Singapore tech startup scene poised for rebound after Covid-19

26 October 2020 4 min. read

Funding has dried up for technology startups in Singapore since the start of this year, although PwC expects a resurgence in the near future as new opportunities emerge.

Singapore has undoubtedly been a bright spot for the global startup landscape in recent years, home to a number of ‘unicorns’ – private startups valued at more than $1 billion. PwC defines a startup as a company that has existed for less than 10 years, and currently pegs the number of tech-enabled startups in Singapore at 4,000. This figure was at 1,000 in 2014.

Stellar growth in the country’s startup landscape has drawn attention from around the world, leading many to compare it to Silicon Valley in terms of tech dominance. According to PwC’s researchers, several factors have combined to make Singapore the tech hub that it is today.

Startup funding in Singapore, 2017-2020

“In a nutshell, it is a flourishing ecosystem providing fertile ground for start-ups, supported by a forward looking Government ensuring ease of doing business, conducive infrastructure, strong research bases at local Universities and a skilled talent pool. Singapore is often seen as a great test bed for new technologies, and the gateway to access the broader Southeast Asia market opportunity,” explained Patrick Yeo, PwC Singapore’s Venture Hub Leader.

Up until last year, the numbers were backing up this story. Funding was climbing a steep incline, amounting to more than $10 billion in 2018. However, 2019 brought the first signs of trouble for this vibrant tech hub. Money was slow to flow in last year, and the total funding for the year took a tumble.

At this point, experts were already suggesting that the tech startup market in the country had saturated. The global pandemic that followed has not helped allay these concerns. Come 2020, the decline in funds has persisted, with a subdued first half of the year sparking concerns around the health of Singapore’s startup market. According to PwC, these worries are unfounded.

Start-up investments across key sectors

“The Covid-19 crisis has disrupted fundraising in Singapore’s start-up ecosystem, but we will continue to see investments coming in this year and ahead. We believe there are significant opportunities in Singapore with high growth innovative companies for investors to consider,” explained Yeo.

The value of tech startups often lies in their ability to solve problems – be it for businesses, governments and consumers. Few need reminding that the pandemic has brought its share of problems, opening a world of opportunity for tech startups to develop solutions. Businesses are going virtual, consumers are turning to ecommerce, healthcare systems are burdened, and governments are navigating an unprecedented swarm of challenges.

All this cries out for technology partners. For PwC, the tech startup ecosystem in Singapore will respond to this scenario, with a handful of sectors leading the charge. One is the urban solutions & sustainability sector, specifically transport and logistics.

The report points out that this has been among the most resilient sub sectors in the midst of the crisis, drawing nearly $2 billion this year. Dominating this segment is ride-hailing and delivery company Grab, which raised $1.2 billion. Going forth, this sector's central position will be cemented by the AgriTech sub-sector, as Singapore’s drive towards food self-reliance creates the need for more sustainable and efficient production.

Number of deals across funding stages

Also in the front seat – consistent with trends across the world – is Singapore’s digital economy. Be it ecommerce, financial technology (FinTech), consumer technology or media, the pandemic has created a reliance on tech like never before, which signals a stream of funding into such ventures in the near future. Business tech such as analytics and artificial intelligence will also benefit according to PwC.

Then there are the advanced manufacturing, health and biotech sectors. While less active than the other sectors, disrupted supply chains and the strain on healthcare has put these segments in the spotlight as well. The report predicts strong activity from these areas in the near future.

For the Big Four accounting and advisory firm, these are harbingers of an even bigger startup boom for Singapore in the future. Helping this scenario along is the fact that money is now available in the country for most funding rounds. A few years ago, early stage funding – Series A specifically – was a problem area for Singapore. According to PwC, this funding gap has now been filled to some extent, and the market is rearing to go once the economy stabilises.