The Singapore government has decided to commit $200 million SGD in new funding for a current government initative that is designed to support local technology startups.
According to a government statement, the Singapore government will match the money that venture capital companies invest in local startups. The government decision is based upon a decrease of capital being invested in the city-state because of uncertainties related to the Covid-19 pandemic.
Heng Swee Keat, Singapore’s Finance Minister told parliament that, “In this environment, some promising startups in Singapore are finding it hard to raise capital and develop their businesses.”
The governments new funding for startups is part of a fourth round of business relief measures to assist enterprises that have been affected by the pandemic. The government previously allocated $300 million SGD into startup support in February and the new funding is seen as the government continuing long-term support for technology startups.
The governments funding will be for Startup SG Equity, which has seen more than $560 million SGD invested by private sector funds between 2016 and last year. According to Startup SG Equity statistics, there are 3,800+ technology startups in Singapore, and around 150 venture capital funds have invested in Singapore startups to date.
Singapore is also making a “government focus” to work with investors and venture capital funds in technology areas that include agri-food technologies, biopharmaceuticals, medical technologies and advanced manufacturing technologies.
Chia Tek Yew, head of Financial Services Advisory at KPMG Singapore said, “It is extremely important for incumbent players to embrace innovation and look to collaborating with these new startups who could potentially disrupt their existing business models.”
Singapore isn’t the only country in Southeast Asia supporting startups in the technology sector, and a report from investment firm Cento Ventures earlier this year showed that Singapore had dropped to third place in 2019 related to capturing new investment funds.
Cento’s report found that related to the share of Southeast Asia investment in 2019, Indonesia was first and captured 59%, Vietnam was second place and received 18% of new funds, and Singapore was third with 17%.
Cento also found that Southeast Asia companies were already facing challenges to raise new investments before the pandemic struck earlier this year and that technology investments in Southeast Asia declined 36% in 2019 to $.7.7 billion USD, from $12 billion USD in 2018.