Singapore is expected to produce a steady pipeline of tech startups – about 60 annually – even as the number of new tech firms incorporated last year dropped to its lowest in five years, according to the Singapore Early-Stage Emerging Tech Startups 2022 landscape report released by SGInnovate.
The report noted how the city-state’s emerging tech startup pipeline appears to be maturing to reach a “steady state” even as there were only 35 startups incorporated last year, down from 63 in 2021 and 93 in 2019, the highest in five years.
However, the SGInnovate report said the final number for 2022 could be raised to 60 as some new emerging tech startups have yet to exit stealth mode.
Despite the maturing tech startup pipeline in Singapore, the report noted that early-stage startups looking to raise funds this year may face challenging conditions due to uncertainty in private markets.
The report pointed out how startups in their initial stages of development were also impacted by uncertain economic conditions, with average seed round sizes shrinking across the sustainability, agrifood, and advanced manufacturing verticals.
Hsien-Hui Tong, executive director of Investments at SGInnovate, said early-stage emerging tech startups in the city-state need to also tap into other strengths of the local ecosystem, such as the availability of alternative funding mechanisms and openness to corporate innovation for co-development.
“Besides extending their runway to focus on product development, this also allows startups to minimise the impact on their valuations until the macroeconomic environment improves,” he added.
Private sector helps drive strong pipeline
Despite the growing economic uncertainty across the globe, Singapore is expected to continue to incorporate startups, thanks to the help of private sector organisations launching specialised venture programmes as well as accelerator and incubator initiatives, the report added.
“As Singapore’s emerging tech startup ecosystem continues to mature, we look forward to supporting our homegrown startups in making a difference on a global scale,” said Tong.
Last year, the agrifood sector accounted for the largest proportion of emerging tech companies incorporated at 14, with six of them spun off from the National University of Singapore, which continues to support research in areas of food technology.
The largest deal in the agrifood sector in 2022 was the $100 million that Next Gen Foods, a plant-based alternative proteins startup, raised in its Series A round from Alpha JWC Ventures and other backers.
The report noted that the total number of funding deals completed by tech startups in Singapore fell by 17% between 2021 and 2022, while fundraising value declined by 28% on average across all verticals and funding stages.