Singapore, from digital hub to deeptech beacon
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In many countries, an obsession with digital technologies and exponential growth has captured entrepreneurial mindsets and current innovation discourses and, with it, the economic and political life of their respective ecosystems. The venture capital model largely inherited from a US market-centric philosophy and risk perception strongly influenced how new ecosystem entrepreneurial thinking has been globally rationalised and operationalised.
As a consequence, the appetite for “fast tech” became the norm at the heart of technological entrepreneurship. Exponential growth thinking has also permeated public policy globally in the search for solutions to entrepreneurial statehood.
However, politics of exponential growth does not embrace politics of technology when it comes to deeptech. While hard technologies offer society the opportunity to solve grand societal challenges, the road to market is a high-risk venture that requires massive investments and hybrid entrepreneurial lenses. The long gestation period means returns are typically slower to materialize, unlike for general consumer tech.
Micro-ecosystems like Singapore, Luxembourg or Israel, in respect to their identity, unique strengths, global connectedness and major role as epicentres of ideas, talents and innovative financial tools, understood early on that positioning themselves at the vanguard of the next generations of technologies was crucial. In particular, the assumption that technological and market knowledge orders co-evolve in a sufficiently synchronised way is largely misleading at a regional scale, as local cultures, entrepreneurial mindset, ecosystem maturities and institutionalised apparatuses influence them massively. Ecosystems of tech excellence, although small in scale, have a major role to play on the global scene.
The situatedness of Singapore makes it a particular story on its own. The city-state has been quick at responding to the current patterns of rapid scaling and the broader trends in innovation, tech entrepreneurship, and finance that underwrite it. A particularly supportive government, strong intellectual property regime and well-developed infrastructure add to the allure. The country has pulled off something absolutely incredible in its experiment of speedrunning multiculturalism. Across Asia, Singapore has one of the most advanced startup ecosystems. Still, deeptech investments are still few and far between, and new vehicles and organisational innovation are going to be necessary to keep pushing the entrepreneurial scene forward.
Immersed in the Singaporean ecosystem, we have been witnessing two emerging and consolidating trends. On one hand, cutting-edge scientists unlock dramatic new discoveries while still facing institutional and cultural difficulties to spin-off and elaborate a smooth early-stage entrepreneurial journey. On the other, a growing number of local old-economy companies start upgrading their product lines and internal processes with new materials, new robotic and IoT capabilities that will quickly become generic commodities. Somehow hard tech is both rocket science and tractors in Singapore and the South-East Asian region, and partnerships on the industrial value chain will be key to consolidate this momentum. We believe that new bespoke Singaporean innovation vehicles and investment arms will open the game to alternative trajectories of social-technological transformation. Technology and innovation model experimentalism being a pillar of the Singaporean ecosystem, we are convinced that the city-state will run fast, rule opportunities in, roll valuations forward and optimize the ecosystem for deeptech-game-mindset founders.
Three areas especially need some attention to accelerate this positive trend:
A new approach to market timing. Deeptech research and go-to-market demand a lengthy gestation period. Behind every discovery is years of research, which requires large doses of funding. New hybrid models such as venture builders, indie hard tech funds and new types of public-private partnerships will be paramount to bring the results of this world-class research to market, leveraging the fantastic efforts made over the last two decades to build a rich and dynamic fundamental science ecosystem.
Availability of deeptech talents. The number of available experienced professionals with both industry knowledge and supply chain know-how to commercialize deep technologies is one of the main roadblocks to inventing tomorrow’s local industries. As a result, deeptech valorisation channels tend to stagnate, as the ecosystem still lacks the depth and specialization of other high-tech startup hubs. A special emphasis on talents and re-use of local and international expertise will increase the chance of success in the long run.
The dawn of a local deeptech venture scene. The absence of a sophisticated deeptech community in Singapore results in startups that mostly have to look overseas for capital. Few potential Limited Partners (LPs) view deeptech venture capital as a viable asset class in the region (even though some have participations in U.S. funds). Venture returns are still largely unproven in Singapore, while returns for more traditionally non-liquid assets in the region, such as real estate, are high. Indie models will help demonstrate the value of hard tech.
While the numbers of healthy deeptech ventures in the Singaporean ecosystems are still small, we are strong believers that a renewed support from the local government, an emerging venture capitalist interest as well as a growing popular interest for transformative hard tech technologies — think ageing, wealthier population and urbanisation and climate challenges — will boost the deeptech mantra in Singapore and beyond.
