Investments in Singapore startups up 36% to S$13.4b in 9M2019: ESG

VENTURE investors have poured in some S$13.4 billion into local startups in the first three quarters of 2019, a 36 per cent jump from the previous year, Enterprise Singapore (ESG) announced in a media release on Thursday. 

Excluding Grab's S$6.6 billion Series H funding round, the total figure stands at S$6.8 billion across more than 430 deals. The figures are based on data from ESG and business intelligence services Pitchbook, AVCJ and Crunchbase.

In the first three quarters of 2019, seed and Series A investments nearly doubled to S$886.1 million across more than 300 deals. Meanwhile, Series B and further investments grew 33 per cent on-year to S$12.5 billion across 83 deals.

Digital tech startups clinched 93.2 per cent of the total capital deployed across 278 deals, up from 145 deals in the same period last year.  

Government efforts also spurred dealmaking activity, such as the Startup SG Equity scheme, where the government makes co-investments with the private sector into startups in nascent industries. 

ESG's investment arm SEEDS Capital and government-owned SGInnovate, both administrators of Startup SG Equity, invested in 56 deals in the first three quarters of 2019. This led to co-investors from the private sector deploying S$160.5 million in investments.

The deeptech sector in particular is gaining traction. Investors pumped S$416.4 million into deeptech deals in the first three quarters of 2019, specifically in advanced manufacturing, urban solutions and sustainability and healthcare and biomedical sciences. This sum marks a 25 per cent increase year-on-year.  

Notably, agri-food tech startups clinched S$28.3 million in investments, compared to just S$750,000 the previous year. More broadly, urban solutions and sustainability startups received S$150.4 million in investments, up 56 per cent year-on-year.

"This is in line with the government's push to develop Singapore into a leading food and nutrition hub in Asia," ESG said. For instance, SEEDS Capital, ESG's investment arm, appointed seven co-investment partners in January, aiming to spur over S$90 million in investments into agri-food tech startups.

The biotech scene is also vibrant. Healthcare and biomedical science startups received S$148.3 million in funding, while digital health startups clinched S$126.9 million. Investments in biopharma and medtech startups hit S$21.4 million. 

Advanced manufacturing startups also saw healthy interest, securing S$117.8 million in venture investments, up 40 per cent from the same period last year.

To be sure, investments in the deeptech sector are still limited, accounting for under 4 per cent of the total capital invested. This is "in part due to the current ecosystem's lack of lead investors with the expertise and experience to back deeptech companies", ESG said in the release. 

But venture capital firms are paying more attention to deeptech amid challenges such as ageing, urbanisation and climate change, said Edwin Chow, ESG's assistant chief executive for innovation and enterprise.

"On the back of this, we expect to see more deeptech companies being formed - be it through spinouts from our Institutes of Higher Learning or incubators and accelerators - to address these needs. To succeed, they will require more early-stage venture funding," he said in the release. 

Venture capitalist Amit Anand, co-founder of Jungle Ventures, agreed that deeptech investments are set to grow. "We have seen considerable investment conviction that greatly underscores the growing momentum for startup investments to be injected into the South-east Asia region. Our capital allocation into deeptech startups has grown over the years," he said. 

Many local deeptech startups are founded by local researchers and university graduates, and have locally-produced intellectual property, ESG noted. 

The government agency said that it will continue to grow the deeptech investment scene. For instance, ESG and the Monetary Authority of Singapore (MAS) started conducting dealmaking sessions in June, called Deal Fridays. The 15 sessions to date have generated over 200 leads, with more than 200 startups and 150 investors participating. 

More sessions will be held during the Singapore FinTech Festival and the Singapore Week of Innovation and TeCHnology (SFF x SWITCH) in November.

"Access to smart financing is essential to support the development of deeptech startups based in Singapore. We will continue to work with partners such as MAS to catalyse more smart monies into startups in deeptech domains," Mr Chow said.