Delving into Singapore’s smart-city startups and the funds flowing into the sector

In 2014, Singapore launched the Smart Nation initiative. And over the last six years, the country has been building up its startup ecosystem as part of this drive.

Startups by their nature are in the business of disruption – an important factor for a nation that is striving to become a truly digital society.

Over the years, global demand for smart-city solutions has emerged as a result of the growing world population and increased urbanization.

With Singapore ranking 17th on Startup Genome’s 2020 list of top startup ecosystems in the world, it’s no surprise that the city-state is home to many startups who are developing smart-city solutions.

These startups encompass a huge variety of businesses and technologies, and it would be impossible to explore them all. So in this piece, we take a look at the funding that’s gone into the three areas that play a significant role in the development of smart cities: internet of things (IoT), digital payments, and clean tech.

Funding to startups in these three sectors has increased at a steady pace, rising from just US$84.8 million in 2015 to US$276.7 million in 2020 so far.

Most smart-city startups in these areas are in the early stages of their funding journey (in the seed to series B range). This indicates the relative newness of smart city solutions as an area of interest for investors.

Taking a look at who’s been funding startups in these areas, a few names are consistent. Wavemaker Partners has backed nine startups across all three sectors. Entrepreneur First has invested in 11 companies across IoT and clean tech, while Seeds Capital, the investment arm of Enterprise Singapore, has backed four startups in the two segments.

Now, we’ll look at each sector more closely.

IoT

IoT is usually the first thing that comes to mind when people talk about smart cities – the ability to transmit and analyze information in real time is often what will help a city operate more efficiently.

But in fact, investments in IoT startups in Singapore only took off in 2016, with US$3.2 million invested in the industry. The number has since climbed to US$11.8 million as of 2020 to date and is likely to increase even further, especially as technological advancements make the implementation of IoT more accessible.

Improvements in computing power and connectivity and the rise of cloud and edge computing solutions all play a role in facilitating greater growth in the IoT space.

So far, Singapore is in the process of trialing smart lamp posts and is working towards setting open standards for IoT development, which would create the necessary infrastructure for companies to build their own IoT services.

The country is also home to several accelerators that support the growth of IoT startups, such as AIRmaker, IoT Tribe, and SparkLabs Connex, among others.

IoT startups in Singapore cover many aspects of life, addressing areas as diverse as property management, asset tracking, food waste, and even aquaculture.

A significant portion of the funding in the space has gone to UnaBiz, an enabler of massive IoT that has worked with companies like Singapore Airlines and Changi Airport to deploy its solutions. In 2018, the firm secured over US$10 million in series A funding.

Another major player is SensorFlow, a startup that helps hotels and commercial properties optimize energy and operations, which closed an US$8.3 million series A+ round in April this year.

Digital payments

Payments are important for smart cities and help facilitate more efficient ways of living and doing business. Singapore has a strong ecosystem in place to support startups in the fintech space, with over 40 innovation labs and a regulatory sandbox for companies to test their products in live environments, among other initiatives.

From 2014 to 2015, payments and remittances startups in Singapore saw a spike in funding, jumping from just US$3.6 million to US$29.2 million. This was in large part driven by investments into companies that offered solutions for mobile and social payments and also corresponded with a global spike in fintech funding. A report by KPMG and CB Insights shows that 2015 was “the year fintech entered the mainstream.”

Since then, funding into startups in the payments and remittance industry has continued to increase. Taking a closer look at the specific types of startups that are receiving investor money, cross-border payments is clearly a growing segment. This is especially so for companies that can provide such solutions to enterprises and consumers in developing economies, where the relative immaturity of banking and financial infrastructure has created setbacks in cross-border payments.

With an increasingly connected global community, being able to facilitate more effective cross-border transactions has become crucial – a fact that’s reflected in the amount of funding going into the fintech space.

Case in point: Nium, a provider of cross-border payments and money transfer services, secured series C funding in May, with Visa among its backers. Similarly, Wallex, which focuses on providing small and medium-sized enterprises with foreign exchange and cross-border payment services, raised funds for its series A round in June.

Meanwhile, Thunes, which aims to be a “super highway” for payments, is the top-funded startup in the payments and remittance space in Singapore, having closed a US$60 million series B round in September this year.

Clean tech

Another essential aspect of smart-city development is clean tech. These solutions cover many aspects of urban living, from water innovation, energy solutions, to waste management.

Investments in clean tech startups in Singapore have climbed from US$55.5 million in 2015 to US$170.9 million in 2020 to date, more than doubling over a period of five years.

With climate change being a pressing global concern and much of Asia’s population still lacking access to modern energy services, opportunities for clean tech firms in the region are plenty.

Singapore has numerous resources that startups can turn to for support. Corporate accelerators like the Shell Startup Engine and Engie Factory, the venture-building arm of Engie Group, are examples, as are dedicated incubators such as the Sustainable Energy Association of Singapore’s Cleantech Incubator, along with other grants and initiatives.

One particular area of interest is that of energy. A critical aspect of clean tech lies in exploring ways to reduce energy consumption and dependence on fossil fuels after all.

Energy startups in Singapore have received over US$145 million in funding in 2020 so far. Among them is solar energy solutions provider Sunseap, which closed US$72 million in a series D round this year, bringing its total disclosed funding to US$280.9 million.

The company has deployed its solutions across Asia, which means it’s in a pretty good position: ASEAN nations have set a target of securing 23% of its primary energy from renewable sources by 2025 against a backdrop of growing energy demands in the region.

Given that the total venture capital investment in energy technology startups globally stood at US$16.5 billion in 2019 – of which early-stage investments are estimated to have accounted for US$4 billion – it’s clear that energy is a rising area of interest in the clean tech vertical.

Towards smarter cities

Despite the Singapore government focusing on these three verticals, funding in smart-city startups is on an upward trajectory as a whole. In Singapore, about US$160 million worth of smart city-focused venture capital funds were launched in 2019, and investor interest in the sector is unlikely to slow down in the coming years.

Enterprise Singapore is a government agency that champions enterprise development in the city-state. It organizes the Singapore Week of Innovation and Technology (SWITCH), one of Asia’s leading technology, innovation, and enterprise festivals. The event provides a one-stop platform where innovation meets enterprises and where people can get access to global startups, investors, corporates, and the innovation community.

Hear from industry experts in the smart-city space at the 2020 edition of SWITCH. Speakers from key players such as AIRmaker and Engie Factory share the latest developments in the field, insights about the race to a zero-carbon goal, co-innovation opportunities in smart cities, and other possibilities for growth in the sector.

SWITCH 2020 is taking place in Singapore from December 7 to 11. Learn more about the event and how to attend on its website.

Visuals by Christine Toh, 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.