Talent gaps, market hurdles blot Singapore’s move up startup ecosystems ranking

A FEW large exits and strong investor activity have pushed Singapore up 10 spots to rank eighth among global startup ecosystems, but a shortage of life-sciences talent and other hurdles hold the city-state back.

The Global Startup Ecosystem Report, published annually by policy advisory and research firm Startup Genome, identifies leading global ecosystems based on factors such as performance, funding and talent. Singapore has had four startup exits valued at over US$1 billion, the latest report showed.

These large exits act as triggers, noted Parshant Sharma, data-science lead at Startup Genome. “They send a signal that success can happen in a given ecosystem, and catalyse the attraction of resources from outside the ecosystem,” he said. Such resources include foreign investors and talent.

In the 2023 report, Startup Genome began assigning exit counts to both the ecosystem where a startup was founded and the ecosystem where it is headquartered. In previous reports, only the origin market was considered. Sharma noted that this change in methodology better measures an ecosystem’s ability to attract startups from elsewhere.

Consequently, the record-breaking exit of Grab, founded in Malaysia and now based in Singapore, was included in the Singapore ecosystem in the new report. The super-app’s US$40 billion initial public offering in December 2021 remains the country’s largest startup exit to date.

Singapore also performed well in terms of early-stage funding and investor activity, establishing itself as the top Asian ecosystem in these aspects. The country’s seed and Series A rounds have remained robust amid the global slowdown in funding.

Still, it may take some time before Singapore catches up with the markets ahead of it. Silicon Valley maintained its lead in the 2023 report, followed by New York City and London, which tied for second place. Beijing and Shanghai, the other two Asian ecosystems in the top 10, dropped to seventh and ninth respectively as China’s economy slowed.

Singapore scored the lowest in terms of research impact, an area where the US has a stronghold.

There is also a lack of access to life-sciences talent, based on the limited number of life-sciences-focused local universities and degree programmes in Singapore.

An earlier report by SGInnovate warned that the shortage of biotech talent in Singapore may grow by almost 30 per cent over the next decade. That shortage is expected to particularly affect biotech companies in the clinical stage, across junior, manager and C-suite roles.

“Singapore’s biotech ecosystem is still nascent when compared with other established international biotech hubs,” said Juliana Lim, executive director of talent at SGInnovate.

Interest in biotech is increasing steadily, though. The number of students admitted to biotech disciplines in local autonomous universities grew from 1,200 in 2018 to 1,400 in 2021, said the National Research Foundation.

Government bodies are working together to grow Singapore’s talent pool in tandem with the development of local biotech companies.

For example, the Agency for Science, Technology and Research (A*Star) supports biomedical-related sectors through scholarships and other opportunities, and SGInnovate’s Helix Immersion Programme trains younger talents to help them transition from academia to industry.

Talent gap aside, Singapore’s small market reach is also an obstacle. With a population of around 5.6 million people, Singapore lags far behind ecosystems in the US.

“Although there are facilities and institutions in place to support deep technology development in Singapore, the capacity to commercialise such technologies is limited due to a lack of space or customers,” said Christopher Quek, managing partner at venture firm Trive.

The city-state can instead serve as a launchpad for startups to showcase their capabilities before they venture into larger overseas markets, noted Quek.

Sophia Ng, executive director at Enterprise Singapore, added that Singapore’s robust regulatory landscape and significant presence of venture firms and accelerators create a strong foundation for startups to build their base. “Many local startups are cognisant of Singapore’s small domestic market. Hence, they develop products and solutions for a global audience from the outset,” she said.

To help local startups internationalise, Enterprise Singapore runs initiatives – such as the Global Innovation Alliance – to equip startups with key insights and connections that are specific to each market.

Quek noted that investors could also help early-stage startups overcome the limitations of Singapore’s small local market reach. Finding early-stage investors that are well-connected to later-stage investors “is key to helping the startup gain market access in new markets to grow beyond the local ecosystem,” he said.