Why Singapore could be better than Silicon Valley

In recent times, Singapore’s burgeoning startup scene has been constantly compared to Silicon Valley. There are plenty of similarities: clusters of game-changing startups, heavy weight tech corporations present and VCs / wealthy angels around. While it is playing catch up, Singapore is in a great position to learn, grow and hopefully avoid the pitfalls of its more illustrious counterpart.

Singapore is a prominent hub for startup activity around the world, and rightfully so. Singapore, a predominantly English-speaking city-state, is usually a springboard into the wider region of various languages and cultural barriers in South East Asia. With a stable, honest and pro-international business governmentmakes Singaporethe easiest country to setup a business.

Singapore possesses excellent technology and infrastructure to grow tech businesses. The country has one of the highest Internet and smartphone penetration populations in the world. With continuous plans by the government to improve the networks, the adoption of and tech will not be hindered by lack of bandwidth.

The big players in tech are touching down and setting up shop. The bigwigs like Facebook, Google and Yahoo have been here for a while. Others like Spotify and Rocket Internet have recently opened regional headquarters or branches here.

The money is here with venture capitalists like Sequioa, incubators and accelerators like Pollenizer, funds and angels like Eduardo Saverin based around the island. Even the local MNCs are getting into the tech investment game like SingTel’s Innova8 Fund.

Rent is inexpensive. Well, not everywhere – Singapore’s premiere location in the CBD is ranked 8^th in the world. However, if you do not need to be a stone’s throw away from The Merlion, try demarcated startup areas like Blk71. Otherwise, co-working spaces like The Hub, Regus and others offer hot-desking options.

One thing lacking in Singapore, of course, is the elusive billion-dollar startup. 2013 alone has seen numerous six-figure investments and even a 9-figure exit for Viki. Yet, there has been nothing like the pedigree of success in Silicon Valley. Out of all the companies that were started over the 10 years in the US, 39 of them are now worth more than $1bn – with a bunch of them in tech.

Billion dollar companies and million dollar exits are signs of a healthy startup ecosystem. Just like the Paypal mafia, that led to creation of Tesla Motors, LinkedIn, Yammer and more, great startup exits means creating more jobs and transferring knowledge to the next batch of startuppers. Those who reach the finishing line don’t end there, they start again.

Silicon Valley’s success is not without its problems – low talent and high rent.

The valley is lacking highly skilled American tech workers and has long depended on immigrant talent. “Immigrants have founded 40 percent of companies in the tech sector that were financed by venture capital and went on to become public in the U.S., among them Yahoo, eBay, Intel, and Google," writes Laszlo Bock, Google's senior VP of People Operations. "In 2012, these companies employed roughly 560,000 workers and generated $63 billion in sales."  

With a quota system of only 65,000 H-1B visas per year in a country of 320 million, it is usually snapped up within days of its release. This low supply of internal and external talent is slowly stagnating the industry.

Having one of the largest concentrations of tech companies in the US in a 30-mile radius that is Silicon Valley means limited and expensive office space. Palo Alto hovers around at a 5% vacancy rate with approximately $70 per square foot yearly – and rising rapidly.

Many startups are forced into paying the ransom to be closer to the action, VCs and other startups. This exertion on the limited funding a startup has can cause the fledging business to stress, to contract and even to fail.

These crises for the US are significant opportunities for Singapore to learn from. To encourage more risk takers and visionaries, the reasons for its current success should be extended.

Singapore has an opportunity to attract the foreign entrepreneurs being rejected by the H-1B quota in the US. There is nowhere else in the world that will allow entrepreneurs, like myself, to set up a global startup. Thanks in part to the progressive measures of the Entrepreneur Pass, Singapore’s open business environment and moderate tax rate.

By bringing in more startup founders, it will spice up the economy with more new additives and seasoned entrepreneurs in this melting pot of tech. Instead of the failed quota system of Silicon Valley, Singapore gives visas to those with the right qualities, skills and experiences.

For more basic roles, companies can outsource to regional development hubs in Vietnam, Cambodia and Philippines.

To help more people into the entrepreneurial scene, I believe in making more office space available just for startups. The BLK71initiative by MDA to house tech companies sees the warehouse filled to the brim.

With many startup offices in the area, it is easy for out-of-town investors, business partners, media and recruits to visit several companies in one trip. This is a step in the right direction as more startups look forward to the expansion of the cluster.

Continual improvement on the talent and office spaces can be the catalyst that sees Singapore startups become billion-dollar corporations that spawn others. This not-so-distant future will see Singapore surge past the Silicon Valley.