THE startup model for building a business is increasingly dominant, and is here to stay. And it has become a new source of potential risk for the broader economy.

Trade and business development agency Enterprise Singapore announced last Friday that startups raised US$10.5 billion from 353 venture capital deals in 2018. That easily overshadowed the S$0.7 billion raised from 15 initial public offerings (IPOs) on the Singapore Exchange (SGX) last year. Six years ago, the roles were reversed, with startups raising just US$0.8 billion in Singapore, a fraction of the S$4.9 billion raised by 21 IPOs on SGX in 2012.

A perfect storm of factors has ushered in this proliferation of startups in Singapore. On the funding side, ultra-low interest rates have fed a bloom of early-stage investment capital as investors seek higher returns. Significant technological breakthroughs - most notably smartphones, cloud computing and artificial intelligence - have created real opportunities for disruption and productivity to underpin optimism over new technologies and business models. Strong government support for entrepreneurship and the startup ecosystem has also helped to make "founder" an increasingly popular career path in universities and polytechnics.