2019 was a significant year for the Singapore startup scene for several reasons.
On a positive note, Carousell’s merger with classified firm 701Search lifted its value to S$1.2 billion, showing that born-and-bred Singaporeans can grow unicorns – companies with a valuation of over S$1 billion – and can compete in the big league.
On the downside, local grocery seller HonestBee had to scale down and lay off staff on the back of outstanding debts of over US$180 million (S$250 million). A Business Times report suggested that it was burning through some US$6.3 million a month in the first half of 2019.
The troubles of HonestBee and others earlier, such as oBike, have also shown that the cash-burning days that was a characteristic of the startup ecosystem here in the last few years are not sustainable.
So what can we expect in Singapore’s startup ecosystem scene in 2020? Can the Republic stay ahead in a very competitive environment, given that a number of venture capitalists have declared their interest in Vietnam and Indonesia startup investments, with a few setting up offices regionally?
In addition, what startup events in 2020 will impact Singaporeans?
More job opportunities abound
Expect more roles in tech engineering, product development and marketing, largely due to big tech unicorns setting up headquarters or regional offices in Singapore.
Shopee (a unit of Sea) opened its Singapore headquarters in Science Park in September 2019, which can house up to 3,000 employees.
Razer, a United States-based tech startup founded by Singaporean Tan Min-Liang, will open its Southeast Asian headquarters in mid-2020, raising its headcount from 400 to 1,000 employees. Grab will follow suit and open its Singapore headquarters in the fourth quarter of 2020, to house 3,000 employees. Bigo will add 500 more engineers in the next three years.
From what I gather, more such global startups are likely considering establishing headquarters in Singapore in the coming year.
This is because of Southeast Asia’s growing consumer middle-class — expected to soar to 700 million people by 2030 — and Singapore’s pro-business environment and strategic location as a gateway to the region.
It is not only more jobs, but the quality of jobs as well. Sources I spoke to explained that roles offered are core function roles, not supporting roles which were more prevalent previously.
Green deep technologies startups
“Sustainability deep tech” is now the in-thing for Singapore. There were multiple events in 2019 that focussed on deep technologies based on scientific inventions and breakthroughs.
Take two food-related events, the Asia-Pacific Agri-Food Innovation Week and the SFF x SWITCH financial technology festival, in November 2019 that featured many tech startups involved in food and agricultural innovation.
This ranged from alternative proteins (think of eating algae, crickets, grasshoppers, plant-based meats, cell-based crustaceans, mealworms) to enhanced urban farming methods (think robot-managed farms, controlled environments, drone bees, biosciences) and food manufacturing processes (think organic shelf-life materials, reducing wastages, circular economy).
Much of these food-tech inventions are led by two demand drivers: Singapore’s aim to see have 30 per cent of food supply to be locally sourced by 2030, and the urgency to feed the world’s growing population where arable farmland supply is diminishing and unable to meet demand.
These new inventions are also broadening the definition of sustainability, where it goes beyond reducing carbon footprint and damaging the environment, to innovating new solutions that provide sustainable living.
As consumers in a test market, Singaporeans will likely get to experience more novelty food choices beyond just plant-based burgers. Many startups will want you to try out more sustainable and healthier choices. Your decision to consume will likely help determine the food supplies of the future.
Smart cities technologies will also be the focus of the next wave of startups in Singapore, fuelled by the construction boom in Vietnam and Indonesia.
More developments are integrating tech solutions to expedite construction (think pre-fabrications design, and choosing new construction materials alternatives) and to make the process more energy-efficient (think bio buildings and energy monitoring systems that significantly reduce energy output).
Expect more acquisitions, mergers and potential large scale failures
As Singapore’s startup ecosystem matures, the likelihood of acquisitions and consolidations will rise in this shakeout stage. It is inevitable that some startups have peaked in their development and will merge with others for the next chapter of growth.
Two companies worth watching out for in this regard will be Grab and Gojek. Given their deep pockets, the two rivals could make strategic acquisitions in a bid to gain a competitive edge over one another.
Do not be surprised as well of potential large startups that had attracted huge investments previously to suddenly fail or go into debt, similar to what happened to Honestbee.
This usually occurs to startups of a certain size that have reached a “make-or-break” stage, where if they fail to achieve a certain milestone, they could come undone relatively quickly.
Singaporean consumers will have to be careful about placing large deposits or making sizable pre-payments with startups.
MY HOPE FOR SINGAPORE’S STARTUP ECOSYSTEM
A startup ecosystem is reflective of a nation’s commitment to innovate and the forming of new startups and investments give an indication of new economic opportunities being created.
The Singapore startup ecosystem should be concerned when fewer entrepreneurs decide to base themselves in Singapore and bypass this ecosystem to operate in other parts of Southeast Asia. Indonesia, Vietnam and Thailand are the top three choices for consumer-driven startups, as the bulk of the consumer middle class are in these countries.
Will Singapore lose its attractiveness as an entry point into Southeast Asia?
There are some signs in recent years of international investors and business founders going straight into these countries and bypassing Singapore altogether.
According to data from research portal Preqin, Singapore’s share of venture capital deals in Asean dipped slightly in first 11 months of 2019 compared to the same period in 2018, both in terms of number of deals (from 53.9 percent (233 out of 432) to 49.8 percent (239 out of 480)) and in aggregated deal value (from 67.9 percent (US$7 billion out of US$10.3 billion) to 56 percent (US$3.7 billion out of US$6.6 billion)).
My advice to Singaporean startup founders: Think of Southeast Asia as your first market, no longer just Singapore. This is a rising new middle-income class that will spend USD14 trillion in the next 10 years.
Evolve your thinking. Tap into Singapore’s wide range of deep technology capabilities.
Competition is more severe now with the new emerging economies. More than ever, now is the time to build differentiated startups.
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