The Infocomm Development Authority (IDA) of Singapore has been engaged in building various elements and partnerships, in an attempt to establish the city-state as a premier business destination for entrepreneurs and a base for technology entrepreneurs globally. Part of these efforts are undertaken by their venture capital unit, Infocomm Investments (IIPL), headed by Alex Lin.
IIPL has spent 2015 spearheading a number of projects and forging partnerships aimed at agglomerating and establishing Singapore as a major global startup ecosystem, launchpad for startup ventures expanding into the region and gateway to the Asia Pacific (APAC).
Having previously served as an entrepreneur-in-residence at NTU Ventures, as well as a director at the Singapore University of Technology and Design (SUTD), Lin corresponded with DEALSTREETASIA via email, explaining his insights into how the startup ecosystem has changed and is further evolving.
With the recent strategic partnerships, what else does IIPL have in store for 2016? Which are the future hubs you plan to partner with? With the strategic partnership with Barcelona Activa, which other cities do you intend to maintain a partnership and some level of presence in from 2016 onwards?
IIPL helps startups around the world (that are ready), to accelerate its market access of their business. In particular, into Asia with Singapore as a launch pad to the regional markets. Our partnership with Barcelona Activa is the start of such collaborations.
We also collaborated with the Startup Sri Lanka, an initiative by SLASSCOM (Sri Lanka Association for Software and Services Company) Innovation and Entrepreneurship to help them build acceleration capabilities and their startups to access South East Asian markets. This partnership saw the launch of Xeleration – Sri Lanka’s first accelerator programme.
We are currently in discussions with a few cities to build this up. We will continue with the strategy of using our Global Startup Exchange programme to engage more cities and build a strong global ecosystem for startups.
Some of the countries in the pipeline where we have strong links with the Government, commercial and grassroots stakeholders are, Korea, Taiwan, China (Shanghai & Shenzhen), Thailand and Indonesia. We are continually working towards forming strong relationships with these stakeholders.
What is IIPL’s investment thesis or theme, in terms of addressing startups?
IIPL is a commercial venture capitalist (VC) with a strategic purpose. We invest for financial returns, that is, the startups have to be commercially viable and have a scalable business model. The “I” in IIPL stands for “Infocomm”, our focus is hence on companies that build infocomm technologies or are able to leverage on infocomm technologies to solve problems and scale effectively.
Beyond IIPL’s asset of $200m capital base, our capabilities also lie in our acceleration know-how and connection to various governments, communities and customers in Asia. The number of accelerator programmes have significantly increased in the last two years, and we see accelerators targeting different verticals of startups from web & mobile to fintech. Our partnerships with global cities are also growing.
IIPL would therefore attract startups that can leverage on our capabilities and asset to scale its business in Asia.
Several business leaders and entrepreneurs in Singapore have raised the issue of a need for a startup visa to attract and retain entrepreneurs over the last few years. What’s your position on this, in light of the Entrepass being insufficient for startup founders but more suitable for middle-market entrepreneurs?
Every country has its scheme to attract entrepreneurs to set root in its place, Singapore is doing the same to attract good startups to use Singapore’s advantage as the ‘Asian Gateway’.
Entrepreneurs go where the opportunities are, and a good entrepreneur will figure out what and how best for him to use the various schemes to achieve his goals for his startup and to gain market access.At IIPL, we focus on creating and connecting opportunities for startups through our Acceleration initiative and Global Startup Exchange programme. Through us, startups would be able to build a viable and scalable business and get market access to gain traction in Asia.
When entrepreneurs grow their startups to that stage, they would naturally attract investments for scaling beyond Singapore. And as they continue to develop their startup, the company will quickly grow into what you termed as ‘mid-market’, the availability and applicability of Visas for the entrepreneur will also fall into place.
We focus on accelerating the startups through their early vulnerable stage where they would require a lot of assistance and that would help entrepreneurs get to being desirable to countries attracting talent.
How does your melding of cognitive science at a postgraduate level and a grounding in engineering impact your perspective of entrepreneurial ecosystems and the human capital therein?
You see, most successful entrepreneurs are males, about 40 years old and are engineering graduates (based on Kauffmann Foundation research). I am no exception. My background of entrepreneurship allows me to understand my fellow entrepreneurs and what they need in order to succeed.
My cognitive psychology background actually complements the engineering training I’ve received. It helps me understand how people, especially entrepreneurs, learn; so that I can help them accelerate their startup development stage and move on to scaling as soon as possible.
According to NTU’s Career Aspiration Study (annual study since 2010) of graduates’ inherent career inclination, less than 8 per cent are entrepreneurially inclined. This is similar to other ecosystems such as the UK, where the figure is 9 per cent (according to a Nov 2015 YouGov study commissioned by IDA).
To better develop this limited human capital, we have plans for Q1 of 2016 to work with a talent development platform to attract, induce, train, and accelerate the entrepreneurially inclined graduates to create their startups. IIPL intends to share more information regarding this in time.
With a deep understanding of entrepreneurs’ need, IIPL is also planning to create a mentor training programme scheduled for its first run in 2016. This programme will bring together mentors from all walks of life (both entrepreneur and business mentors), provide them with an insider perspective of the startup ecosystem and facilitate knowledge-sharing amongst mentors just to name a few.
This ‘train-the-trainer’-type programme spurs a healthy and dynamic mentor-entrepreneur network of relations that has the potential of a multiplier effect, benefiting both the startups – in terms of increasing the quality of these ventures – and the mentors themselves.
What do entrepreneurs and private sector partners need to understand when engaging government-backed agencies like yours, as well as other statutory boards like SPRING Singapore and the EDB?
When engaging an organisation (or a person), regardless if they are government-linked), corporate, startup or an individual, you need to understand its needs and the issues they face. By having a clear understanding, you would be able to navigate the perceived bureaucracy to achieve your goals.
For most entrepreneurs, who are keen to access grants to grow their startup, there is a primer. I shared some thoughts on the grants, schemes and programmes available to startups in Singapore in response to an entrepreneurs’ query on Founders Dating, also published here.
There are also those who are still really just starting out, for them I would suggest Clinic@Bash, a startup clinic by IIPL that diagnoses problems entrepreneurs typically face, helping them to navigate the ecosystem and to overcome their challenges.
Coaching from mentors will also help startups understand and engage organisations more effectively. The mentors’ expertise, connections and experience in the business scene will greatly benefit startups. As mentioned above, IIPL is launching a Mentor training programme in 2016 to identify mentors who will be able to help their mentees/entrepreneurs. We’re seeking out mentors-to-be who would like to give back to the ecosystem by way of sharing their experience with young entrepreneurs.
What’s your take on addressing issues faced by Singaporean firms, in terms of technical development and other challenges?
I had actually spoken to Christopher Quek on this topic and it is not about a lack of tech talent, but a mis-match of tech talent. For the common tech talent “shortage”, we work with General Assembly, ALPHAcamp, NTUitive’s Mozilla collaboration and NUS’ Institution of System Science (ISS) to furnish and convert techies into tech workers and technical co-founders.
On a longer term, broader approach, we are working on transforming the ecosystem to focus on Innovation Driven Enterprises (IDEs) rather than System Integrators (SIs). The reason being that IDEs produce better technology jobs where employees have greater ownership and control of their own time; as compared to SIs which require tech support engineers to work on 24×7 shifts and being called back over weekends and holidays.
By shifting the ecosystem focus, it will eventually address the mismatch issue by matching the talents’ desire to the market demand.
In addressing concerns over perceptions of Singapore’s startup ecosystem being overrated by some quarters, what’s your response on such an issue and what steps are being taken to address this?
The article is interesting, the title is probably a ‘click bait’ to attract readership. Within it, the author agreed that all startup ecosystems are different and develop differently. Singapore is successful in several aspects such as acceleration, great infrastructures, deep technology expertise from SIs as well as available funding.
As most ecosystem builders would attest to, unless you are in the ecosystem being deeply involved in the mechanics of the work, rather than as an observer, it is hard for anyone to truly understand how the ecosystem works and how to capitalise on the advantages of the ecosystem.
The Global Startup Exchange programme is exactly designed to help startups navigate the intricacies of Singapore’s ecosystem and capitalize on IIPL’s network and connections locally, regionally and globally. Through our programme, startups will discover trends and business opportunities in new markets, gain valuable insights through dedicated mentor coaching sessions and be acquainted with local ecosystem players amongst others. All in all, it will be a full immersion into the ecosystem.
In fintech segments such as equity crowdfunding and emerging industries like drones, Singapore is currently lagging in terms of regulations. With technology development often advancing past legislative and regulatory matters, what is crucial to align these two axes in a harmonious manner?
In areas where business opportunities are emerging, such as fintech and urban mobility (i.e. autonomous vehicles), we are experimenting with the startups via regulation sandboxes to see how regulations can be adapted to capitalize on the emerging technologies and business opportunities.
For areas where the opportunities are unclear, it would be necessary to very carefully consider any changes since the change may not lead to anywhere, or worse, it may derail the hard-earned reputation we have built up.
Taking equity crowdfunding as an example, the purpose is to increase the available funds for startups or early-stage companies. But funding is not the issue that these companies face. There is too much money seeking out good deals. It is not about there being ‘No Money’ but about building a company viable for investments.
The perennial issue startups/early-stage companies face is how to validate and build their business into a viable and sustainable one such that investment will flow to them. By not making the switch, it is unlikely to gain any traction (looking at reward crowdfunding, you could see that the path is littered with many ‘dead’ projects) even if equity crowdfunding is made legal.
Furthermore, even if the startups managed to raise funds, but operate with a bad business model, it will still fail and the capital of the retail investors’ would not have been well invested. This also creates additional issues, such as small-time investors losing their life savings, which can damage Singapore’s standing and reputation as a financial hub.
On the other side of the fence, equity crowdfunding does have its benefits, in that the startup’s business model is validated if there are sufficient retail investors putting/betting their money into the startup.
Likewise for businesses in the drone industry, where a viable business model for building a sustainable business is still unclear. Allowing an uncontrolled flight in Singapore’s limited airspace is likely to create a negative impact on Singapore’s established status as an air-transportation hub. Even then, commercially available drones are currently only capable of short range local transportation.
In terms of addressing the gaps with regards to investor education, as well as raising awareness of how startup ventures are often a volatile, illiquid asset class, investor education is a constant and regular effort.IIPL’s mentor training programme is aiming to get mentors into this space and eventually bridge the education gap, as angel investment knowledge is imparted during the mentor training.
Manufacturing has emerged as a crucial sector for creating economic value and generating employment, especially in terms of indirect job creation as observed in the US. In light of successors to China’s manufacturing emerging and the advances in areas like automation, robotics and 3d printing, where do you see Southeast Asia as a whole, and Singapore’s own manufacturing sector responding?
As mentioned breviously, there are two types of business we’re looking at; the system integrator (SI) and innovation-driven enterprise (IDE). The SI adds value to a finished product before it is delivered to the customers, since the value is mostly created, therefore the SI does not enjoy large profit margins. While the IDE creates value through its products formation, with the IDE typically the supplier of the SI. Hence, they are able to capture and monetise the value created.
In the case of typical low-value manufacturing such as textile, assembly & testing (for semiconductor), and manufacturing services, these require labour in high volume and low cost. Singapore has lost its advantage to cheaper manufacturing centres such as Indonesia, Bangkok and Shenzhen. With its high labour cost, Singapore’s manufacturing business has to be retooled on the basis of having a pool of low volume but highly-skilled IDEs.
The emergence of new technologies such as factory automation, robotics and 3D printing with suitable materials has created a new class of manufacturer called ‘digital manufacturers’.These require very high-skills level and deep domain knowledge.
For example, digital manufacturing capitalises on Singapore’s advanced capabilities in 3D printing, created by NTU and SUTD and advanced ICT infrastructure created under IN2015 and Infocomm Media 2025 masterplan. This is an area poised to be the next growth manufacturing area for Singapore.
Leveraging on Singapore’s Smart Nation push toward energy sovereignty and superior material sciences from NTU & NUS, we have the potential to develop a smart energy sector which manufactures power generation, maintenance, and management integrated with the Internet of Things (IOT) and sensors.
With Singapore taking the lead in the acceleration of tech companies (e.g. IIPL’s upcoming Smart Energy accelerator and Digital Health Tech & IoT accelerators) in the ASEAN region, it positions Singapore as the next high-tech manufacturing space and prime-mover (locomotive) that brings the (ASEAN) region’s manufacturing capability forward. This would be in tandem with the region providing support to core intellectual property that are created in Singapore.