A recent report highlighted that despite a decline in funding, Singapore emerged as the leading investment hub for startups in Southeast Asia in 2023. Startups domiciled in Singapore secured 63.7% of all equity deals within the ASEAN-6 region, comprising Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, marking a notable increase from 56.7% in 2022.
According to the joint report by Enterprise Singapore and DealStreetAsia, Singapore's deep-tech startup ecosystem experienced significant growth in 2023, witnessing a 31.4% year-on-year surge in deals. This rebounded from a 38.9% decline observed in 2022. However, despite the increase in deals, the total deal value dropped by 18.4% to US$1.53 billion (S$2.07 billion) in 2023.
EnterpriseSG start-up ecosystem director Cindy Ngiam said that Singapore’s results indicate continued investor confidence in the country as the region’s go-to destination for funding and start-up development. “As investors prioritize strong fundamentals during this funding winter, the resilience and solid foundation Singapore has built into its tech and innovation ecosystem are what will allow us to further our growth in deep tech”, said Ms. Ngiam.
The report highlighted that deep-tech startups in Singapore are increasingly incorporating artificial intelligence (AI) and machine learning into their operations, signaling a shift in their approach to research and development as well as cost management. Additionally, it suggested that the recent increase in private funding for AI firms in the US could serve as inspiration for investors, potentially including those from Singapore.
Mr Aditya Mathur, managing director of venture capital firm Elev8.vc, highlighted at a panel discussion that Singapore’s deep-tech ecosystem has expanded rapidly since 2019. “The number of quality deep tech start-ups and world-class founders has grown immensely”, he said. “In the past, we used to look around the world (for start-ups) but now I think Singapore is generating enough deal flow for us”.
Venture-backed private companies in Singapore secured US$6.1 billion in funding in 2023, marking a 44.7% decrease from 2022, amidst a broader decline in deals across the ASEAN-6 region by approximately 53%. Early-stage deals in Singapore saw a significant rise in deal volume, accounting for 94.1% in 2023, up from 89.9% in 2022, and capturing 49.8% of deal value, compared to 43.7% in 2022. However, despite this trend, early-stage startups based in Singapore faced challenges, experiencing an 18.2% decrease in deal volume and a 37% decline in deal value.
Despite facing a funding squeeze, both global and regional investors maintain robust interest in Singaporean startups showcasing solid business fundamentals, innovative solutions, and growth potential. The report highlights that Singapore hosts several tech companies valued at over US$500 million following substantial funding rounds, such as e-commerce loyalty solutions platform ShopBack, cross-border payments firm Thunes, and e-commerce solutions provider SCI Ecommerce.