In a recent Ernst & Young report, private equity (PE) and venture capital (VC) activity in South-East Asia (SEA) is at an all-time high, with the tech industry emerging as the second largest sector attracting the majority of the PE and VC investments in the second quarter of 2018 by deal value across the region.
At the heart of this flurry of activity in SEA is Singapore’s vibrant tech scene. More than 50 per cent of VC firms in SEA have a presence here, and Singapore-based companies obtain over half of PE and VC investments in SEA. These trends speak of robust tech growth: in a 2019 report on Singapore hiring trends by jobs website Glassdoor, hiring in Singapore’s tech industry outpaced that of the finance sector in 2018, signalling a burgeoning tech market and presence here.
Mr Jeff Lin, Principal at cross border venture capital firm iGlobe Partners, shares his thoughts on the three key factors behind the growth of Singapore’s tech scene, and why tech firms choose to set up their businesses here.
Q: What is the first reason that comes to your mind on why tech firms choose to set up shop here?
Jeff: Personally, I do believe that talent is a huge driving force behind tech firms moving to Singapore. US tech giant Google employs over 1,500 local staff at its Asia Pacific headquarters in Singapore, while Facebook’s Singapore office has over 1,000 staff members. A key reason why these tech giants can hire at such a large scale is the availability of both tech and marketing talent in Singapore.
With connectivity to the region and the world, there is also a readily available pool of global tech talents that tech firms can tap on if they choose to set up here, encouraging many startups to pick Singapore for their global
offices. I saw a recent report which revealed that Singapore topped the Global Talent Competitiveness index in Asia-Pacific for the sixth straight year, coming in second in global rankings behind Switzerland and ahead of the United States.
You might be surprised, but there are actually numerous Kaggle masters in the field of data science here. I was told that in Singapore alone, there are around ten Kaggle masters – the top tier of machine learning experts of the world. For a small country like Singapore, it is definitely quite a feat to have a substantial community of data scientists based here. As the most developed nation in this region, Singapore has a much more advanced higher-education system and research community, which has attracted and groomed a lot of good researchers. For example, A*STAR’s Institute for Infocomm Research (I2R) is well known for its scientists in artificial intelligence (AI) and data analytics, and there have already been a few AI startups founded by former scientists from this institute.
A world-class quality of life here is an important pull factor for these talents. Mercer’s Quality of Living Survey 2018 named Singapore the most liveable city in Asia. Additionally, the country offers a stable political environment and institutions, setting itself apart from other markets in the region. Be it in job and education opportunities or global connectivity, Singapore’s performance makes it an appealing destination for globally-mobile talent.
“Singapore topped the Global Talent Competitiveness index in Asia-Pacific for the sixth straight year, coming in second in global rankings behind Switzerland and ahead of the United States.”
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Q: You’ve mentioned that Singapore’s strategic location provides connectivity to the region and the world. Is this also a factor tech companies can leverage on?
Jeff: Absolutely. Singapore is strategically-located at the heart of SEA, which allows tech entrepreneurs to plug into the diverse SEA market. SEA is predicted to become the fourth largest economy by 2030, and its consumer population is predicted to double by 2020. This means that this region offers unprecedented growth opportunities for businesses. Most countries in SEA have young populations with a median age of less than 30. The rising middle class consumer population in SEA translates into an increase in consumer purchasing power, thus creating a lot of opportunities for new businesses.
There is a high density of regional headquarters (RHQs) here, with 46 per cent of RHQs in Asia located in Singapore. This means that a critical mass of adjacent business partners are thriving here and available for collaborations that leverage opportunities new tech trends bring.
In terms of getting from one place to another, Singapore’s connectivity provides easy access to customers and collaborators in key markets across Asia. We are just an hour or two away from Indonesia and Malaysia, and a few more hours to the rest of SEA.
“SEA is predicted to become the fourth largest economy by 2030, and its consumer population is predicted to double by 2020.”
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Q: You’ve talked about the availability of talent, and Singapore’s strategic location. What about our digital infrastructure?
Jeff: Of all the cities in the region, Singapore has proven attractive to RHQs because of its digital infrastructure.
Singapore was ranked top in Asia for digital infrastructure and industry connectivity in The Economist Intelligence Unit’s Asian Digital Transformation Index, beating South Korea, Japan, Hong Kong and China in digital readiness. Singapore hosts more than half of SEA’s data centre capacity and houses over 22 submarine internet cables, which places it right at the heart of regional and global data flows. This fact that Singapore has topped this index twice can be attributed to its clear digital vision and successful ICT infrastructure strategy – including 5G development plans and its fibre network rollout.
This index this leads us back to the topic of talent in Singapore that tech companies need: the index revealed that apart from boosting connectivity, Singapore’s small land area also hosts a high density of telecommunications professionals within its workforce, which is a major advantage for development in new technologies such as Internet of Things and AI.