Singapore aims to be Southeast Asia’s Silicon Valley

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Malaysia

As MSC falters, Singapore aims to be Southeast Asia’s Silicon Valley

February 27, 2014


Tech firms are attracted to Singapore which offers Singapore offers good infrastructure, rule of law and
easy access to major markets. – Reuters pic, February 27, 2014.

Huge deals in Silicon Valley are pushing Singapore to go all out to build its own version of the American technology zone as the start-up hub for Southeast Asia – a dream once shared by Malaysia's Multimedia Super Corridor (MSC).

But Malaysia's MSC that started in 1996 has now faltered into a real estate play known more for call centres rather than what it was meant to be: a test bed for cutting edge tech as well as home to start-ups.

Over in Singapore, the Wall Street Journal reported that excited by deals such as Facebook's US$19 billion (RM62.7 billion) agreement last week to buy messaging company WhatsApp, Singapore's policy makers and technology entrepreneurs are betting that one day a tech giant could swoop down to grab one of its own home-grown start-ups.

Venture-capital tech investments in Singapore last year outstripped those in Japan, South Korea and Hong Kong, the global business daily said.

It noted that the city state, with its population of just 5.4 million, was not quite Silicon Valley and has yet to produce anything like a Google or Facebook, much less a service like China's messaging app Wechat, with 272 million monthly active users.

And while Singapore has had mixed success in trying to kick start innovation in various industries, including biotechnology, media and entertainment, the paper quoted investors as saying the technology ecosystem was becoming more active.

One concern is that insufficient entrepreneurial spirit among young Singaporeans and the government's financial largesse could inadvertently enable some start-ups to limp along on state funds, a few analysts told the Wall Street Journal.

But in recent years, the Singapore government has been trying to fund local technological innovation by investing some S$100 million (RM260 million) for early-stage start-ups as part of the S$16 billion it has pledged for scientific research and development.

Well-known American venture capital firms, such as Andreessen Horowitz, have funded local start-ups, including video site Viki, which Japanese online retailer Rakuten bought for US$200 million in September.

Rakuten also agreed earlier this month to acquire Cyprus-based messaging app Viber Media, it added.

Another Singaporean tech firm attracting investors is RedMart, an online grocery-delivery service founded in 2011 that has raised more than US$10 million from investors, including Facebook co-founder and Singapore resident Eduardo Saverin.

One hot spot in Singapore's fledgling start-up scene is a seven-storey, renovated factory building known as Block 71, west of downtown.

On a recent Friday evening, a few dozen technology entrepreneurs gathered to drink beer, nibble on cheese and almonds, and discuss their start-ups, the paper said.

Hugh Mason, a 47-year-old British entrepreneur, said there were about 100 start-ups and more than US$1 billion of investment under management in the building, the paper added.

In 2010, Mason and his friend, 38-year-old Singapore native and anti-spam pioneer Wong Meng Weng, co-founded Singapore's Joyful Frog Digital Incubator, which hosts frequent gatherings at its headquarters in Block 71.

Wong, decked out in a three-piece suit and carrying the company's green stuffed frog mascot Smoochy on his shoulder, moved about the room, introducing out-of-town visitors to regular attendees. A sign read, "Silicon Valley isn't a place. It's an idea".

Venture capital invested in Singaporean tech firms by funds last year totalled US$1.71 billion. While that is behind China's US$3.46 billion, it is ahead of Japan, South Korea and Hong Kong, according to data from Hong Kong-based Asian Venture Capital Journal.

PricewaterhouseCoopers LLP and the National Venture Capital Association put venture funding for software companies alone in the United States at US$11 billion last year.

Still, funding devoted to Singapore's tech firms, including from the government, skyrocketed last year to account for 19% of funding for Asia – up from just US$27.3 million, or 0.3%, in 2011, the paper reported.

Brad Templeton, a Silicon Valley-based Internet pioneer who consults with Google on self-driving cars, said while Singapore's tech scene seemed more active now than it was in previous years, he noted "too much government can hurt a start-up community rather than help it."

In its policies, Singapore's government has attempted to mimic Israel, which has developed a robust technology industry over the years, the business daily said.

One government programme designed to assist early stage start-ups is the "Technology Incubation Scheme," which began in 2010.

Under that programme, the government co-invests up to 85% of capital in select start-ups, capped at the equivalent of S$500,000.

Technology incubators – organisations typically run by start-up veterans who provide mentoring and physical space – pitch in the remaining 15% and are allowed to buy out the government's stake after three years. There are now 15 incubators and more than 100 start-ups participating in the programme.

"In the past, I might have funded two or three start-ups a year. Now I've been doing one a month," said Leslie Loh, who heads Singaporean venture capital firm Red Dot Ventures, which launched in 2011.

Douglas Abrams, who spent 14 years at JPMorgan in New York and has worked in Singapore's technology venture-capital industry since 2000, said there has been a marked increase in the value of Singaporean "exits" – when start-ups are acquired or sell stock to the public.

Abrams, now chief executive of technology venture capital firm Expara, said last year, some 20 firms had exits totalling more than S$400 million, compared with about S$50 million in previous years.

Razmig Hovaghimian, a 38-year-old American who started Viki as a class project at Stanford Business School, said he chose Singapore for its headquarters in part because of its proximity to key Asian markets.

Though Viki was able to attract Series A funding from Andreessen Horowitz, the company benefited from Singapore's sense of community, Hovaghimian was quoted as saying by the paper.

Steve Leonard, executive deputy chairman of Singapore's Infocomm Development Authority, which is tasked with building the country's technology industry, said Singapore offers good infrastructure, rule of law and easy access to major markets.

"We're still waiting for that Instagram or that WhatsApp," said Scott Anthony, a Singapore-based managing partner at consulting firm Innosight.

"It's going to be a few more years, but I think it's coming." – February 27, 2014.

http://www.themalaysianinsider.com/m...silicon-valley

Singapore unlikely to succeed due to lack of creativity and talents. The Singapore environment is not conducive in nurturing innovation and creativity. Sim Wong Hoo is a testimony of that!


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