A recent visit to Singapore inspired me to put pen to paper on a comparison with Ireland as a start-up ecosystem. This was published on 8th February 2016:
You’re a start-up executive and have opened your company in the heart of a strong start-up community. You want to network with other executives, and for your team to do likewise. You’re keen to track what is going on, to uncover opportunities to collaborate, and – yes – to enjoy the gossip. And, right now you have a little spare space in your office.
So maybe you could take inspiration from Harry Dewhurst at BlisMedia…I dropped into his office when in Singapore before Christmas, and was surprised to find that the entrance hallway was a private bar and hangout area. After work, people in other start-up companies – particularly partners and customers of BlisMedia – in the Ann Siang district are welcome to drop in, and socialise with Harry and his team. BlisMedia has thus become a focal hangout in the area, and Harry and his team have even better personal networks as a result. You can get a sense from the twitter hashtag #Blisbar – including the 2015 ‘Golden Shaker’ awards for the best new cocktail at BlisBar!
Singapore’s population is about 5.4 million, slightly higher than ours. Its land mass is only about 1% of Ireland’s. GDP per capita in 2013 was $55K, ahead of our $50K. In its ranking of health systems worldwide, the World Health Organisation placed Singapore in sixth place, with Ireland in 19th. As a city state, its public transport system is extensive. The international airport at Changdi is one of the world’s busiest, and is rated the best in the world (2015 Skytrax ranking).
Corporation tax is 17%, ahead of our own at 12.5%. Corporate tax contributes over 30% of the total tax income to the State, as compared to less than 10% here. The highest applicable personal income tax rate is 20%. The Goods and Services tax – equivalent to VAT – is a maximum of 7%.
The Government of Singapore strongly promotes the city state as the startup hub of southeast asia. Singapore is first in The World Bank’s annual ‘Ease of Doing Business’ for 2015 – Ireland is in 13th place. Singapore is seventh in Transparency International’s ‘Corruption Perception Index’ for 2014 – Ireland is in 17th place. Singapore is ranked seventh in the 2015 Global Innovation Index, immediately ahead of Ireland.
Start ups are blossoming in Singapore, as I learnt from both Harry and from David Gowdey at Jungle Ventures, a VC firm. The primary challenge facing Singapore’s economy is demographic change, caused by a combination of falling birthrate and increasing life expectancy. A shrinking workforce and tax base result. Given the challenge of a shrinking labour pool, there is an urgent Government emphasis on innovation and start-ups, to drive higher skills, higher productivity and higher wages.
Technology investment has increased from about €25M in 2011 to €1.14B in 2013, ranking ahead of Japan, South Korea and Hong Kong. In 2008, the Government pump primed venture capital by matching the funds raised by five VC firms, under the National Framework for Innovation and Enterprise initiative. The Technology Incubation Scheme offers 85% public funds for 15% invested from private sources. There are no capital gains or dividends taxes in Singapore, which is a significant advantage to startup founders.
There are now several regional ‘unicorns’ – technology companies valued at over $1B – headquartered in Singapore. These include GrabTaxi (equivalent to Hailo or Uber); Garena (online games); and the Lazada Group (‘the Amazon.com of SE Asia’). Other companies are nearing unicorn status, such as Redmart (an online supermarket) and iFlix (streaming content). In general business growth is being driven by momentum of mobile devices across southeast asia. However, not unlike Europe, each country in the region has its own dynamics, with multiple languages, and differences in law and regulations.
David told me that while access to seed and venture capital is reasonably strong up to Series A rounds, there is a real gap in Series B and growth funding. Similar to Ireland, there are relatively few funds providing risk capital for expansion and growth. The Australian ASX public market has been the IPO target of choice for several companies in the region, particularly from Malaysia such as IProperty (similar to Daft.ie or MyHome.ie), iCarAsia (online car market), or migme (online social gaming). Nasdaq is an aspiration for several emerging high tech companies, but none from Singapore have yet emerged there.
In talking to some other entrepreneurs, I learnt that wealth created in the last few decades in Singapore has been a two-edged source. There is a strong pool of private individuals seeking seed stage investments in technology startups. However, the rising wealth has led to expensive labour costs and high office rents, as compared to other countries in the region. One individual observed that in her view and in general, entrepreneurs and founders tend to be more focussed on aggressive growth in neighbouring countries, than in Singapore where the desire to create personal wealth is not so pronounced.
Personal networking and industry ’situation awareness’ are key for any start-up, along with access to finance and talent. Blismedia’s Singapore office has an interesting approach. Drop in to Blisbar if you are in the area, and tell Harry I sent you.