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Startup Genome: Singapore has boatloads of startup money, but faces a cultural deficit

The latest Startup Genome report, which ranks startup ecosystems around the world, released a deluge of numbers, facts, and statistics. But what do they actually mean for entrepreneurs belonging to the cities involved?

In Singapore’s case, the report could validate an observation that has often been made about the country: While there is plenty of startup money from the government and private sector sloshing around, dealflow has not been as forthcoming.

So unless there is drastic improvement, Singapore’s innovation output, relative to its investments, will continue to underperform. Think of it as a major infrastructural project — perhaps a highway — that becomes underused and hence a massive waste of money.

Startup Genome is not the first to highlight this issue: Last year’s Global Innovation Index, released by Insead, also noted Singapore’s yawning gap between institutional investment and innovation output.

Here’s what the report said: “Singapore’s Innovation Efficiency Index ranking is low (37th among high-income countries, 94th in the general rankings); this shows up in its relative weak performance in the Output Sub-Index, where it is ranked 17th overall (Scientific outputs at 17th place and Creative outputs at 33rd).”

Before I go on, let me introduce a caveat: Although Startup Genome was able to capture data from about 500 startups in Singapore through various sources, which does seem substantial, the actual quality of the data remains opaque. We still don’t know how much of the information is gathered from Startup Compass versus public data sources like Crunchbase and Angelist, how complete is the data that has been provided, and how transparent are Asian startups compared to their Silicon Valley peers.

But while we can wait for Startup Genome to refine its data, there’s nothing stopping us from drawing some insight from what we already have. As imperfect as it may be, Startup Genome may be the complete source of publicly available data of its kind at this juncture.

So here’s what the report says about Singapore: The ecosystem is current ranked 17th out of 20 cities; it scores high marks in terms of funding and talent (in 8th place for both), but ranks near the bottom for everything else (between 16th to 20th).

See: Interactive chart of ecosystem rankings

While being a laggard among the best is not such a bad thing, that’s besides the point. What we want to scrutinize is the discrepancy between funding and talent on one end of the scale, and entrepreneurial activity on the other.

Digging a little deeper, we know that Singapore entrepreneurs have a buffet of investment and grant options to go to, especially at the early stage. They are also a competent bunch by Startup Genome’s definition, possessing relevant experiences and expertise, the ability to mitigate risk, and previous startup successes.

Singapore entrepreneurs are also the most hardworking. They clock in an average of 11 hours a day, far exceeding Silicon Valley at 9.95 hours. No ecosystem in the top 20, except for Bangalore, surpassed 10 hours.

Yet their hard work isn’t seeing a proportionate amount of payoff. Singapore ranks last for the Startup Output Index, which measures total entrepreneurship activity, and 19th for the Performance Index, which gauges the performance and performance potential of startups. They’re also last for the Mindset Index, which tracks the founders’ ambition, resilience, and risk appetite.

Taken together, these indices hint at the root problem of Singapore’s stuttering performance: Our cultural deficit.

Don’t take my word for it. Ask Benjamin Joffe, CEO and founder of Plus Eight Star. He said: “Singapore has some of the key infrastructure and policies in place for a startup ecosystem. The money is there for early stage, and global funding can find good companies for later stage investment. What is still lacking? Cultural elements: lower risk aversion, tolerance of failure, better role models and self-promotion skills, and stronger access to key markets.”

Singaporeans are a smart bunch. The country has a top-notch education system producing a proficient workforce who pride themselves in owning everything they do.

But there are too few risk-takers who want to bet on a crazy idea and turn it into a billion-dollar company. And too many scholars who prefer the comforts of a cushy government or MNC job. Even those that bravely step into the fold are not quite as visionary as their Silicon Valley counterparts.

In the end, it all boils down to a numbers game. A society that can nurture the most people with high risk appetites and turn them into successful entrepreneurs wins.

The Singapore government, recognizing the country’s cultural deficit, is playing this game too.

Recently, I accompanied Minister-of-State Teo Ser Luck as he toured Block 71, which has been designated by the government as a startup hub — a hothouse where entrepreneurs mingle and work together in one building.

The place has become a showpiece of Singapore’s startup ambitions. It’s a garage-like environment that has been used to impress many foreign dignitaries — including one famous Israeli-American journalist who wrote a seminal book about Israel’s startup ecosystem.

Yet Block 71 is only part of the solution. As one entrepreneur put it, an environment can only come alive with creativity because of the community. Block 71 can only elevate to the standard of its denizens.

The government too recognizes this, and with its foresight, recently launched a new program to develop entrepreneurial instincts from the secondary school level onwards. It’s a sensible and comprehensive program, and if it fails, it won’t be because of bad planning. It’ll be undone by bad execution.

Nonetheless, despite Singapore’s shortcomings, the country does appear to be moving in the right track. Entrepreneurship is more embraced than ever, and while the idea of an iron ricebowl is still attractive, Singaporeans now have wider berth to pursue their dreams with the support of their peers and family.

While Silicon Valley took decades to cement its position as the world’s top startup ecosystem, Singapore by comparison begun its journey six years ago, after a series of false starts.

Cracking the top 20 in such a short span of time is not a bad result.

Be sure to check out our extensive coverage of Startup Genome.

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