Many come to join one of the thousands of companies developing cutting-edge technologies; others arrive in search of markets, mentors and the attention of the area’s venture capitalists, who represent one of the world’s greatest concentrations of available funding for tech startups.
Clarence Chio has done both. Chio, a Singaporean, studied computer science at Stanford University and then built a career in the US, working for a number of major tech companies, mainly in and around Silicon Valley. In 2018, he co-founded Unit21, a financial technology company whose software allows banks and payments businesses to identify and investigate financial crimes, such as money laundering.
“We started this company because of our combined backgrounds in fintech, security, and artificial intelligence,” Chio says. “We wanted to build technology that had an impact stretching beyond our immediate lives, and empowering crime fighters and law enforcement with technology that leverages our skillsets was a calling we could not ignore.”
Although Unit21 was founded in the US, Chio has kept his connection to Singapore. When the company outgrew its previous incubation space, Chio and his team moved to BLOCK71 San Francisco, an initiative from the National University of Singapore that helps promising startups from the city-state to identify and access new growth opportunities overseas. BLOCK71’s San Francisco outpost provides co-working spaces, mentorships, networking and educational resources to Singaporean companies looking to tap into US funding or markets, and vice versa.
“BLOCK71 provides Singapore tech companies with an opportunity to learn, explore business opportunities and integrate into the local ecosystem seamlessly, while also helping to educate US-based entrepreneurs on the Southeast Asia market,” says Dr Lily Chan, CEO of NUS Enterprise. “Importantly, BLOCK71 functions as a global network— enabling opportunities for cross-cultural learning and collaboration.”
Setting up in the US can be challenging for startups from Southeast Asia, as regulations are different, costs are often higher, and investors can be reticent about investing in companies with foreign founders. Likewise, American companies heading east find a complex and heterogenous group of markets where they often struggle to adapt.
When Kenneth Low, the chief operating officer and co-founder of online marketplace software provider Arcadier, set up in the US, he found that there were significant differences in expectations between American and Asian investors. In the US, startups are expected to focus on growth over everything else, launching with a big bang and trying to generate a large user base, before then trying to convert that to revenue. In Asia, where investors are typically more conservative, the expectation is that they will try to generate revenue first, and will take a more considered route to market.
In the US, Low adds, there are also different attitudes to trying and failing in startups. “In the US, encountering failure and success via comebacks is a widely acceptable culture, [whereas] in Singapore, the readiness to forgive prior startup failure is lower.”
Despite the differences and potential difficulties, there are substantial advantages for companies going in either direction. For Singaporean startups, the US presents a huge market opportunity, and also a chance to attract growth capital from investors who are increasingly interested in global opportunities.
“As Silicon Valley becomes increasingly saturated, US investors are starting to look outside the US for new growth markets and to invest in founders from more diverse backgrounds,” Chan says.
For American companies, Singapore is a gateway to some of the world’s fastest-growing emerging markets in Asia. The city state has worked hard to create a pro-enterprise environment and vibrant startup hub where promising technology startups can flourish.
“Singapore takes a forward-looking view of industry… decides what the next focus industry will be and then ‘sets the table’ to make it possible for overseas and local entities to want to locate in Singapore,” says Claire Pribula, managing director of the Yield Lab Asia Pacific, an agri-food incubator that was established in Singapore in November 2018. “Singapore takes a 360 degree view. When Singapore decides to focus on an industry, it puts its entire ‘shoulder to the wheel’ and makes it happen.”
The proximity of leading multinational companies, research and development facilities and universities helps startups to access talent and cutting-edge technologies, Pribula says, while national enterprise development agencies, such as Enterprise Singapore, have comprehensive programmes to support innovation. Combined with private sector support, in the form of venture capital and incubators, like the Yield Lab, the city state has all of the ingredients for foreign startups.
“For our start-up portfolio companies there are some obvious reasons for “why Singapore”: Strong Intellectual Property (IP) Protection laws, financial stability and tax structure which fosters a place where start-ups, venture funds, and family funds across the region feel comfortable investing and locating,” Pribula says. “A USA company can get a quick and easy entry via Singapore and work from a concentrated base containing all those things needed to successfully complete their innovation and scale regionally and globally.”
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