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Singapore: Indian startups’ preferred destination while expanding into Southeast Asia


Mohit Chopra (left), Partner - Transaction Services, PwC India talks to Patrick Yeo, Venture Hub Leader, PwC Singapore about why Indian startups are setting up their regional base in Singapore

Mohit Chopra: Why is Singapore a good base for startups in general?

Patrick Yeo: Singapore is known as an innovation hub for a couple of reasons. The country is ranked number one in terms of capital raised and financing by the Global Innovation Index in 2021. Singapore has always been a hub for fundraising and has been used as a platform to go into Southeast Asia, mainly because of the ease of doing business. Singapore is, according to the World Bank, ranked number two in 2020 in terms of ease of doing business.

If you look at the trend - not just this year, but throughout the pandemic in 2020 and even earlier, you will see a number of Indian startups coming to Singapore and setting up their regional headquarters. There are certain tax benefits that are given by the Singapore government. There are certain grants as well as support schemes provided by Enterprise Singapore. That helps overseas startups, especially those from India, set up their base here in Singapore to tackle the region.

Mohit: What is the market sentiment for startups like in Singapore right now?

Patrick: 2018 was a record year for fundraising in Singapore and then we experienced a decline in 2019 because of the onset of the pandemic. There was a knee-jerk effect where investors were holding back. They were helping their own portfolio of startups to make sure they have enough cash to survive. I think the situation has stabilised quite a fair bit and for the whole of 2020 as it kind of held pretty steady. The amount raised in Southeast Asia and in Singapore was very similar. 2021 was interesting. In the first nine months of 2021, funding of $11.5B was done. I suspect by the close of 2021, it will be a record year again.

What we are seeing is that there has been a lot more diversification in terms of the verticals or the sectors that we are seeing the funding going into. Historically, we see a lot of fintech, logistics tech and so on. But increasingly we are seeing deep tech startups. For example, like eye treatment startups, biotech and agritech because of some initiatives started by the government. Increasingly we are seeing more in-bound startups coming to Singapore to raise bigger funding rounds.

Mohit: What kind of advice can we give to in-bound startups wanting to raise money here in Singapore?

Patrick: I think number one is, you need to be able to articulate your market focus and your ability to scale. Most of the investors here in Singapore are international. So they would have certain experiences gleaned from the US, India, China, Indonesia, etc. Hence they're looking for startups that are able to capture the regional share of the dollar. And of course, the management team is important and how the startup founders intend to leverage on talent as well as articulate their expansion plans.

Mohit: What are the challenges for Indian startups wanting to operate in Singapore?

Patrick: One area is talent. Singapore is a very small country by population, 5.9 million and not everybody wants to work in a startup. So there is a strong need to attract talent to come to Singapore. For founders from India, they need to bring along their talent and attract talent in the regional markets as well. If you're expanding to Indonesia, you must be able to tap the Indonesian market for local talent. So you cannot have all your talent coming from Singapore because there ain’t enough to go around.

I think the other aspect to think about is partnership. Language differences can be overcome. But each regional country, for example Indonesia - it’s a huge country and every city seems like a mini country on its own, similar to India. Everyone speaks their own languages. So the key is to look for support, the right strategic investor or partner in the region to support your growth.  So that you know the local culture and customs and who to go to when you need to overcome certain hurdles.

This is in excerpt from the virtual panel discussion at CII’s ICONN 2021, titled India-Singapore Startup Scaleup Strategies

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Amit Nawka

Amit Nawka

Partner - Deals and Leader - Startups, PwC India