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Singapore’s 9M21 Startup Funding Shines, Deep Tech Space Grows

The first nine months of 2021 have shown that Southeast Asia’s startup ecosystem has started to reach maturity. Amid the lingering effects of the pandemic, the region’s deal activity showed an encouraging resilience, even if the pace of recovery has, predictably enough, not been uniform.

Investors funnelled at least $16 billion into 828 deals in the region. In the process, the region birthed at least 21 unicorns, surpassing the combined tally of the last eight years. This is despite the start-stop recovery faced by the region’s governments as they combat different waves of the Delta variant.

Singapore’s Tech Startups Bag Lion’s Share

Tech startups in Singapore have raised $8.3 billion in the nine months ended Sept 30, 2021, nearly two-and-a-half times the $3.5 billion raised in the same period last year. This represents over half of the funding received by tech startups based in the region. In Q3 2021 alone, Singapore startups raised around $4.1 billion, almost equivalent to the entire capital raised by private companies in the city-state through 2020.

The number of deals closed in the first nine months rose by 17% year-on year to 487. The strong numbers can be attributed to three factors: (1) startups enjoying strong increases in user bases and activities even after the initial flight-to-digital behavior in 2020  (2) investors’ preference to focus on Singapore-based companies due to mobility restrictions imposed in Southeast Asia (3) the relatively easier access to funding in the city-state.  Startups in Indonesia and Vietnam raised the second and third highest quantum of funds in the first nine months amongst ASEAN 6 countries at $4.9 billion and $1.4 billion, respectively.

Deep Tech Ecosystem In The Making

Investments in deep tech startups in Singapore (amongst disclosed deals) have surged from $324 million in 9M20 to $861 million in 9M21, as investors start to take more interest in deep-tech companies. Deal count rose 44% year-on-year to 131.  While the ecosystem still faces funding gaps in the growth stage, investors note that it is the right time for deep tech firms.  Singapore’s investment into the space over the last three decades means that the country has reached a stage where these companies help the country create a natural competitive advantage. Within deep tech, sustainability investment is now at an inflection point, according to members of the CFA Institute Future of Finance Advisory Council in a December 2020 discussion. As the startup ecosystem in SE Asia matures, deep tech startups will be able to leverage on the region’s tech-savvy population and talent base.

What’s Next?

With these developments, venture capitalists believe Southeast Asia is entering a ‘golden age’ where mega exits are bound to happen. With unicorns such as Bukalapak having already gone for an IPO and many other Southeast Asian powerhouses such as GoTo waiting in the wings, investor interest in the region is on the rise.

With the first generation of unicorns nearing an exit, they will free up an entire batch of talent who would go out to create or seed the next generation of startups.  Singapore, which is the commercial capital amidst a maturing ecosystem, stands to reap the benefits as a fintech hub. Less discussed but equally significant is the city state’s preparation for Industry 4.0, where the country is looking to boost capabilities in food, pharmaceuticals and industrial manufacturing, in partnership with VCs based in the region.

About the report

In this overview report on startup funding produced in collaboration with Enterprise Singapore, we offer perspectives on the opportunities, emerging trends and sectors that are attracting capital within Singapore and Southeast Asia.

This paper also explores the nascent yet important deep tech sectors of Singapore, with investors’ perspectives on the growth opportunities and challenges ahead.