Two brothers are cashing in on a virtual land of opportunity in Singapore, where the government is investing billions of dollars into startups. The city-state is the leading destination in Southeast Asia for start-ups. With investor-friendly, government-matched finance programmes, low taxes for individuals and businesses, ease of use factor, and political stability, VC investment in Singapore’s
Tech sector increased from less than $30 million in 2011 to more than $1 billion in 2013. The Harvard Business Review reports 10 exits in 2014.
Cameron and Bradley Priest, two brothers from New Zealand, are cashing in on Singapore’s investment. The Priests moved from their Pacific island to this Southeast Asian one, in 2012, in search of a stronger ecosystem. Recently, I spoke with Cameron Priest about the differences between the start-up scenes in New Zealand and Singapore.
“New Zealanders are great at inventing stuff, we’re not so great at commercializing. Most New Zealanders become successful overseas and then come home, taking their network and connections and doing it from there. There are a few successes but they’re usually from very experienced entrepreneurs overseas,” Priest says.
Surprisingly, any difference in operating costs is negligible, Priest says. Labor costs are about the same, and Singapore’s low taxes compensate for it’s higher rents.
The same thing that makes New Zealand a great place to live, it’s remoteness, it’s slower pace, and emphasis on lifestyle, Cameron says, is what makes it not a great place to do business. There’s a lot of talk, he cautions, but little action…and even fewer ways to access funding.
“There are limited resources and very little capital. I could name two VC funds in New Zealand.”
The government of Singapore has spent tens of billions of dollars developing its ecosystem, attracting startups and venture capitalists through programs like it’s Early Stage Venture Fund. Through the fund, the government matches investor finance. In 2009, it established the Technology Incubation Scheme, pledging 85% government funding paired with 15% incubator investment into the startup, on the condition mentorship is provided.
Singapore’s investments are paying off. Fourteen incubators have been operating on the island since 2009, and a dynamic, if young, tech scene is emerging.
The Priest’s and their startup, TradeGecko are leading the pack. The company is a poster child for a Singapore’s grand plan to host 500 tech startups by 2019. Tradegecko was the first startup accepted into Singapore’s first ever incubator. The software-as-service inventory management business announced $6.5 million in Series A funding this past spring with 1,100 year on year growth this year. The brothers, running one of few global startups locally, have become leaders in the Singapore and Asia-Pacific startup world.
They had considered relocating closer to home, to Sydney, but it, too suffers from a small town feel and mentality, for now, at least.
“From what I could see then and now, it’s a great scene and is growing, but it doesn’t have the quantity of funding or startups that Singapore does. In retrospect we made the right decision.”
Singapore’s ecosystem may be flourishing, but it isn’t without challenges. Young communities come with limitations, namely a few gray hairs, even if only metaphorical.
“We were in the first ten investments for all of our funds. It helps us stand out, but it also means we don’t have the level of expertise. The benefit of young investors is you stand out a bit more, but the counterpoint is there isn’t a ton of experience.”
After only four years, Tradegecko seen as one of Singapore’s most successful companies, which Priest says, is good for the ego, but not necessarily the ecosystem.
The government and local VC’s are working hard to combat the problem, importing senior teams from abroad. Fuelled by their recent funding round, Tradegecko just announced hires from Redgate Software, Google and Trip Advisor, recognizing they need top leadership talent to stay competitive and inspire staff.
Even with just a few years under his belt, Priest supports other young entrepreneurs through events held at Block 71, and elsewhere. The compound of three buildings, affectionately nicknamed Block 71 houses more than 200 startups. A San Francisco outpost was announced earlier this year. It will offer 24 hot desks to tech startups, aiming to “strengthen ties between startup ecosystems in the US and Singapore, allowing tech companies from both countries to better know their respective markets and explore business opportunities and build networks there.” Syncing up with Silicon Valley may be the ultimate sign of success for Singapore’s startup strategy.
