Singapore's tech investments on track to rival the S$6.5b raised in 2019: PwC

TECH startups in Singapore raised S$3.3 billion in capital over the first half of 2020, bringing total funding this year up on track to rival the S$6.5 billion raised the year before, according to a report from PwC Singapore.

Despite headwinds from the global pandemic, the first half of the year saw a steady flow of investments into tech startups, with Grab raising its latest Series I round of S$1.2 billion in February, and Ninja Van's S$390 million in April, noted the report.

Others like Elara Technologies, Shopback and Moglix have also seen renewed interest and raised large amounts despite Covid-19.

The average value per deal in the first half of the year stood at S$17.3 million across 188 deals, which is higher than the S$16.3 million for 2019, but still short of the S$22.5 million raised per deal on average in 2018.

Patrick Yeo, PwC Singapore's venture hub leader, said: "The Covid-19 pandemic has had an impact on the fundraising ecosystem, but we will continue to see investments in good startups. We believe there are significant opportunities in Singapore, with solid and innovative startups for investors to consider."

Health and biotech sub-sectors, for example, are emerging spots in the Singapore startup ecosystem. They have raised S$342 million in the first half of this year, already eclipsing 2019's S$230 million by 48.7 per cent, according to the report. In contrast, the health and biotech sub-sectors raised only about S$49 million in 2017.

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This trend (increase in investments into health and biotech) is expected to continue, with solutions such as telemedicine, home-care and biodegradable plastics being brought to the fore, said PwC.

On the other hand, fintech continues to be a stronghold for the startup ecosystem, with investments in the sector almost doubling from S$377 million in 2017 to S$686 million in 2019. The growth is largely driven by fintech firms in sectors such as payments, insurtech and credit, aligning with trends in consumer demand, said the report.

The first half of the year has also seen growth in funding across later stages, with more investments geared towards Series A rounds and above.

This is a sign that the ecosystem is maturing, said the report. "Back in 2017, while the ecosystem was still rather nascent, the bulk of tech startup funding was invested during the seed stage." Now, the seed stage has been roughly stable over the last three years, added the report. Seed-stage funding raised in H1 2020 is S$140 million, down from S$270 million in 2019.

In contrast, Series A funding for the first half of 2020 has already reached S$586 million, close to 70 per cent that of last year.

Funding stages beyond Series A also saw tremendous growth, with between 45 per cent and 55 per cent per year in Series B and C in the period 2017 to 2019, signifying a strong foundation and a clear indicator that the ecosystem is developing steadily.

"However, Series B and C funding for H1 2020 stood at S$634 million, indicating reduced focus across these stages of funding amid Covid-19," the report said.

"The acceleration driven by the pandemic will bring about favourable opportunities for both investors and tech startups as business shifts online and new business models emerge.

"Covid-19 has added many new dimensions to the game. It's now important for investors to lay greater emphasis on the fundamentals and resilience of the startups' business models. On the flip side, outstanding startups should be able to clearly show how they have emerged much stronger and more relevant in the new post-Covid-19 world," said Mr Yeo.