In the first quarter of 2015, Indonesia and Malaysia are experiencing a larger number of venture capital deals according to the Singapore Venture Capital and Private Equity Association. The government in Singapore has used innovative ideas and initiatives like MDA i.Jam and National Research Fund (NRF) Technology Incubation Scheme. The latter can co-invest up to 85% of the capital recommended by an incubator to help spur this increasing startup deal flow.
Block 71 Creating Startup Clusters
In addition, similar to other sectors in the past, the government has created a strong foundation for new businesses and entrepreneurs to develop and succeed. It created Block 71 to provide the physical infrastructure needed by new entrepreneurs. At Block 71, entrepreneurs can work next to other new businesses that can utilize each other. The Block 71 system acts much like an incubator and offers essential services and access to experts in addition to basics like office space, print services, and internet access.
Block 71 not only benefits the businesses, but the clustering of related businesses helps spur the local economies around these areas. Over time this provides access to specialized labor in these areas as well that other companies can tap in to.
The collection of similar companies helps develop better supply chains and often leads to vertical integration in that cluster. The entire value chain benefits including workers, researchers, manufactures, entrepreneurs, investors, and workforce training. As this cluster continues to gain strength, it can create a pool of knowledge and capital that can be further deployed into other endeavors.
A good example of this is free market is an area like Silicon Valley in the United States. The government in Singapore is trying to develop a hub for startups, venture capital, and technology though a more actively managed approach. So far it is working according to Selacorp’s David Selakovic. “The government in Singapore is so progressive and entrepreneurial, it really demonstrates the enthusiasm and excitement in everything it is involved in, including startups.
Other Factors Contribute to the Environment
There are some who disagree with this view of the strong startup culture created by the government in Singapore. It argues that some believe that a certain amount of government propaganda has led to this overly positive view.
Singapore is a large financial center and has very high levels of employment. The mainstream media locally makes sure to frequently remind citizens of the city-state of these facts. However, the media also ignores the high costs of doing business in Singapore.
All this said, the local economy is loaded with key components to help drive successful startups and innovation – infrastructure, intellectual capital, and a world-class reputation. All of these help attract venture capital and talent along with its corruption free government.
The government has experience in establishing footholds in new sectors before. It was able to build up the biomedical science and offshore marine engineering in the past. The biomedical science sector is still growing and flourishing in Singapore, and it was noted as the third most innovative biotech country in the world after the U.S. and Denmark in Scientific American.
The challenge startups will face in Singapore is finding a market. While it is a great place to develop and test new technology and services, it is still a small market. Both the offshore marine engineering business and its biotech enterprises rely on markets outside of the small city-state.