders and hackathons for software programmers.

It was also a year when many accelerators emerged, often in specific areas like financial technology and media. There are now about 40 accelerators helping start-ups fine-tune business plans and prepare for their first round of seed financing.

With so much activity going on, it is timely that tech.sg, a portal that collates data and information on start-ups, was set up by IBM and NUS Enterprise, the entrepreneurship arm of the National University of Singapore. It is a much-needed resource, providing solid information for policymakers and the investment community.

Singapore also laid out the welcome mat for entrepreneurs who want to use the country as a hub for Asia and a test-bed for smart nation projects.

The Infocomm Investments (IIPL), the venture unit of the Infocomm Development Authority, held conferences to promote this initiative.

IIPL, NUS Enterprise and Innov8, the venture arm of Singtel, opened an office in San Francisco to provide a base for local start-ups that want to enter the United States market.

In London, it hosted an Asian innovation forum last month to share with entrepreneurs Singapore's start-up opportunities.

Here are five things people in the sector can look out for this year.

More funds available

Expect more cheques to be written for amounts between US$1 million (S$1.4 million) and US$5 million as a result of there being more venture capital firms flush with funds.

Last year, Singapore-based venture capital firms like Monks' Hill, Jungle Ventures and Golden Gate Ventures raised more than US$50 million in funds each. They are now primed to spend.

However, as these funds are also meant for start-ups in the region, local start-ups have to compete for their share, so they have to improve their business plans. The bad news is that there is a funding gap where much bigger sums, like US$30 million and more, are needed.

Entrepreneur and venture capitalist Dennis Goh said these venture capital firms must be attracted to set up shop here so they can identify the good deals and the best Singapore start-ups can easily approach them for funding opportunities.

Managerial talent

Mentorship and business guidance are key to a start-up's growth phase, when its products are ready for the market.

Dr Lily Chan, chief executive of NUS Enterprise, told The Straits Times that while a founding entrepreneur may be great at building a team from one to 50, he rarely has the experience of how to grow a company from 50 to 500.

"For a number of start-ups, bringing in a new CEO with relevant industry experience can make the critical difference in taking a company to the next level."

Expect support from the Government to plug this gap by getting seasoned executives in large local enterprises involved in start-up activities.

Fintech dominates

Financial technology start-ups will continue to emerge as one of the biggest sectors in the community. They already number more than 80, according to fintech.sg, a website which tracks this sector.

The Monetary Authority of Singapore may allow equity crowdfunding, in which case, one can expect a few more of such websites to crop up.

Exits from the industry

Last year, there were about 25 start-ups acquired, according to tech blog techinasia, but no founder went home with multimillion-dollar cheques.

Many local start-ups sell out because they lack funds to grow their businesses or they are seen to sit better with a larger company.

More venture capital firms being able to cough up $1 million to $5 million could mean fewer exits.

The flip side of the coin is that with funding, start-ups should be able to grow bigger faster and be profitable sooner rather than later.

Getting a public listing

Who will be the next high-tech poster boy for Singapore?

Out of the 138 unicorns - a start-up worth more than US$1 billion - listed by Fortune magazine, four are based here: online entertainment, commerce and financial platform Garena; taxi-sharing site GrabTaxi; e-commerce portal Lazada; and gaming accessories firm Razer.

Two were founded by Singaporeans: Mr Forest Li of Garena, whose company is valued at US$2.5 billion, and Mr Tan Min Liang of Razer, which is valued at US$1 billion.

Do not expect a listing. They are profitable and unless investment bankers can give them a good valuation for a public listing, they are comfortable where they are.

However, watch the mid-sized start-ups with private valuations of between US$300 million and US$500 million.

They may get a listing either to raise funds from the capital market or allow their investors to cash out.

Unfortunately, they are likely to seek a listing in the United States, where the capital markets better understand high-tech companies.

Grace Chng

A version of this article appeared in the print edition of The Straits Times on January 07, 2016, with the headline 'Start Singapore'. Print Edition | Subscribe