Singapore’s start-up ecosystem gets more vibrant as MNCs pitch in

The fast-expanding start-up economy here is becoming more enriched.

While a host of venture capital firms have flocked to the country to invest, some multinationals are also pitching in, boosting the chances of finding the next unicorn.

It is well understood that start-ups don't usually develop into successful enterprises on their own. They need an ecosystem of investors and business partners to provide funding and expertise to turn innovative ideas into commercially viable products for an addressable market.

While start-ups are as old as innovation itself, Silicon Valley mainstreamed the idea of creating an enterprise from scratch by getting these fledgling firms fully funded.

In the 1970s, when innovation became synonymous with technology, the San Francisco Bay Area allowed tech entrepreneurs to rub shoulders with equally innovative investors such as venture capital firms that not only provided funding but also marketing know-how and other enterprise expertise.

The Valley is still the world's top start-up accelerator ecosystem, though its grip on tech talent has started to wane in recent years.

Skyrocketing property prices alone have become a major hindrance to cash-strapped start-ups unable to pay salaries that cover the cost of living in the area.

Then came the Covid-19 pandemic, which not only boosted tech adoption worldwide but also removed the physical constraints of living near the office as work-from-home arrangements became the default.

Valley talent started to disperse around the globe to other start-up ecosystems.

The Global Startup Ecosystem report last year counted 100 emerging ecosystems - including Singapore - that were collectively valued at US$540 billion (S$727 billion), up 55 per cent from 2020.

The jump took the ecosystem value of the global start-up economy to an astounding US$3.8 trillion last year, with 90 of the emerging ecosystems now boasting at least one unicorn - a private start-up valued at over US$1 billion, the report noted.

Policymakers worldwide can see the benefits and are increasingly focusing on entrepreneurs and accelerators - incubators that can boost the possibility of finding the next unicorn.

The accelerator ecosystem is also broadening out beyond financial institutions to universities, research centres and, more recently, large multinationals that are keen to act as incubators for start-ups in the hope of finding innovative solutions for their businesses.

For instance, Royal Dutch Shell and Oracle Corp have been running start-up accelerator programmes here for several years, in part aided by government initiatives and incentives such as the Open Innovation Network and the Global Innovation Alliance.

Mr Jason Williamson, vice-president and global head of Oracle for start-ups, said the company has been running its programme virtually since 2019.

"Since we pivoted to fully virtual in July of 2019, we have had more than 500 start-ups graduate. We had an 89 per cent increase in enrolment last year," he told The Straits Times.

Enrolment in the Asia-Pacific region, including Japan, grew by 130 per cent over the past 12 months, he added.

Mr Williamson said a fully virtual programme has allowed Oracle to help more start-ups, regardless of their location.

Shell's initiative - Shell StartUp Engine - started in 2017 and now operates in Britain, France, Singapore, the Netherlands and India with plans to add more countries.

It has since seen 27 start-ups graduating, said Ms Emily Tan, who heads the Shell StartUp Engine Singapore Committee.

Ms Tan, who is also the general manager of Shell City Solutions and Shell Renewables and Energy Solutions, said working with start-ups enriches Shell's own organisational culture.

She said her colleagues who participated in the programme were also able to sharpen their own soft skills such as mentoring, coaching, presenting, thinking through business cases and pitches.

"They learn about new tools and frameworks in the process, which are not only helpful to start-ups but also for the mentors' daily work as well. The broadened perspectives from working with the start-ups help our own people keep abreast of the problems and challenges related to energy transition," said Ms Tan.

"Importantly, the inventive and enterprising spirit of start-ups inspires our people to think out of the box, strengthening our own culture of curiosity, agility and action which is essential for the energy transition."

Mr Williamson echoed Ms Tan's perspective. "Working with start-ups provides co-creation and innovative opportunities where together we can solve big global problems. That's great for the start-ups, our customers and Oracle," he said.

Both multinationals believe Singapore has huge potential as a start-up hub and its success so far is a testament to the promise it presents.

Last year's report from the Startup Genome and the Global Entrepreneurship Network ranked the Singapore start-up ecosystem at 17th globally and fifth in Asia behind Beijing, Shanghai, Tokyo and Seoul while giving it top marks in funding, performance and talent access.

It valued the ecosystem here at US$22.5 billion, higher than the global average of US$13.68 billion. The leading sub-sectors in the start-up economy of Singapore are fintech, cleantech and agtech and new food, the report said.

Singapore is now home to more than 3,800 tech-enabled start-ups. The Government works closely with ecosystem players, including universities, 190 accelerators/incubators and over 200 investors, to provide support such as financing, mentorship and talent, the report added.

Such efforts have propelled several start-ups to unicorn status, such as Carro, which secured US$360 million last June, and Patsnap, which landed US$300 million in funding last March.

Carro uses artificial intelligence-powered technology to buy and sell cars while Patsnap provides data that gives companies a 360-degree view of the marketplace. Ms Tan said: "Start-ups are an increasingly important part of the society and we see that growing the energy start-up ecosystem in particular is a vital step in our journey to deliver more and cleaner energy solutions to help meet Singapore and Asia's growing needs."

Finding innovative solutions, with incubator help

In recent years, some large multinationals in Singapore have pitched in to act as incubators for start-ups in the hope of finding innovative solutions for their businesses. Here’s a look at two examples.

Green hydrogen made with nanotechnology

SunGreenH2, part of the Shell StartUp Engine programme, is using advanced nanotechnology to produce low- cost green hydrogen.

The start-up is exploring collaboration opportunities with major electrolyser makers and has signed some initial agreements in Singapore, Italy, and India.

Ms Tulika Raj, co-founder and chief executive, said the company may go public here after successful commercialisation of its technology.

Hydrogen is a US$150 billion (S$202 billion) market, used in oil refining, ammonia-based fertilisers, cement and steel-making.

As hydrogen is mainly made from fossil fuels – natural gas or coal – it is a big contributor to CO2 emissions.

On the other hand, green hydrogen made from water electrolysis is carbon-free.

However, electrolysers are expensive and inefficient. The green hydrogen industry relies on the use of precious metals like platinum, iridium, gold and titanium, which are not only expensive but also limited in supply.

As a result, green hydrogen is five times more expensive to produce than fossil-fuel based grey hydrogen.

SunGreenH2 has invented technology that incorporates high-performance advanced nano-structured materials into key electrolyser components that electro-chemically split water molecules into hydrogen and oxygen, doubling green hydrogen production, reducing energy consumption and saving space at the same time.

“It is... the result of over 10 years of research in electro-chemistry and nanotechnology,” said Ms Raj who co-founded the company with Dr Saeid Masudy Panah, an award-winning scientist.

The founders met in the midst of the pandemic and built the prototype while facing travel restrictions.

“We tested and troubleshooted with team members spread out across the globe to bring the solution to life,” Ms Raj said.

The Shell start-up programme helped, she noted: “The team has received advice and guidance from mentors across Shell on their business model, market strategy, manufacturing considerations and end use applications.”

Connecting players along the supply chain

Dibiz, which recently graduated from the two-year start-ups programme by computer technology company Oracle Corp, has developed a trading platform that connects all stakeholders in a supply chain, from a small farmer to a multinational corporation.

The platform is powered by the blockchain technology that allows every player in the chain to verify and trace supplies in real time and authenticate their sustainability credentials. That means products are delivered faster and at a lower cost.

The Singapore-based start-up is focusing for now on agricultural products, such as palm oil, whose supply chains are notoriously complex and where small farmers are usually left out of the markets where only sustainable products are traded.

Its co-founder Srinivasan Malarampath said: “(We) were convinced that commitments from a few ethical large enterprises alone is inadequate to increase the share of sustainably produced agri-commodities.

“Thus Dibiz was formed to bring a technology-driven solution to authenticate sustainability, democratise the value chain and help the last-mile farmers and small producers to embrace sustainability at the lowest cost.”

Mr Malarampath and co-founder U.R. Unnithan had known each other professionally for many years and were already collaborating in the agri-commodity industry.

Mr Malarampath noted that the company expects to show a potential annual recurring revenue of US$175 million, with high net margins, from just the palm oil industry by 2026.

“The growth rate could be slow initially while we bring awareness; however, it could eventually lead to more than three times the initial growth rate over a decade,” he said.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.