A busy business startup market is a vital part of the wealth creation food chain, so it is good news for Singapore's private bankers that the volume of activity has been picking up, this article says.

The following guest comment is from Jacqueline Low, chief operating officer of Hawksford Singapore. She writes about efforts in the city-state to emulate the phenomenal tech success of the US. As students of Silicon Valley know, creators and owners of the Googles, Facebooks, Amazons and PayPals make tempting wealth management prospects. Closer to home in Asia, of course, there has been the spectacular e-commerce example of Alibaba. As always, the editors here invite readers to respond with their views.

Singapore’s efforts to evolve into an Asian Silicon Valley appear to have paid off well.

Although not a Silicon Valley yet, Singapore has started showing a strong semblance to its western counterpart. More importantly, the little red dot is punching above its weight by catalysing startup growth across diverse sectors including biotechnology, information and communications technology, IT, cleantech media and entertainment.

According to official figures, the number of active startups has grown by 60 per cent in the last seven years. The phenomenal growth of the local startup scene is evident from the growth of venture funding that has gone into technology startups. From S$35 million ($28.8 million) in 2011, it has soared to S$2.1 billion. This is far ahead of other regional startup centres like Japan, Hong Kong or South Korea.

According to a study by Singapore Venture Capital and Private Equity Association, S$578 million worth of venture capital deals were done in Singapore, compared with S$1.2 billion invested in the rest of Southeast Asia. The number of mergers and acquisitions has also increased in tandem, vouching for the value of Singapore based startups - last year 13 firms were acquired, for a total of S$300 million. Singapore startups accounted for about 40 per cent of the 85 Southeast Asian startups acquired since 2008.

The local startup ecosystem is well developed with mentors, incubators, accelerators, angel investors, venture capitalist and government support. With government support in the form of funding, legal and tax incentives, the availability of private investors creates an ideal environment for startups to thrive. With increasing numbers of startups, the potential for large companies looking for expansion, diversification and vertical integration through acquisitions is higher. International investors are showing a keen interest in Singapore based startups - most of the venture funding that has been invested in Singapore startups is from overseas. The availability of funds catalyses the growth of startups there.

We believe that the thriving scene is growing because of increasing interest from international investors and entrepreneurs. While the number of local startups has been steadily growing, many foreign entrepreneurs are choosing the city-state to develop their products. Singapore may not boast a big local market, but its enterprise ecosystem is complemented by its great location in the heart of burgeoning Southeast Asia. It has a growing consumer market and enterprise sector that is matching up to supply products and services to this huge market.

More importantly, the tax regime for startups is truly attractive; they pay no tax for the first three years if their income is less than S$100,000 and thereafter pay only 8.5 per cent for income of up to S$300,000 and 17 per cent on income above S$300,000. This is very helpful for startups that are invariably cash-strapped in their formative years. Singapore allows 100 per cent foreign ownership of companies and its robust IP regime provides strong protection for their innovations. Recent efforts to establish Singapore as an IP hub also makes registration, monetisation, control and disbursement of rights easier for innovators.   

Well-known U.S. venture capital firms such as Andreessen Horowitz have funded local startups - there are now close to 100 VCs and angels in Singapore. Monk’s Hill Ventures, Golden Gate Ventures, Walden International are some of the notable VCs. The acquisition of local startup, Viki, by Japanese ecommerce giant, Rakuten, amplified the interest in the Singapore startup scene.

The Singapore government is keen to stimulate and keep the startup spirit alive and has rolled out several schemes such as the Business Angel Scheme, SPRING Startup Enterprise Development Scheme and Technology Enterprise Commercialisation Scheme. Recently the government selected six venture capital firms each to receive S$10 million under the Early Stage Venture Fund scheme. The money will be matched on a dollar-to-dollar basis with the VC firms’ own funds, which will be used for investments into Series A level startups. Very recently, under its Sector Specific Accelerator Programme, SPRING Singapore along with Zicom MedTacc and Med Tech Alliance, announced S$60 million for the medical tech industry for medical technology startups.

Singapore is evolving into a startup haven:  the government is focused on developing the innovative and entrepreneurial spirit of the locals at the same time as providing a soft landing for foreign entrepreneurs with innovative startup ideas. It is very easy and fast to set up a Singapore company and the infrastructure is incredibly well developed – and with the quality of workforce – it is like a plug and play environment.

The clusters, such as the iconic Blk 71, pave the way for a more collaborative and synergetic networking, partnering and exchange of ideas and expertise. The evolving, unconventional co-working facilities relieve the innovators from significant cost pressures, and the availability of strong government support, investors and the recent successful exits of local startups continue to inject more energy into the ecosystem.

Singapore was recognised in the recent World Startup Report where it took the 27th spot among 29 countries with at least one company valued at US$ 1billion - Garena, a five-year-old Singapore startup.