Where exactly is the funding going in Singapore’s tech and startup ecosystem?

Note: The statistics in this article cover the Q1 to Q3 period of 2020.

The economic impact of the Covid-19 pandemic has been severe for countries in Southeast Asia. Except for Vietnam, all economies in the region have experienced year-on-year contractions.

In Singapore, lockdown and social distancing measures have dampened domestic consumption, and the challenging global environment has also affected the export-dependent island nation: The second-quarter GDP contraction of 13.2% was the worst ever recorded.

However, despite all of these challenges, economists believe that a rebound in 2021 is in the cards, and the Singapore market continues to be an attractive investment destination. In 2020 so far, over US$3 billion in funding – across 201 deals – was poured into various industries in the Lion City.

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“Singapore continues to be a desirable investment location because we have strong fundamentals in place,” says Jonathan Lim, global innovation network director at Enterprise Singapore, a government agency that champions enterprise development. It is the organizer of the Singapore Week of Innovation and Technology (SWITCH), one of Asia’s leading technology, innovation, and enterprise festivals.

“With our vibrant ecosystem and a closely-knit community, we have the right environment to make things work for startups. Today, we have a growing network of more than 220 venture capitalists and over 190 accelerators, a strong base of MNCs, and a talent pipeline,” he says. “These factors, coupled with Singapore’s ideal location as a gateway to Southeast Asia, make us attractive not only to startups but also investors from all around the world.”

The majority of this funding comes from within Singapore itself, but there is also a variety of international sources. The United States leads the top three with 33 deals, followed by the United Kingdom and Japan.

Mirroring consumer behavior

Two of the top three industries that have received the most funding to date during this turbulent year are the fintech and ecommerce verticals.

The data reflects consumers’ increased reliance on digital means to access essential goods and services as a result of lockdown and social distancing measures. A report by Facebook and Bain & Company found that 47% of consumers in Southeast Asia have decreased their offline purchases while 30% have increased their online spending. And it’s a trend that’s here to stay: 83% of consumers polled for the report said that they’re likely to continue spending more online even after restrictions get lifted, and investors are wise to this.

In order to support this growth in online commerce, the development of contactless payments, e-wallets, and other fintech solutions has been a key piece of the puzzle, helping to keep the economy going by giving consumers and businesses risk-free ways to complete transactions. The Singapore government has always backed fintech development, and the nation has over 40 fintech innovation labs.

Compared to the same period last year, investments in fintech have remained around the US$300 million mark. However, funding in ecommerce has increased from US$460 million in 2019 to US$635 million this year.

Building a healthier future

Significant money has also been put into Singapore’s healthcare and biomedical sciences sector as it continues to find ways to alleviate the issues raised by the pandemic, as well as prepare for future health crises. The health industry received US$60 million in funding last year but that amount has almost been tripled this year.

Beyond Covid-19, the aging population of Singapore presents real opportunities for the industry to play a key role in the future. About a quarter of the country’s population will be elderly by 2030, which is the highest ratio in Southeast Asia. Additionally, over 80,000 seniors are expected to live alone, so relying on the traditional solution of nursing homes will be less viable in the future.

At a global level, interest in tech-based health solutions such as telemedicine has skyrocketed. Analysts are optimistic about the market, which is projected to reach US$175 billion by 2026, up from US$45 billion last year. In Southeast Asia, startups such as Alodokter, Halodoc, and Doctor Anywhere have closed double-digit fundraises over the past year.

“Covid-19 has affected the global economy, but this does not impact our goal to continue growing the ecosystem and strengthening our position as the Global-Asia node for technology, innovation, and enterprise,” says Lim.

“Looking ahead, innovation will become a key growth driver for many economies as demand for new and novel solutions increase. Through platforms such as SWITCH, we want to enable large corporations, SMEs, and startups from Singapore and all over the world to forge new connections and make new deals.”

The Singapore Week of Innovation and Technology (SWITCH) is one of Asia’s leading technology, innovation, and enterprise festivals, and it provides a one-stop platform where innovation meets enterprise, with access to global startups, investors, corporates, and the innovation community.

The 2020 edition, in conjunction with the Singapore Fintech Festival, is taking place as a hybrid event combining digital and physical experiences from December 7 to 11. You can learn more about it and get your pass here.

Visuals by Susi Susanti, Tech in Asia

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.