What's missing in Singapore's startup scene?

SINGAPORE’S startup ecosystem has come a long way since the government launched a US$1 billion fund in 1999 to attract venture capital (VC) fund managers. Once a ghost town of tech players, the city-state now boasts over 3,000 startups, nine unicorns, and over 400 accelerators, incubators and VC firms.

But it battles supply gaps in both tech talent and funding for deep tech, just like any maturing ecosystem.

Here are some other growing pains:

Discipline

Funding rounds are getting larger and done at later stages. But the large amount of liquidity is sparking concerns that VCs are sticking a band-aid on the cracks of lousy businesses. Some observers have noted that the "SoftBank effect" of massively funding startups could have trivialised cash-burning.

"The pioneer generation of entrepreneurs was more disciplined with their cash because it wasn't 'Ah Kong's money'," said Dennis Goh, who built food portal HungryGoWhere when Nokia was still at its peak and a third of restaurants he approached did not even use email. He and his co-founders sold the startup to Singtel for S$12 million - equivalent to a Series A funding round today.

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Mr Goh worries that some startups burn cash without a clear return on investment. "Product-market fit is a delicate balance" but some companies rush in because money is now more easily available,” he said.

READ MORE: At a loss? There's always the 'path to profitability'

Coaching

Founders could benefit from the experience of mentors who have operated companies. While this culture in Singapore is nowhere as strong as that of Silicon Valley's, it is showing healthy signs of growth.

JobsCentral founders Lim Der Shing and Huang Shao-Ning now run AngelCentral, which coaches angel investors and links startups with experienced mentors. Entrepreneurs Goh Yiping, who founded three companies, and Hian Goh, who ran the Asian Food Channel for nine years, are among ex-founders who became VCs.

"The next gap is the coaching gap," said Jeffrey Paine, managing partner of Golden Gate Ventures. "First-time founders are becoming CEOs that manage a few hundred people, some older than them, and managing three or four offices. That's when things start to break."

Founders are also yearning for more diversity and mental health support in Singapore’s ecosystem. “Being an entrepreneur can be very lonely,” said Joyce Ng, a partner at pioneer VC iGlobe.

Exits

Though the emergence of special purpose acquisition companies (SPACs) and the tech rally accelerated public listings, the jury is out on whether the ecosystem can see more meaningful exits especially as early VC funds reach the end of their lives. A bulk of exits for VC firms still happen through secondary sales.

On the local front, Sea, Razer and Grab’s decision to list on foreign exchanges ignited debate over whether the Singapore Exchange will ever become attractive enough for tech companies. Talk in the startup world points to worries over liquidity and investor understanding of new-age loss-making businesses.

READ MORE: How Singapore built a startup ecosystem from scratch