Indonesian start-up founders still look to Singapore for first leg up

The shock of the pandemic, as well as current macroeconomic turbulence, have done little to stop Singapore’s dominance.

Deni Ghifari

Deni Ghifari

The Jakarta Post


Singaporean Deputy Prime Minister Heng Swee Keat delivers his opening address at SWITCH 2022.(Enterprise Singapore/-)

October 31, 2022

JAKARTA – Despite a slowdown in investment, Singapore is still Asia Pacific’s best sandbox for early-stage start-ups, but other countries in the Southeast Asian region are becoming more competitive, tech industry insiders say.

Indonesian founders admit that a presence in the city-state remains important for attracting pre-seed and seed funding from foreign investors.

“To get early-stage funding, we need an international presence, and Singapore is important in that sense. Not every start-up needs a Singapore presence, but if we have a Singapore company involved, we have better access to international funding,” said Imam Karnohartomo, CEO of FitHappy, a wellness start-up in the pre-seed round.

The shock of the pandemic, as well as current macroeconomic turbulence, have done little to stop Singapore’s dominance; the country was ranked first in Asia Pacific and seventh in the world in StartupBlink’s 2022 Global Startup Ecosystem Index.

However, Peter Ong, chairman of Enterprise Singapore — a government agency for enterprise development — said at the Singapore Week of Innovation & Technology 2022 (SWITCH) on Thursday that “fundraising and listing prospects had become less favorable”.

Ong revealed that Singapore has minted four unicorns so far in 2022, which is significantly fewer than last year’s 11, and the US$11.4 billion worth of deals closed in the country up to the third quarter also marks a decrease from $11.6 billion in the same period of last year.

Edwin Chow, Enterprise Singapore assistant CEO for innovation and enterprise, said coming to Singapore was not a mandatory milestone for new Southeast Asian start-ups, but funding had always been the key to success for start-ups.

“Because of our history and what we have today, [Singapore is] a financial center. If it makes it faster for Indonesian start-ups to go global by coming to Singapore to raise money, then we welcome them,” Chow told The Jakarta Post on Tuesday.

“The venture capitalists [VCs], financiers and corporates are here, and it makes a lot of sense for Vietnamese, Indonesian or Thai start-ups [to come here]. [They] don’t actually have to do it. I mean, Jakarta already has a strong pool of investors, and if the start-up is happy to grow in Indonesia alone, then, by all means, just raise money [there],” he added.

Visiting SWITCH for networking and education purposes, Mirsa Sadikin, CEO and cofounder of Biteship, an Indonesian logistics start-up, said that, on top of bigger funding opportunities, Singapore also offered business convenience.

“It’s easy to do business here, and I think Singapore is the center of Southeast Asia, so it’s essential if you’re planning to expand to other countries. [A Singapore presence] attracts more capital definitely, and it’s easier to do partnerships here as well,” Mirsa said.

The founder of Korea-based animal skincare company Sunny Side Up, Avril Han, begged to differ.

Han told the Post on Wednesday that she was looking to expand to the region but that her eyes were not locked on Singapore specifically, and where she landed first did not matter, given that each country in Southeast Asia was a unique market.

“Is Singapore still the best window to enter the Southeast Asian market? When I was in the cosmetics industry that was the norm. […] Singapore could be a good start, because it feels like they have [people from various backgrounds], so it could be a good testbed, I think. But I don’t feel like it’s the master bridge to every country, because each is really, really different,” said Han.

Concurring with that view, Enterprise Singapore director for Southeast Asia Khairul Anwar said Southeast Asian countries had different strengths and characteristics, and for that reason, international corporations and start-ups had identified key markets of interest based on their sectoral strengths.

“Due to the diversity of the markets in the region, we are looking at Southeast Asia as a regional play and not just focused on opportunities in Singapore or individual countries,” Anwar said.

Anwar told the Post on Tuesday that the Southeast Asia region had strong projected growth rates compared with more developed markets, as well as high rates of digital adoption, and those factors lured global investors from places like the United States, Europe, Japan and India.

“[Southeast Asia] is a region that has become very adventurous in trying out new digital and technology solutions, which provides a strong upside for any global VC or international start-up looking to expand their customer base,” said Anwar.

Willson Cuaca, managing partner and cofounder of Indonesian venture capital firm East Ventures, said location was of little relevance when it came to funding.

“East Ventures has always maintained the view that, wherever a good start-up is, regardless of geographical location, it will always attract investors from other parts of the world,” Willson said.

A report from DealStreetAsia found that Southeast Asia’s fundraising had plunged to a seven-quarter low in this year’s third quarter, partly due to a worsening macroeconomic situation.

Growth-stage funding drove most of the jump in total investments back in 2020 and 2021, but that situation has flipped this year, as Series C and above rounds saw a tapering of 25 percent in value.

Seed and Series A deals, however, remain on their upward trajectory, but DealStreetAsia explained that this segment too could come under pressure as investors may turn their backs by pushing winners in their existing portfolios rather than gambling on new, unfamiliar bets.

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