May 27, 2017

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by Lim Qiu Ping

INNOVATION, technological change, internationalise – words and ideas like these are nothing new regarding how Singapore economy is steered. The SkillsFuture initiative and the principle of lifelong learning are being pushed hard. And the report from the Committee on the Future Economy released in February recommended strengthening the innovation ecosystem and raising the profile of startups.

Singapore is trying to reinvent itself, especially economically, at the individual, organisational and national scale. At the bleeding edge of this re-invention is the startup scene. Singapore’s quest for Silicon Valley-ism has seen the development of ecosystems that contributed to the vibrancy of startup hubs the world over.

One notable ecosystem piece is the accelerator: an intensive, short-term and structured programme available to founders that assure mentorship, funding, emotional and educational support, networking with potential partners and investors; all culminating in a public pitch event known as demo day. In exchange for participation in their programme, accelerators take equity, typically less than a 10 per cent share, from the startup. They earn when the startup successfully ‘exits’ – referring to how startups are to develop till they can either get publicly listed or be acquired by another business entity.

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Questioning Singapore’s accelerator boom

So, what are the bearings on a startup ecosystem if accelerators are the ones finding it difficult to survive? During mid-2016, at least 15 accelerator programmes could be found in Singapore, not least due to efforts by the wholly-owned investment arm of the Infocomm Development Authority, known formerly as Infocomm Investments (IIPL) and revamped as SGInnovate in November last year, which helped fund and launch several accelerators.

Questions were raised if there have been too many accelerator programmes here. Since 2014, IIPL (now SGInnovate) has embarked on an accelerator strategy to pump up the startup ecosystem of Singapore. It began signing Memorandums of Understanding (MoU) with commercial accelerators and corporations, creating partnerships where IIPL supported accelerators to run their programmes for a certain length of time. The first such partnership was with Joyful Frog Digital Incubator (JFDI), a commercial accelerator, in March 2014. Other examples included the European financial tech accelerator Startupbootcamp FinTech, brought in in October 2014. And the partnership that sprung up with Singapore Press Holdings (SPH) and California-headquartered accelerator Plug and Play in April 2015, formed SPH Plug and Play. Meanwhile, corporations such as DBS Bank and Mediacorp jumped on the bandwagon, setting up their own corporate accelerator programmes.

Then on Sep 14 2016, JFDI announced in a blog post that it would cease operating as an accelerator. It had not only been the first accelerator partner of IIPL but also Singapore’s first ever accelerator programme, founded in 2010. Three months later in January 2017, SPH Plug and Play confirmed that they would be closing.

 

How viable is the accelerator model in Singapore?

Ultimately, accelerators are businesses and businesses, no matter how valid its products and services to a community, survive according to the calculation of dollars and cents.

Mr Hugh Mason, 50, the co-founder of JFDI, explained the difficulty of sustainability in his company’s blog post. “In Asia, the time to exit is more like six to eight years and the valuation at exit is perhaps 30 [per cent] of that it would be in the US,” he wrote. In short, JFDI was unable to generate sufficient returns (from equity obtained) fast enough to cover the “high costs” incurred while operating in Singapore. He further recognised that the accelerator business model carried over from US did not fit well in the local and Asian context.

The model consists of setting up a team, which could include paid personnel such as programme directors, facilitators and a full-time secretariat. This team is only able to handle so many startup cases per programme batch, even if it benefits the accelerator to groom as many startups as possible in hopes of hitting gold with one that could garner a high valuation.

With this business model, the accelerator outfit is non-scalable. Mr Jarrod Luo, 32, a startup founder as well as startup consultant, explained the model and how the profitability of an accelerator is curtailed because of this. “To scale, you have to do a one-for-one multiplication… if you want to increase the cohort size, you have to increase your team size. [It is] logistically heavy, it takes a toll on your corporate communications, internal qualification… co-ordination gets more expensive as the team grows.”

Mr Luo’s role as a startup consultant from his consultancy firm 2Bite is akin to that of an accelerator programme. It has been financially tenable for him, so far. He has served as mentor to and point-of-network for startup founders, tailoring knowledge and advice on growing a startup to the needs of his clients, who were travelling on their own entrepreneurial journey. Payment type, however, is negotiable, rather than following the rule of equity in exchange for participation.

 

Accelerators in perspective: just one piece of a bigger puzzle

To point, the function of and need for accelerator programmes should be subordinate to the progress of the entrepreneur, who encounters different issues at different phases of growing a startup. The accelerator as a device has its place in the startup ecosystem because its structured curriculum provides some form of stability in an industry characterised by risk and unpredictability. Nonetheless, it is possible for the individual to gain guidance, know-how, contacts and even funding through other means.

As startup founders, Mr Luo and his two partners chose to skip the accelerator experience when Tembusu Systems, their financial technology startup, was founded in 2014. They already possessed the skills, vision and structural knowledge to develop their business idea. “We weren’t like newly graduated students with no contacts in the world and no exposure; no experience… We were already quite well-placed in whatever we’re doing. We’re already consultants. We had the necessary contacts in the local Singapore scene,” he explained. Participating in an accelerator programme was not cost advantageous to them and what the accelerators offered was not “critical”.

Other founders have also bypassed the accelerator programme experience, such as those from startups Shopback and ViSenze. The first is an e-commerce business and the second a visualisation and artificial intelligence technology used in e-commerce. Their source of support and grooming comes from NUS Enterprise, the entrepreneurial arm of the National University of Singapore (NUS).

 

A bigger vision?

NUS Enterprise facilitates entrepreneurship in a wider scope than the accelerator concept, more like a matrix of human and infrastructural resources as well as knowledge base. Truly, its greatest asset is its community – and relationships within – built through time. Though officially beginning in 2001, its roots could be traced back to 1988 when a university-level centre called the Centre for Management of Innovation and Technopreneurship was started. It was meant to “nurture entrepreneurial learning and venture creation among the NUS community”.

Describing how it stood apart from standalone accelerators, NUS Enterprise acknowledged the “significant benefits” of being set in a university “with strong roots in education and research”, even as it remained open to those outside of the NUS fraternity. The aim is to create culture, not only success stories. Part of student life could include six months to a year’s internship in startups for immersive learning, facilitated through a NUS Overseas Colleges (NOC) programme. Shopback was started by alumni who knew one another as course-mates or through NOC. NUS researchers or serial startup founders could also mentor and re-invest in younger entrepreneurs, as they did with ViSenze. University alumni could return and tap into the entrepreneurial community established, gaining support and resources for startups planted within the ambit of NUS Enterprise. Other advantages include “access to technologies, research and intellectual property developed at NUS”. Start-ups such as ViSenze, have been spun out of technologies developed in NUS.

The accelerator is but a part of the NUS Enterprise mechanism, called the NUS Start-up Runway. NUS Enterprise explained it as “a series of initiatives and activities that help [startups] to grow and scale”. On its website, NUS Start-up Runway calls itself “the most comprehensive university-based incubation/acceleration programme in Singapore”. Access to it is part of the package of participating in the wider ecosystem unique to NUS Enterprise. With or without utilising the accelerator, people thrive in the startup industry. Therefore the industry thrives.

Perhaps, questioning what bearings the business survival of accelerators has on the startup ecosystem is to miss the forest. Rather, the thought for how healthy and self-sustaining the ecosystem is should frame the challenge of figuring out the most apt model for accelerators in Singapore.

 

Featured image by Sean Chong.

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by Bertha Henson

I RECALL reading Dr Benjamen Gussen’s piece in ST in January and thinking to myself: this can never fly. So I was surprised to see that Mr Peter Ho had raised it as an example of thinking beyond national boundaries in his final S R Nathan lecture.

Dr Gussen, a law lecturer in the University of Southern Queensland, had proposed that Singapore and Australia set up a charter city in Australia. Think of it like a Special Economic Zone. Except that his concept was quite extensive, with equity partnerships and a constitution with a 10-year transition period after which the residents can choose their own representatives. He even called his hypothetical city Dilga. You can read it here.

Dr Gussen saw it as a demand and supply problem. Singapore needs space; Australia has plenty. Both sides have plenty to offer each other in terms of resources and know-how. It will be win-win.

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Why did I dismiss it out of hand? After all, it is true that Singapore needs space and Australia isn’t far away. There are plenty of Singaporeans working and living there. I suppose it’s because I’m used to the idea of Singapore as a little red dot on the map. Plus, immediate problems of national identity come to mind. We are a country that doesn’t even allow dual citizenship and chafes at the presence of so many foreigners within its borders. Then there are practical problems, like should charter city residents do National Service?

I’m afraid the cons came to mind much faster than the pros. Mr Ho is right to say that we shouldn’t let our physical size constrain our thinking. Perhaps, we wear our little red dot badge rather too proudly. Perhaps, we’ve been so conditioned by the vulnerability narrative that we only think in terms of what we can do here, get people and products here and how to prosper here. Mr Ho, a nice man, said it’s natural that we cling to what we’re familiar with and project the future from what we know of the present. But given the accelerating change that technology brings, the present is not a good predictor of anything.

Acknowledging that establishing a charter city would be difficult, he said: “But even if this specific idea may not gain much traction, it raises this possibility – that the idea of Singapore need not be confined to this small island.”

Have we done what we can with the space we have? At 719 sq km, Singapore is now 25 per cent bigger than it was two centuries ago. Late last year, the G said a new method which doesn’t rely so much on sand will be used to add to Pulau Tekong. We’ve built artificial islands, like Jurong, we’ve built upwards and we’re building downwards . Over the past two years, we’ve been talking about digging tunnels and developing spaces underground. We already have caverns to store liquid hydrocarbons and ammunition. We can also also build more intensively (we’re not as densely populated as Hong Kong), while, hopefully, remaining a liveable city.

Dr Gussmen and Mr Ho are futurists who believe that we should think about living somewhere else or even virtually – while still remaining Singaporean.

Mr Ho gave examples of what a few other small countries are doing to extend their boundaries – and he doesn’t mean land reclamation.

There is Luxembourg, with just 600,000 people, which is reaching for the stars. It introduced legislation in November last year to let companies own resources such as platinum, obtained from space. It has set aside money and attracted American companies dealing with the space industry. We shouldn’t laugh because the country happens to know quite a bit about space. It founded one of the largest satellite companies in the world. It’s no space cadet.

By the way, Singapore has a space and satellite industry too. It currently comprises 30 companies and employs 1,000 people. Late last year, the G said that the industry is a new cluster it will focus on growing.

There is Estonia, with 1.3 million people, and where babies get a digital identity at birth that would allow them later as adults to sign contracts and do transactions. It is pioneering e-residency, said Mr Ho.

“You may live abroad. If you become an e-resident of Estonia, you can use some of the digital services available to Estonian citizens, such as setting up an Estonia-based company. E-residency helps Estonia generate business activity for Estonian companies, from independent contractors to small companies with clients worldwide. More than 18,000 people have since become e-residents,” he said.

Come to think of it, if this concept was applied here, it would solve our manpower shortage problem. It’s like having Singapore permanent residents who live somewhere else. One condition needs fulfilling though. Singapore would have to be a really, really Smart Nation which is extremely “networked”.

Then this may happen: “In the future, digital platforms can tap into labour based abroad, without even setting up a Singapore-supported industrial park abroad. Such platforms, like Konsus, already exist. Konsus matches high-end independent contractors or freelancers with projects, including when the freelancer and the project client are based in different places. If cross-border supply of services increases, Singaporeans may be able to work with co- workers and clients based abroad, as if they were physically present in Singapore.”

Mr Ho thinks that Singapore is capable of overcoming constraints because, ironically, its small size makes it easy to change course – or do a course correction – quickly. Quick changes are inherent in Singapore’s DNA, which was why it succeeded from moving from Third World colony to global city.

But who’s going to steer the boat and will the people row? It comes back to politics and leadership.

“A key source of Singapore’s strength has always been our people’s trust in fair competition and just reward for effort and achievements, compassion for the unfortunate, and a restless yearning for continuous progress. The points on trust and compassion bear emphasising. This has to be carefully fostered by the leadership because, without it, it would have been impossible for our leaders to forge consensus on far-reaching policies and tough trade-offs between different priorities, interests, and groups.”

The above is from his fourth lecture.

But I prefer the way he discussed leadership in his second lecture.

“Change requires leadership, because it means leading people out of their comfort zone. Getting them to change is an act of will. The future-fit leader has to persuade his people to believe in the need for change, instil confidence in change, and empower his people to change.

“Successful leaders of change also make their people brave enough to express their opinions, change their behaviour, take risks, and learn from failure. They tolerate mavericks – even if they do not embrace them – because all future-fit organisations need mavericks. They are the ones who are prepared to challenge conventional wisdom and come up with the ideas that can change the rules of the game.”

Yup. Everyone needs to open up their minds, challenge orthodoxy and even slaughter some sacred cows. And if it’s done in the country’s interest, no one should be batting an eyelid. That’s the way to find our future.

Majulah Singapura.

 

Featured image by Flickr user David Russo. CC BY 2.0.

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by Bertha Henson

MR PETER Ho isn’t like Mr Ho Kwon Ping, the entrepreneur who threw a couple of grenades when he was the first to take on the S R Nathan lectures. Nor is he like Mr Bilahari Kausikan, the veteran diplomat who made no bones about what he thought about soft-headed approaches in diplomacy. Mr Ho, the former head of the Civil Service who gave his fourth and final lecture yesterday,  is gentle and scholarly. His lectures can also be described as an attempt to get people to understand that…

a. The world is moving is so fast that it is well-nigh impossible to predict problems.

b. Today’s problems are so complex and intertwined that new approaches which encompass the big picture are needed to solve them – and even then, not everyone will be happy.

c. Singapore needs a new, broader mindset that goes beyond the traditional idea of a national identity bounded by natural borders if it wants to prosper.

It is in his fourth and final lecture that Mr Ho makes his recommendations for the future. The first three are a lead-up to his point about not letting Singapore’s constraints get us down. The above points probably over-summarise his lectures, which were extremely scholarly and delved deep into how to develop a mindset to deal with the unexpected.

So here is a selection of quotes that struck me, as well as my one cent worth of thoughts.

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Besides Black Swans, he talked about Black Elephants

“The black elephant is a problem that is actually visible to everyone, but no one wants to deal with it, and so they pretend it is not there. When it blows up as a problem, we all feign surprise and shock, behaving as if it were a black swan,” he said, giving the example of how the British establishment didn’t think that Brexit could happen and was caught flat-footed when it did.

Nope, he didn’t give a Singapore example of a Black Elephant which is cross between the black swan and the proverbial elephant in the room.  Perhaps, the swelling of the foreign population in Singapore in the late 2000s could well be one of them. It needed an election and a backlash over the White Paper on Population to get the G to rethink its foreign manpower policies. As for a Black Swan event, there’s the 2003 Sars crisis which Singapore responded to magnificently with a Whole-of-Government (WOG) approach. See next point.

He talked about a WOG approach to coming up with solutions

“But while Whole-of-Government may be an imperative for dealing with wicked problems, it is not easily achieved. Governments, like any large hierarchy, are organised into vertical silos. For Whole-of-Government to work, these vertical silos need to be broken down, so that information can flow horizontally to reach other agencies.

“It requires not just a lot of effort but also a real change of culture to surmount this instinct to operate within silos, in order to make Whole-of-Government work properly. Often, the leader must nag his people to remind them that the Whole-of- Government imperative takes precedence over narrow sectoral interests and perspectives.”

Nope, he didn’t give any examples of difficulty. Rather, he gave examples of how the G was already taking this approach, which includes establishing institutions which work in the WOG way, such as the National Security and Coordination Secretariat and more recently, the Smart Nation & Digital Government Group.

He talked about the difficulties of challenging the official view

“But even if they try to do that, it is not always easy for the planner or policy-maker to challenge the official future, especially when that future is consistent with an organisation’s biases and preconceptions. Those who articulate a radically different future are at danger of being branded as subversive or lacking a sense of reality. So they will have a real incentive to make their scenarios more palatable for their audiences. But in so doing, they also inadvertently reduce the impetus for the organisation to confront uncomfortable alternative futures and to prepare itself for them.”

Maybe the paragraphs above reflect his thinking about the paucity of naysayers and the dangers of groupthink, which was a hot topic recently. Note, however, he is taking an organic approach – that all big hierarchical institutions have the same problems.

He talked about mavericks

“Some will argue that leaders should be more tolerant of mavericks. My response to this is “Yes, but only up to a point.” A maverick is a maverick only if he is fighting the establishment. If he believes enough in his ideas, he ought to have the courage and conviction of his beliefs to push them, even against resistance. If he gives up the moment he runs into some opposition or official rebuff, then in my book, he is not a maverick. I think this is a sound approach. It is essentially a Darwinian process in which only those who have thought through their ideas, and are prepared to stand up and defend them, deserve the chance of a second hearing. Some mavericks will survive.”

This was in his second lecture, delivered on April 19. So it wasn’t directed at a certain someone who wrote an unfortunate Facebook post.

He referred to the blame culture

“When things go wrong, as they often do, how do we respond? Do we just look for someone to blame, or do we work to solve the problem? A blame-seeking culture can be both destructive as well as unproductive. It might satisfy a human impulse to hold someone accountable. But it certainly does not solve the problem.”

So decision-making is an imperfect process. There’s so little time to come up with a solution, which can’t please everyone anyway. But surely holding someone accountable is not just a human impulse but also the right thing to do, just as we reward the meritorious? It is part of the process of transparency, which he didn’t touch on.

He said that Singapore can be more than a little red dot on the atlas.

“The central question that is posed in this evening‟s lecture is whether Singapore is merely a price-taker, or whether it has the ability to influence and alter the factors that shape the future?

“A thread running through all these four lectures – and this evening‟s in particular – is a hopeful view that even small city-states can influence, shape, and even create, not just markets, but also their operating environment. It is a belief in this view that hope can be redeemed for even a little red dot like Singapore.”

This was from his final lecture where he referred to small countries like Estonia and Denmark which envision e-nations in their future. But that is the subject of another column.

 

Featured image by Flickr user Megan Coughlin. CC BY-ND 2.0.

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by Bertha Henson

IT DIDN’T escape notice that Prime Minister Lee Hsien Loong wasn’t at the biggest diplomatic event held in China over the weekend. The guest list was filled with luminaries including his counterparts in the Philippines, Malaysia and Indonesia. There were in all 29 heads of state or government. Singapore was represented instead by Minister Lawrence Wong.

Asked why the PM Lee wasn’t there, he said that the invitation was decided by the Chinese.

So on Sunday, PM Lee was giving out flowers to his Ang Mo Kio constituents on the occasion of Mother’s Day, rather than hobnobbing with other leaders over what seemed to be the most ambitious economic project in recent time.

His absence in Beijing is intriguing and only serves to raise questions about whether Singapore and China had papered over their differences since the seizure of Singapore Armed Forces vehicles by Hong Kong authorities in November last year. Or are the Chinese still pissed off at Singapore’s lack of empathy over its position on the South China Sea?

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You wonder if the invitation was extended to a Deputy Prime Minister or a senior co-ordinating minister like Mr Khaw Boon Wan. After all, Mr Wong, in charge of national development, told the media himself that Singapore didn’t have any infrastructure projects under the One Belt, One Road initiative. In fact, he spoke more about “brokering’’ opportunities for Singapore banking and city planners.

Even as it seemed that the PM had been snubbed by the Chinese, we’re told that a Chinese delegation is in Singapore to discuss leadership development. The Singapore side was led by Mr Teo Chee Hean, who is also Coordinating Minister for National Security and Minister-in-charge of the Civil Service. The Chinese were headed by Mr Zhao Leji, Communist Party of China (CPC) Politburo member and Central Committee Organisation Department Minister.

Is this a meeting of political equals? Or should we be glad that a Chinese delegation has deigned to visit Singapore even as China chose not to invite its PM over for its biggest shindig? And we’ve been asserting that Singapore is its “all-weather friend’’ – who also wants to be a friend to all. In other words, we don’t want to take sides. The question then is the definition of an “all-weather friend’’.

All this illustrates the rather prickly situation of the little red dot. Obviously, the Chinese want Singapore firmly in its camp, and might even be wondering why a Chinese majority country isn’t behaving like Muslim-dominated Malaysia and Indonesia or a Catholic country like the Philippines.

Education Minister Ong Ye Kung tried to explain this in TODAY : “In Singapore, we have a majority Chinese population. But other than the Chinese traditional culture, what is very deeply rooted in Singapore is a collective awareness that there is also the tradition and wisdom of the Malay and Indian cultures. We are small, and we are open. We have been very much affected by Western cultures, but basically, we are still an Oriental* society.” Presumably he means Oriental as Asian opposed to Occidental or Western, rather than the perception that Oriental means Chinese.

To business people here, the chief concern is probably whether the political atmosphere would affect the economic environment and their chance of exploiting the massive One Belt, One Road project.

It doesn’t help to read about the deals inked by Asean counterparts with China, even though most of them are for infrastructural projects which aren’t relevant to Singapore.

Is the initiative a boon or a bane for Singapore?

There is the question of whether the plans for rail links cutting through Europe, Asia and Africa would affect Singapore’s premier port status. Maybe not, as the One Belt initiative includes a maritime route which cuts through Singapore and it’s still cheaper to go by sea.

Then again, there is the other question of whether ships will skip Singapore since the Chinese are helping different countries build their ports and industrial parks along the route. “With the Belt and Road (initiative), new infrastructure will be built all around us… Trade routes will be adjusted as these new roads and ports get built and developed,” noted Mr Wong.

That’s why Singapore is going full-speed to expand its port and airport facilities to gear up for the competition, he said.

The competition looks daunting. We’ll need to make and save money, if we don’t want to ask for Chinese money. And even if we do, there will be an insistence that significant projects must remain in Singapore hands rather than those of foreign (Chinese) companies.

It’s interesting that after Chinese leader Mr Zhao met PM Lee at the Istana, a statement was released which affirmed the “strong and substantial relationship’’ between the two countries. (Of course, nothing was said about the snub)

The statement also harked back to the old days: “The two leaders noted that bilateral relations dated back to 1976, when then-Prime Minister Lee Kuan Yew first visited China, and 1978, when then-PRC (People’s Republic of China) Vice-Premier Deng Xiaoping visited Singapore. Mr Lee and Mr Deng provided a strong foundation for the friendship and cooperation that the two countries now enjoy.’’

That was a long, long time ago. Circumstances are different now and China is a mighty power with the ability to project its military and economic might. Singapore is its biggest investor and it is Singapore’s biggest trading partner. How do we proceed from here and on what basis so as to secure our own independence and prosperity? Despite exhortations about strong ties, everything still looks pretty murky.

*According to the Mandarin speech delivered by Mr Ong, the appropriate word is Asian.

 

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by Danielle Goh

GAZELLES. Adaptable, fast and incredibly rare.

But these gazelles are not the four- legged animals native to Africa. It’s a term for fast growing and profitable startups. With a 20 per cent increase of profits each year, these startups are highly sought after. Their natural habitat is an ecosystem of cutting-edge research, plucky investors and initiatives by the G.

Only 8.1 per cent of startups in Singapore are gazelles, making them an endangered species here. “While the number of startups have increased, and more have received government support, not enough are becoming successful gazelles,” explained Dr Wong Poh Kam, Director of NUS Enterprise, in an interview with The Middle Ground.

Companies like Razer and gaming giant Garena are examples of gazelles from Singapore. Founded in 2009, Garena has amassed annual profits of US$200 million, evolving into one of Southeast Asia’s biggest startups.

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Before 2010, startups in Singapore were hardly a buzzword, but now they are the talk of the town.

You’ve heard of Smart Nation, and of ministers hammering on about the need for innovation and to transform our economy. In fact, the G has been steadily building initiatives to further develop the startup scene in Singapore. Helmed by Finance minister, Heng Swee Keat, the newly revamped Future Economy Council will implement proposals by the Committee of the Future Economy (CFE) to fund more research and help startups build networks overseas.

With more investors and funding from the G, the number of startups have doubled between 2004 and 2015, showed the findings of a recent study by NUS Enterprise. In the study, younger startups surveyed were companies that were founded after 2010 and mature startups were companies that have been around before 2010.

Dr Wong Poh Kam, director of NUS Enterprise speaking at Innovfest Unbound 2017. Image from NUS Enterprise

The main thrust of the research is that while efforts have paid off in creating a thriving startup ecosystem, few make the leap to become gazelles.

We break down the key developments in Singapore’s startup scene and what it could mean for the future:

1. Increased number of new startups

Startups in Singapore rank first in business churn when compared with other countries, higher than UK and the US.

What this means is that many new startups are set up, and those that don’t succeed exit.

A high business churn generally bodes well for startups. “It’s a dynamic that attracts new players. This suggests that there’s more entry into the startup scene in Singapore, and it could be an indicator that it’s growing,” said Dr Wong.

The booming numbers of startups here can be attributed in part to an improving infrastructure and ecosystem. Yet, the results are not as great as they should be. Not enough startups are becoming successful, and gazelles continue to be far and few.

 

Diagram of different types of High-tech startups in Singapore. Image by NUS Enterprise Study

 

2. Highly innovative and better protected

Younger startups are more innovative than mature startups. And many have introduced new products and services to the world. The NUS Enterprise Study also found that those who dedicate resources to research and developing tech tend to have higher profits.

While more companies own Intellectual Property (IP), a huge jump from 19.6 per cent in 2010, to 49.5 per cent in 2016, still only less than half of startups in Singapore have their own IP.

Having IP is an asset to startups, as innovations are protected. A strong IP also helps investors to be confident that the products of startups are truly unique and new.

Both young and mature gazelles in Singapore list a dependence on major customers as one of their top concerns for 2016. Dr Wong sees this as a result of some gazelles not having a strong IP.

“The large customer, knowing that you are highly dependent on them, may squeeze you on price by threatening to switch if you don’t meet their demand. It will be less of a concern if you, the supplier has strong technology or IP that is not easy for other competitors to replicate.”

3. More cha-ching from the G and investors

Roboy, an advanced robot developed at the Artificial Intelligence Laboratory of the University of Zurich. Image by Wikimedia user Adrian Baer

Younger startups benefit from more government support schemes and venture investments than their predecessors. This is a good thing. However, these resources must be directed toward ideas that can be competitive in the global market.

For Dr Wong, deep tech is the way forward. Think Artificial Intelligence (AI), DNA sequencing and supercomputers.

“This may require looking at reallocating funding support. Although there are higher risks and higher returns, deep technology is more likely to succeed in the global market,” said Dr Wong.

For more gazelles to be created, both startups and investors must be willing to take risks, and be invested in ideas that can change the world. The G may have already got the memo, as Dr Yaccob Ibrahim, Minister for communications and information, announced the launch of AI.SG at Innovfest Unbound 2017. This initiative will bring together investors, government agencies, startups and universities to advance AI research and development. The National Research Foundation (NRF) will invest up to US$107 million in the project.

4. Younger and more equipped

Founders of startups are getting younger. About 62 per cent are 39 and below, and increasingly more founders are female, up from 5.9 per cent in 2010, to 10.6 per cent in 2016. The majority of founders are also trained in technical disciplines and have work experience.

University programmes like NTUitive and NUS Enterprise help entrepreneurs in their first forays into the startup scene. They provide support for aspiring founders, and aim to transform research into commercially viable products. NUS Overseas Colleges links students with startups from around the world, with opportunities to work in Silicon Valley, Israel, Beijing and Stockholm.

What’s exciting is that these programmes have the potential to link breakthrough research with startups.

5. Many are expanding across borders

More startups are outward looking: over 50 per cent have branches overseas, and 72 per cent derive their income from international customers. For startups to grow, they need to tap into global networks and markets.

“Singapore’s domestic market is too small, if firms want to grow, you need to get regional and global,” said Dr Wong.

Some startups like Ascent Solutions have been global ever since it started and almost all of its business is international. Six years ago, it launched a GPS tracking solution for companies transporting cargo in Africa and now it is dominating the market there.

What is clear is that although the startup ecosystem is teeming with more innovative companies, more gazelles are needed.

It’s difficult to become a gazelle because a startup must be both quick to grow, and also profitable. While there are many fast growing or growth-seeking firms, they must take risks that can sometimes cost them gravely. Cautionary tales abound: Redmart, once the largest online grocery in Singapore, had substantial amounts of VC funding, but it ran out of cash before achieving profitability. Investors quickly pulled out. It was then sold to Lazada at an estimated price between US$30 million to US$40 million, a much lower value than before.

Yet there have been some who successfully make the transition: Razer, an American gaming company jointly founded by Singaporean entrepreneur Mr Tan Min Liang and Mr Robert Krakoff, who is an American, is what Dr Wong terms as a super-gazelle.

“Both startups and investors need to take risks for startups to make the transition to become gazelles.” said Dr Wong. “It may be risky, but if there is a breakthrough product, the startup can achieve success.”

 

Featured image by Wikimedia Commons user Susan Adams. CC BY-SA 2.0.

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Bertha in coffee shop

by Bertha Henson

SO SOME people are kicking up a fuss over what Minister Chan Chun Sing said about the above question while referring to jobs. It seems that he was trying to tell his audience of polytechnic students not to keep thinking about landing their dream jobs immediately but to find meaning in whatever job they’re in. Is this a good analogy? Many people are trying to stretch the analogy, which I was told was made in a spontaneous speech. You have people castigating the minister for suggesting to young people that they can pick anyone to marry, or that he was telling them to be content with whatever job they have. Worse, some are making it “personal’’.

I have been wondering about my own career after graduation and whether I married the one I love or love the one I married. I can say that in my undergraduate days, I was actually infatuated with banking and flirted with the idea of working in a bank and counting money. I had a couple of bank suitors after graduation but eventually plumped for journalism. Not because I love journalism. I didn’t know a thing about it and wasn’t even sure I’d like him/it. I decided on him/it because he/it would make a better provider. Serious. It paid better.

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Maybe it’s because I belong to a generation where being able to provide for the family – I mean the first family with Mom and Dad – was a deeply ingrained duty of children. Even if there was no romance in the job, I told myself I would stick it out – and succeed. A decade later, I was asked to list a hobby for a company book. I wrote that “work is my hobby’’, to the astonishment of my colleagues then. Maybe they thought I was trying to curry favour with management. I don’t care. It was the truth.

More than two decades later, I am still wedded to journalism although I’ve divorced the company. I sometimes ask myself if I should have worked in a bank, which was, after all, my first love even though not as good a provider. The thing is, you never know if you’ll be happy doing your dream job unless you’ve tried it out. It’s like a couple for whom the honeymoon is over and business of living together starts. You could get along comfortably with each other, or you could grate on each other’s nerves.

I have come across too many people who wish they’re doing something different from what they originally wanted to do. For them, I advise a trial separation or a long holiday, like no-pay leave or a sabbatical, to re-charge their life. But since marriage is a death-do-us-part affair, it does mean that people have to make the effort to work at it. Effort which must start from the day you made your marriage vows. It’s no point starting a new job with a long face and making yourself feel worse by focusing on the things you don’t like.

I don’t think this is said often enough because we’re now so concerned about living the dream rather than making a living: people are being PAID to do a job and that job, however dis-likeable, should be done well.

If the unhappiness is overwhelming and affects your ability to justify your salary, then get a divorce. Play the field or maybe there is already a suitor waiting in the wings. Okay, I too am guilty of extending the analogy and no doubt, have succeeded in riling up some people. Just allow me this: Get an internship in your dream job, then you’ll find out whether you can live with the person you love. If you can, the question posed above is moot.

 

Featured image by Sean Chong.

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Hawker centre, food, eat

by Daniel Yap

We must steal other people’s lunches to be competitive, says PM Lee. The world is a dark, hungry place with no scruples. But the phrase started me thinking: where does lunch come from? Is there a lunch shortage? Are some people having five lunches while others have none?

ON LABOUR Day, I went down to my local market and ordered myself a nice bowl of bak chor mee, found myself a table and sat down. I thought: well, a nice cold drink would hit the spot, so off I went to the drink stall. When I got back, someone had stolen my lunch.

It was the guy from the nearby rental block who was a familiar sight around the neighbourhood. He always seemed hungry, hanging around the food centre asking for a free kopi or a bite to eat. Often, the hawkers would be generous and feed him for free. Today, it seemed, he had decided it was my turn to bless his soul.

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Stunned and somewhat offended, I looked over to the next table, where the obese neighbour from Block 5 was stuffing his face with his third helping of Nasi Lemak Set G (tambah everything). Our eyes met, as he drooled a few fragrant grains from his overfull mouth, but he quickly turned away to stare at his food, as if to say “not my problem”. Clearly the problem was mine.

“Eh hello, that’s my lunch.”

“Yes, and now it’s mine! Good, right?” the hungry man mumbled as he fumbled with my chopsticks (ok, not my chopsticks: the stall’s, but he TOUCHED them – desecration).

“Hey, you cannot just anyhow steal people’s lunch, you know?”

“You left it here, mah! Anyway, you see that guy there, he went to buy drinks – go eat his Hokkien mee.”

“But I wanted bak chor mee for lunch!”

“Lunch is scarce, bro, going to be come more scarce. Unemployment going up. You got to learn to compromise.”

“You stole my lunch! I paid for it!”

“Okay lah, I play fair. If I stand up, you can steal it back.”

I was on the verge of attacking him with a Chinese soup spoon when the bak chor mee uncle piped up. “Eh, young man, you give him eat, ok? Uncle make another one for you. Up-sai to big bowl some more.”

“But uncle, how can he like that?”

“Every day he come here, every day somebody give him food. You see everybody eating here, they think there is only one lunch for them. But when you are the one making the food, you know behind still got a lot of lunch left. Is not jiro-sum game one.”

I paused, stunned.

“You see, I am entrepreneur one. As long as end of the day I make money, it’s okay. I can come out how many bowls of bak chor mee, never mind. But if you start fighting in front of my stall then I got no business to do. Maybe you fight for your lunch and you win, you eat, but in the end nobody else get to eat my bak chor mee; next door the roast duck also cannot sell.”

He pushed a massive bowl of noodles into my hands. “Eat, eat! Not everyday I give you eat, but I tell you, lunch is got a lot one.”

I think it must be nice to be him. He can eat his own lunch. As many bowls as he wants. But can man live by bak chor mee alone?

 

Featured image by Flickr user Tiberiu Ana. CC BY 2.0.

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by Daniel Yap

UBER and Grab are going to ruin commuting for Singapore, says The Straits Times. I have to wonder who put that idea in its head. The paper points to the astronomical growth of market share, the growth across vertical businesses, and the desire to “make money” (oh, please) as reasons why commuters may be “taken for a ride”.

But wait, why do these things make one cry foul? Why warn of a dire future? All’s fair in love and war and business. If there’s a legal and ethical way to upset the status quo then, incumbent or newcomer, it is there for anyone to exploit.

Taxi companies – outmoded, complacent, inflexible – failed to capitalize. Someone else did. Uber began in the United States in 2010, and came to Singapore in 2013. Three years is plenty of time to realise that the taxi industry is being shaken up worldwide. Yet the incumbents did nothing.

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Where previously fleet size was the ultimate proxy for market share, it is now no longer as big a factor as it once was. The new measure of “who is the biggest” is efficiency – efficiency that attracts customers, drivers, and investors.

We, the customers, feel served, so we patronise. We, the drivers, feel adequately rewarded, so we keep driving.

Perhaps it is a familiar struggle for the print news industry – new technology redefines the hows and whens of a business, incumbents struggle to adapt, and new powers come to the fore. There is plenty of empathy, even from me. But empathy is not a defence for a poor argument.

Grab’s profits (although it currently appears to have none) would be taxed in Singapore. Temasek is a major investor. Why should we be afraid that it is a Malaysian company? And it is not even unusual that foreign companies that repatriate profits are welcomed to Singapore with open arms and set up multi-billion-dollar operations here with special concessions.

Singapore is an open, globally-connected economy. Perhaps we should ask why our large, local companies do not innovate, and do not then export that innovation abroad to repatriate profits. Instead many of our local companies sit at home, comfortable on a cushion of profits and market dominance that holds them back from innovation. Until it is too late and the rug is pulled.

And perhaps the day will come when Uber and Grab become the new incumbents like Comfort and SMRT, and lose sight of making customers or drivers happy, and focus too much on making investors happy. But I am confident that even if that day should come, and fares go up unnecessarily, and customers are not well-served, that day another company will come up and pull the rug from under their feet. Grab and Uber are proof of that.

 

Featured image from Grab’s Facebook page.

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by Daniel Yap

AFTER his shock-inducing announcement that HDB owners should not expect to get their flats redeveloped at the end of their 99-year lease, which means the value of a 99-year-old flat is practically zero, Minister for National Development, Lawrence Wong is now saying that HDB flats are “a good store of asset value”.

It seems to do little to solve the problems that owners (leaseholders, really) of end-stage leases are facing – possible homelessness or having to shell out tons of money for stuff they wrongly assumed they’d get for free. And those who panicked at the initial reminder that a 99-year lease only really lasts for 99 years will be wondering – what does Mr Wong mean to say now?

Is he trying to calm down stunned flat buyers who thought that the value of their home was a sure thing?


HDB flats are “a good store of asset value so long as you plan ahead and make prudent housing decisions”.

Ah, but the good minister did include a caveat, although he didn’t explain it. His whole phrase is that HDB flats are “a good store of asset value so long as you plan ahead and make prudent housing decisions”. What decisions exactly? What’s the key to unlocking all of this asset goodness, if indeed there is any to be unlocked?

There are two ways of viewing something as an “asset”. The first is that an asset is something you can use to pay off liabilities, for example loans. That’s why you can’t (and shouldn’t be able to) take a housing loan for more than your house is worth. That’s also why banks are not happy at all when you miss a mortgage payment. It means that the value of the money you owe in the loan gets dangerously closer to the money they can get if they repossess and sell off your house, should it come to that.

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The thing about assets is that for every upside, there is a downside. Inflation eats away at the value of cash, property, everything. Markets go up and down, and you cannot guarantee that you will exit in the black. And some assets depreciate, like HDB flats, which run down to zero after 99 years. The ownership of any asset bears some degree of risk.

You just have to make sure that the risks are smaller than the returns.

There’s a second way to look at something as an asset. It is a more “business” approach, where something that is an “asset” is supposed to generate income. Like a factory building or a machine. It can also be something that generates income over a longer period of time (or which can be liquidated for capital gains), like Singapore Government bonds, or stocks.

So, what Mr Wong may be saying is either a) buy and sell and finance your HDB flat in a way that makes your returns greater than your risks or b) rent it out for income (as in rent it out not to cover mortgage payments, but at a price that is higher than depreciation and the costs of rental – agents, repairs, fees).

Taking advantage of renting out for income is straightforward – you get permission to rent out and then you pay money (either your own costs or you hire an agent) to put your property on the market and maintain it.

Taking advantage of buying, selling and financing is also simple (but not necessarily easy). All you need to do is recognise that the market is irrational. If you told any accountant that asset X would last for 100 years and cost $100,000, they would depreciate it (say on a straight-line basis) at $10,000 a year. Or maybe accelerate the depreciation in the first few years.

The money you spent on renovations too should be depreciated (including original fittings), say over 15 years, which is when you may need to renovate again. This is how we do cars – we know that a COE lasts for 10 years and there’s a PARF rebate and a “scrap” value, so every year the value of a car goes down by a certain amount.

Not so for HDB flats. Market values actually rise over time even as the life-span of the asset falls. It may be some kind of hyperbolic discounting (read about how it makes you stupid in our linked story) or people are just plain crazy. But take advantage of this! Buy a BTO flat that is much larger than you actually need, rent out a room and then when the five-year minimum occupation period is up, sell the whole thing and downgrade to a newer, prudent sized unit. Or just sell the older unit and buy a same-sized newer unit every 10 years or so, before people start to get jittery about the HDB flat you’re selling having only 60 or 70 years left on its lease. It should still fetch about the same price. Because people are crazy.

Eventually, when it’s just you and maybe someone else living in your home, you can downgrade further to use your asset (the market value of your HDB flat) to pay for your liabilities (daily expenses, travel, etc), if you’ve preserved it well. If you’re retired, a chunk of that money is likely to go into your CPF, because the housing loan goes back in, with interest (and then gets paid out via CPF Life).

But no matter what age you do it at, the bottom line is this – let it go. If you never sell your depreciating asset, you’ll never get any cash out of it at all. And the “prudent housing decision” you need to make is to take advantage of people who will shell out as much for a 30-year-old flat as a 10-year-old one (especially when the renovation looks fancy).

 

Featured image from TMG file.

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By Ryan Ong

ALTHOUGH they’ll never admit it, a large part of the finance industry aim to convince you that what they do is very complicated, and impossible to understand for anyone short of a NASA scientist (that’s why you better pay them to manage your money for you). Over the past two decades, one of their secrets has been the ETF – a straightforward financial product that makes them look like geniuses, while actually proving the opposite. You should at least have a basic grasp of the concept: