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Nikki Natividad · · 9 min readSingapore may be approaching a golden age for SaaS startups
Just 20 years ago, Singapore’s tech startup ecosystem was practically non-existent and Block71 was just a warehouse.
But thanks to a hospitable business environment and strong support from both the government and the private sector, Singapore is now widely considered a world-class innovation hub. It serves as home to several unicorns, including super app Grab, internet titan Sea Group, and gaming player Razer.
An emerging trend in recent years is the number of successful exits by local software-as-a-service (SaaS) companies.
(From L to R:) PatSnap CEO Jeffrey Tiong, SVP Asia Pacific Guan Dian, and CTO Markus Haense. Photo credit: PatSnap.
Analytics firm PatSnap was recently catapulted into unicorn status after raising US$300 million in a series E round led by SoftBank Vision Fund II and Tencent Investment. This makes PatSnap the second Singapore-based SaaS company to achieve a US$1 billion valuation after image recognition firm Trax joined the club in 2019.
A common trait that these companies have is how they target the US market.
Most software firms do so because the US has a sizable, mature population of customers that speak the same language and are willing to adopt new cloud software, according to David Gowdey, managing partner of Jungle Ventures. The venture capital firm, which focuses on early and growth-stage startups, is an investor in Deskera, an SaaS startup that provides solutions to small businesses.
It seems like the momentum is snowballing for SaaS startups in Singapore, particularly for global business-to-business companies. With exits becoming larger and more frequent, could this herald a golden age for SaaS companies in the country?
Attraction factors
For one, Singapore’s attractive tax regime means that founders who sell their companies get to keep a bigger chunk of the proceeds.
Royston Tay, co-founder of homegrown SaaS company Zopim, tells Tech in Asia that the city-state has “a capital gains tax of zero.” “Just imagine a US$100 million exit in San Francisco versus Singapore. That could literally be a US$30 million difference in what you have to pay for taxation.”
Tay at Zendesk’s Singapore office / Photo credit: Zendesk
Not conducive to SaaS just yet
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The road to a “golden age”
The next SaaS success story
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The “tiny dot” isn’t typically seen as a software-as-a-service hub, but that could change in the near future.
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