As the start-up scene in Singapore continues to flourish, how many are actually succeeding?
Singapore has established itself as a leader in cultivating a fertile ground for start-ups to grow. Overtaking the Silicon Valley, the city state has emerged on the top for start-up talent reported by the Startup Genome Project in 2017.
Interestingly, start-up founders in Singapore are also known to be the youngest in the world, with a median age of 28. This reinforces the growing trend of the increasing percentage of millennials within our workforce in Singapore. However, what are the determining factors that motivate locals and overseas start-ups alike to kick-start a business in Singapore?
Why are start-ups attracted to Singapore?
Extensive government funding and initiatives
Startup SG Founder
Startup SG Founder provides a platform to match start-ups with a mentor, as well as funding up to $30,000 for first-time entrepreneurs with innovative business ideas. This funding would be able to supplement the cost for the initial stages of the start-up.
Startup SG Accelerator
Startup SG Accelerator is an on-going initiative aimed to nurture start-ups. It includes programmes that target different components to ensure your start-up is on the right track. Some examples of these programmes:
The cost to develop programme(s): Help start-ups develop new products and services, obtain business financing and improve market access.
Mentorship programme: Hiring of mentors & experts to provide management and technical guidance to start-ups.
Operating expenses (partial): SPRING Singapore will determine components of operating costs Startup SG can support, such as salaries for the incubation team.
SGInnovate learning programmes
SGInnovate would organise learning programmes that are delivered by industry leaders on growing areas such as machine learning, deep learning and data analytics. In addition to a projected goal of 1,500 in attendance over the next two years, SGInnovate would also be working on the expansion of deep-tech talent network with a goal to connect 2,000 talent to deep-tech start-ups.
In alignment with the Singapore government's AI Singapore (AISG) mission to bring together Singapore-based research institutions, SGInnovate would further enhance AI start-ups and corporates in the growth of Singapore's AI capabilities. The Singapore government had set up AISG back in May 2017 and committed up to S$150 million to the initiative. This is in hopes to meet the potential lack of available talent and capabilities within the field.
Enhanced co-working spaces
WeWork opens in Singapore as part of a $500 million Asian expansion. The new venue has almost reached its capacity and includes not only freelancers, entrepreneurs, start-ups and small businesses but also larger MNCs which require a flexible working space.
WeWork encourages the building of a community within a co-living space. This space allows fellow entrepreneurs to build relations with others who are driven towards similar goals through networking and sharing of knowledge. As a result, this can enhance their access to a large pool of individuals who would be able to assist with first-hand feedback on their product(s) or service(s).
Furthermore, WeWork is financially sustainable having raised $9.8 billion from investors, according to Crunchbase.
What other avenues ensure the growth of start-ups in Singapore?
The possibility of partnership for mature start-ups with banks
Currently, 54% of fintechs have shifted their focus to banks. As such, investment in collaborative fintech companies have thus increased to 138% as fintechs have increasingly viewed incumbent banks as potential partners rather than competitors in Singapore.
Internships for the young and inexperienced
Unlike bigger companies, hiring trends within fintech start-ups are geared towards internships that offer opportunities of conversion into a permanent staff. Not only does this save cost in terms of initial hiring, but it also allows them to groom these young and inexperienced individuals into niche talents that would possess the right skillset for the company.
How many start-ups actually succeed?
According to GoGlobe, 74% of high growth start-ups fail due to premature scaling and 29% of start-ups run out of cash before they are able to get fully established.
What are some of these reasons?
Not every idea would ultimately succeed without sufficient funding and clear planning
Numerous start-ups have stumbled by overlooking money-related administration
Lack of content marketing to educate the public on its unique brand story which is essential in the enhancement of scaling its capacity
Too many restrictions and regulations
The highest failure rate is interestingly within mobile payments. With the restricted banking APIs and high card-processing fees in Singapore, banks in comparison to start-ups are much better in their advancement of the cashless agenda. This is also due to banks having the right resources to provide a scalable solution and to incentivise a change in consumer habits which fintech start-ups for instance lack.
What is their success dependent on?
The success of a start-up varies and this is highly dependent on the maturity of the business, its goals, objectives and other tangible returns such as profits and investments. While there is no one-size fits all approach to achieve success, new born start-ups mainly work towards garnering awareness around its brand story whilst increasing their investment capital to sustain itself financially. On the other hand, mature start-ups may have ambitions skewed towards the expansion of their network and the establishment of partnerships with renowned and established organisations.
What are your start-up goals for the coming 2018? Do share your thoughts with me in the comment section below. Alternatively, if you would like to learn more about the landscape of start-ups within the financial sector or connect with established start-ups in the scene, do link up with Koh Jing How or follow our LinkedIn page for other industry related insights.