Over the last decade, Singapore government has assiduously implemented policies designed to create a robust startup ecosystem in the country. This is a global competition in which many geographic centers (such as Frankfurt, Berlin, Shanghai, Austin, New York, Moscow, Bangalore, etc.) are vying for the prize.
Singapore’s efforts are now bearing fruit: a number of Singapore registered startups have successfully graduated to the public markets and several others are receiving late-stage private investment at very good valuations. Such outcomes are essential for creating a healthy startup ecosystem; they motivate the next generation of entrepreneurs to launch new ventures thereby creating a self-sustaining virtuous cycle.
With Singapore’s rising profile as a startup hub, entrepreneurs from every country should consider it as the place for incorporating their next venture.
Startup Ecosystem
Singapore offers one of the most business-friendly jurisdictions for starting a new company. Since 2000, the country has created an environment that is very suitable for launching a new company. Specifically,
- Singapore offers very generous tax incentives to startups,
- Country is very welcoming to FDI; as a result, most of the top-tier global venture capital firms have a strong presence here,
- Singapore’s tax system rewards startup founders and investors; due to no capital gains tax, in case of a successful exit, the net take-home payout of early investors and employees can be significantly higher.
- Singapore government operates many programs that assist early-stage startups; these include subsidised loans, R&D grants, equity participation, and startup competitions with significant no-strings-attached monetary prizes.
- Country’s sovereign fund is one the largest investors in the world; its mandate specifically targets late-stage Singapore registered company for investment as they achieve scale.
- Singapore’s well-educated workforce provides good talent for startups that require skilled employees.
- Singapore is an open, welcoming, cosmopolitan city; foreigners who want to relocate here to run their startup will immediately feel at home here,
While these factors are important determinants, they alone cannot create a self-sustaining startup hub. Successful exits (through either the public or the private market) are the most important motivator for the next batch of entrepreneurs. It is on this front that Singapore has shown the most dramatic progress. The last few months have seen the following events:
- Singapore is now home to 3 unicorns: Grab, Lazada, and Sea Limited, with several more on the way.
- Sea Ltd (incorporated in Singapore in 2009) had a successful IPO and currently commands a market cap of over $12 billion.
- On May 25, 2019, Trax – another Singapore-based startup – announced that it is nearing a $100 million investment round at a pre-money valuation of $1.1 billion. (CEO Joel Bar-El, and CCO Dror Feldheim featured above. Photographer: Ryan Peters)
- Biofourmis another Singapore-based startup, raised $35 million this month.
- Singapore based holding company – Affle Holding Singapore – has confirmed plans to take its Indian subsidiary public later this year.
- South Africa based PayU has invested US$65 million in Singapore’s payment firm Red Dot Payment.
- Taiger, a Singapore-based AI startup raised $25 million for a post-money valuation of $110 million. Taiger was backed by the Singaporean government via its SGInnovate fund.
Another strong indicator of Singapore’s position as a startup hub is the growing number of entrepreneurs from well-known startup hubs (such as Israel and Silicon Valley) who are choosing to relocate their company to Singapore. For instance, SQREAM an Israeli database technology startup recently decided against listing in the US and has instead selected Singapore as the place for its public listing. Ami Gal, CEO and co-founder of SQREAM said, “Based on discussions I had with fellow founders and companies operating [in Singapore], it is a very friendly ecosystem to do business with.”
Given Singapore’s growing prominence as a startup hub, if you are an entrepreneur considering a new venture, you should seriously explore if Singapore may be a better location for you. Research the country’s startup landscape and learn about the benefits the country offers. When you are ready to incorporate your company in Singapore and launch your venture, we will be glad to assist you.
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