Advantages and Challenges of Starting Up in Singapore

Albeit the high costs and small talent pool, Singapore is strategically located in Asia and has no lack of funding potential.

advantages of starting up in singapore

Advantages of Starting Up in Singapore

1. Access to Funding

Why start in Singapore? Money! That’s why! Available venture capital in Singapore was estimated at US$24 billion in 2013, although only US$1.7 billion was actually invested, according to the Asian Venture Capital Journal. Singaporean investment in start-ups ranks second in Asia after China. Of course, not all is invested in Singapore companies. For example, Thomas Ng, then a partner at the Singapore government-backed Venture TDF, 
invested US$5 million in Alibaba’s first round of financing in 2000. But nonetheless, if you have a great start-up with a promising business resource package and a compelling and sustainable business model, there is no lack of funding potential in Singapore.

Superior Geographic Location

Singapore is situated in the heart of Southeast Asia. A three or four hour flight can get you to any major cities in the region. Six to seven hours flying will get you to all the other 
big cities of Asia. Singapore is considered to be central in the start-up ecosystem of Asia, knitting together the huge markets of China, India and Indonesia along with Malaysia, the Philippines and Thailand. In short, Singapore-based start-ups have a geographical edge when it comes to scaling their businesses.

Experience and Capabilities

Singapore has a track record of tech success stories and boasts an impressive network of VCs and founders. In Singapore, there are a lot of mentors, who are willing to work alongside start-ups. They are important angels for start-ups as they are able to help build the connections and give advice based off their prior experience in the sector. Furthermore, Singapore is superior in terms of capabilities, offering a good mix of hardware and software capabilities. China has a big advantage in hardware, but not in software whereas India is a direct opposite. Singapore has access to both, as skilled people from India and China work and live in Singapore, bringing in their network of connections from their respective home countries.

Challenges of Starting Up in Singapore

1. High Costs

A key pushback against the Singapore option is the higher costs.

But these need to be weighed up against Singapore’s advantages. If a start-up is not located in a conducive ecosystem, it is unlikely that the business will have good access to required capital. Moreover, despite the increased costs, many investors and VCs prefer to stay in developed countries, due to the many natural benefits that arise from it. Thus, even with the higher initial cost, Singapore is still a prime location with the concentration of resources within its borders.

2. Talent Shortage

There are concerns that Singapore, being a small market, represents only a small talent pool. The Singapore government needs to be very proactive in this regard with the right policies to attract foreign talent and retain local talent. The ultimate aim is to create a brain gain.

Report produced by: Asian Insights Office, DBS Group Research

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