Shaping Singapore’s attractiveness in frontier tech
This story is brought to you by Pierrick Bouffaron and Antonio Castro Neto.
AM2 is a Singapore-based venture studio that creates and strengthens science-startup projects in the advanced materials and advanced manufacturing fields. Join an incredible community building the future 🔥🤖
Singapore has overcome vast odds to ignite an entrepreneurial ecosystem and high-tech industries from the ground up, in just a few decades. The Little Red Dot’s skilled workforce, capacity of long-term planning, dynamic government support, and international business environment have been key drivers to shape both its modern economy and a regional basic science powerhouse: NUS and NTU both maintain a tight grip on the top spots in academic global rankings. But like so many competing nations, Singapore faces difficulties to reach a critical size in frontier tech and support its handful of early-stage gems to cross the maturation stage and the valley of the death. Characterized by a small home market, an early maturity with regards to deep science-driven venturing, and a geographic and cultural distance from top frontier tech hubs such as San Francisco, Boston or Tel Aviv, Singapore makes great efforts to attract the talent, technologies, and capital necessary to complete this emerging ecosystem. We argue that a limited range of financial and venture building instruments needed to attract a diverse investor base, experienced entrepreneurs and top operating partners, adds to the picture.
Global research institutions spend billions every year exploring, developing and testing new technologies with the hope to bring them to market. However, while basic science provides numerous avenues for promising ideas and expertise in fields like sustainability or healthcare, a range of structural, intellectual, and financial barriers make their maturation complex, and broadly painful for founders. Those include a scarcity of funding and talent compared with consumer tech, to misaligned incentives and risk appetites among researchers and investors alike. Consequently, many ventures flounder once they reach the maturation phase before market players — investors, corporations — are willing to engage. Let’s face it. Frontier tech discoveries typically face 100:1 odds of making it through the first commercialization steps. Expensive product maturation efforts, investor pressure, and protracted time frames have made traditional investors rather risk-averse. This leaves vast funding gaps at early-stage that create both innovation and economic challenges. The problem is acute all over South-East Asia but resonates in a singular manner in Singapore, where the ambitions are big, science is world-class, and frontier tech R&D is deliberately being nurtured so that its outcomes can be pillars of the future national economy.
To counteract this structural complexity and move to the next level, the frontier tech sector in Singapore needs to produce more promising research ventures that are geared towards commercialization and international growth. In particular, recognizing that the country will always remain a small and remote international platform with regards to the major markets new frontier tech startups will likely target, a combination of targeted efforts could leverage the nation’s strengths and address some of its shortcomings.
- Boosting the attractiveness for researchers and builders alike
There is no question that frontier tech maturation and productization should be driven by specialists, with the aid of seasoned entrepreneurs and operating partners. But the innovation-to-productization cycle only partly overlaps the process of venture creation. While having a team of scientists leading the go-to-market is somehow prevalent in Singapore, academics often lack the experience and incentives required to competitively translate their work into commercial products. Yes, they can learn. But the learning curve is generally steep, and it often has an irremediable impact on the productivity — and, down the road, the market timing and competitiveness — of the spinoff. We highlighted in previous articles the importance of organizing “relay races” , and the necessity to dynamically build the right team, at the right time. Not all academics are made to be science entrepreneurs, but most can make substantial contributions to emerging startups in their field. Now, for the academics ready to cross the entrepreneurship Rubicon, there is always a catch. Let aside the fact that publishing academic research is still considered as the ‘bread and butter’ of academic life —technology maturation is a demanding activity, and hardly compatible — basic science in Singapore just provides more stability and funding visibility. Even if the country had more frontier tech startups today, the reality is that the public sector would always be a black hole for talented research professionals, be they Singaporean or foreigners. To counterbalance this effect, official joint positions between universities and startups or venture builders can be tested. In addition, the introduction of innovative incentive mechanisms that would factor spinoff experiences in—e.g., new KPIs for academics seeking tenure — can entice more candidates to contribute to the ecosystem.
Second, the country faces difficulties in attracting experienced frontier tech entrepreneurs, venture builders, and operating partners. Unfortunately, even highly generous expatriate packages to motivate the move may not convince this crowd. They are largely incentivized to live and work in cities like San Francisco, Boston or Tel Aviv, associated with massive work and learning opportunities, which in turn contribute to their personal branding, experience, and network building. Singapore’s small domestic market, by contrast, structurally offers fewer opportunities to build a world class network. To counteract this, new immigration schemes targeting seasoned frontier tech entrepreneurs and operating partners would be a great addendum to Singapore’s gamut of immigration tools. For example, applicants demonstrating a strong track record could be granted a 3-year work visa— yes, you need visibility to build frontier tech— associated with an ‘entrepreneurial grant’, i.e., the possibility to be financially supported to incubate Singapore-based projects in their field. This status could even open the door to bringing additional talents to work on science-driven products (i.e., opportunistic pooling), as well as an expressway to raise early-stage capital. The program can be designed so that this frontier tech AAA crowd is incentivized to ignite and expand startups from Singapore, and incorporate the associated expertise into the local entrepreneurial ecosystem.
2. Unlocking the private funding market
Frontier tech fundraising in Singapore can be challenging due to the limited types of financial instruments available to the investor community, and the few domestic options available to promising startups. Although the government has long introduced generous tax schemes to incentivize private R&D, spending has been relatively low over the last decade, broadly amounting to 25–45% of gross frontier tech spending (note: it varies following the industry). While these proactive policies are commendable and a blessing for many innovation projects, we tend to notice that good ideas failing to tick government checklists have nowhere else to turn. Also, researchers, entrepreneurs and corporate executives alike point out that application processes for public grants have many restrictions in terms of fund allocation, an excessive reporting, and usually takes months to complete. Those frictions can be eased by working hand-in-hand with domestic grant administrators and technology transfer offices to simplify the playbooks that are used today to allocate and track the available public funding.
For frontier tech private equity to be successful in South-East Asia, a new investor base is poised to emerge, with a strong understanding of the region’s current strengths and weaknesses, and the journey ahead. To create this scene, Singapore needs to develop new and creative vehicles to attract capital. Establishing a series of early-stage hybrid vehicles (e.g., venture builders) and frontier tech venture capital firms is one of the best ways to do so. Making domestic funding available early in the process would reduce the number of startups seeking overseas financing, with the underlying risk to flip the company abroad in the first months or years. While some public funding contributions is expected to be necessary to make a dent —especially for venture building that concentrate more operational risks — it is critical that those funds end up primarily financed by the private sector over time, so that they can be truly competitive with each other. While frontier tech startups in Singapore are still seen as not producing sufficient financial returns for their level of risk, or suffer from a lack of information or local track record given the novelty of their markets, the country may want to support the emergence of new vehicles with first-loss capital in order to attract large, institutional investors and corporations. The new vehicles should be divided not by sector but by funding avenues and investment philosophies. In particular, while the country is home of numerous family offices and philanthropic capital, the lack of flexible investment vehicles has sidelined this market segment. There is a massive opportunity to bring them in.
3. Encouraging more international collaboration and networking
In the frontier tech fields, Singapore would benefit from more exchanges with the US, Europe, Israel and China. They host the global capitals for frontier tech research, development and private equity. Establishing business landing pads in top-tier hubs like San Francisco, Boston or Shenzhen would allow researchers and entrepreneurs to network with and market their technologies to investors and corporations, with the support of the Singapore government. This is key and goes way further than networking and soft landing. For a frontier tech entrepreneur, focusing — for example — on the US market requires a team with a deep understanding of the local regulations, the product development procedures, and, more generally, the current state of the industry. Most early-stage startups cannot afford to hire or develop these expensive resources by themselves, so there is a need for mechanisms to share the costs. Ideally, the venture builders and operating partners that Singapore is able to attract should support these efforts: they are expected to be familiar with these foreign markets, and have strong networks there. They would bring unique perspectives to the conversation.
As collaboration becomes even more critical to modern innovation, a standardized system of frontier tech talent development and exchanges would foster greater international cooperation, socialize science entrepreneurs into multi-disciplinary research and productization, and eventually attract more talent and funding in Singapore. Thus, the establishment of publicly subsidized talent transfer and support programs to complement the work done by the private sector would be a great addendum. As an illustration, the French public innovation agency bpifrance recently officialised an open platform supporting frontier tech CEOs in the constitution of their advisory boards, with 1,500 seasoned entrepreneurs and executives already registered to support early-stage startups. Singapore can easily orchestrate a similar scheme; government subsidies may be necessary at the start to cover the contributions of the first generation of advisors, and accelerate.
In the case of frontier tech, scientists, engineers, entrepreneurs, and business and finance professionals all provide different but equally necessary spheres of expertise. Any future ecosystem success hinges on its ability to make the most of these collaborations. From incentivizing academics, supporting the emergence of new investment vehicles, stimulating international exchanges to attracting seasoned entrepreneurs and operating partners, Singapore is to leverage new frontier tech policies and devote significant efforts to broaden the local pool of dynamic entrepreneurial human capital over the coming years.
