Startups in Singapore are hiring new graduates

Study on the start-up scene in Singapore

Transcript

1 Study on the start-up scene in Singapore, taking into account the role of government bodies and the current situation (as of January 2017) On behalf of German Entrepreneurship GmbH, represented by Matthias Notz, Managing Director Executed by the Singapore Chamber of Commerce (AHK Singapore) Authors: Support : Ms. Margit Kunz-Vinluan, Deputy Managing Director Ms. Caroline Dunning (MA) Mr. Lennart Oberschachtsiek (B.Sc.)

2 Contents Executive Summary 4 Brief overview of the Singapore economy in a regional context 7 Future challenges for the Singapore economy 13 Innovation in Singapore 15 Start-up scene Overview in figures Comparative figures with other start-up locations Legal framework for start-ups in Singapore Social security contributions 20 Financing of start-ups -ups in Singapore Private Public Grants Government Capital Financing / Co-Investment Credit Opportunities Tax Incentives and Reliefs for Start-ups and Investors 25 Indirect Support Measures Office Space Coworking Spaces Universities Incubators / Accelerators Events 30 Expert Interviews on the Topics Access to Financing Insight into one's own environment: challenges, Success, Expansion Why Singapore? Location factors for start-ups Mobile technology E-commerce and logistics 38

3 8.3.3 Access to MNCs and Smart Nation Initiative Manpower Regional aspects Regional environment Singapore (ASEAN / Asia-Pacific) Flight times Free trade agreement ASEAN Economic Community (AEC) Outlook 48 on-site facilities Supplementary content Methodology Appendix Literature Internet sources Copyright of the authors 60

4 1 Executive Summary Singapore can look back on an unprecedented development in Southeast Asia in just 50 years. The former British colony grew from a developing country to an industrialized nation in just a few decades. Today, the city-state in Southeast Asia therefore plays a special role, which among other things means that many medium-sized and large companies are locating their regional headquarters here. For some years now, however, a new group of young start-ups have discovered the location for themselves. According to official information, the steadily growing community has a size of around start-ups, around 2000 of which work in the high-tech field. So far 58 exits have been booked, the majority of which were in the e-commerce area. The government is working on making the location increasingly attractive for start-ups with high-tech solutions, as this also seems particularly useful for the size of the country and the government's future plans. Since the island state has almost no natural resources and only a small area of ​​land, humans are the most important resource. The population has developed a very high standard of living and there is great competition from the surrounding countries to achieve this as well. Singapore therefore strives for the highest level of innovation and technology development in order to serve the upper end of the value chain and to remain economically relevant in the future. The most important initiative comprises the so-called Smart Nation Program, which reports directly to the Prime Minister's Office. Smart Nation encompasses several areas in which technology will have a strong influence on the living space of Singapore in the future and should simplify everyday life for the residents of the city-state. The concept primarily takes into account the areas of traffic and e-mobility, the aging society and healthcare, environmentally friendly technologies, e-government, education, cyber security, big data and Industry 4.0. All economic and social areas are involved in the design of this program. In other words, with the help of funding programs, corresponding research projects are supported, programs for professional development 4

5 has been set up, courses of study that are important for Smart Nation have been set up and expanded, and companies are required to adapt to the intelligent technologies of the future. As part of this active design policy, young companies and start-ups that offer innovative solutions or work on new products together with universities or research institutes are also welcome. Singapore, as the third most densely populated country in the world, is very carefully directing the influx of foreign workers. It is therefore easier for people with expert knowledge or very well qualified graduates and experienced workers to obtain a work permit. Certain salary limits also apply in order to employ qualified employees in the country. Due to the scarcity of land, rents are relatively high and this has to be taken into account when calculating the costs in order to have sufficient start-up capital in Singapore. However, the selection of co-working spaces has grown enormously in recent years and Singapore itself has also made a large number of properties available to make it easier for start-ups to have cheap access to office space. For many medium-sized and large companies, Singapore is the regional headquarters from which Southeast Asia and Asia-Pacific are served. However, slightly modified approaches seem to apply to start-ups. According to experts, some products and services can be developed and offered very well for the Singaporean market. However, the market for many solutions is too small and they therefore have to be introduced relatively quickly in the surrounding countries. The decisive factor for the success or failure of a start-up is therefore the degree to which the different levels of development, as well as many other location factors of the other Southeast Asian countries, are taken into account and incorporated. Financing in the early stages of start-ups in Singapore is relatively well developed through many offices, and there is also access to venture capital and angel investors. The public sector is also heavily involved here, and even incubators can obtain funding. The unanimous opinion of the literature and respondents is that up to Series A funding is good options in Singapore 5

6 are. Another network must be activated for subsequent financing rounds, with close connections to other locations around the world that enable access to capital. The networking of Singapore in world trade and the systematic development of long-term partnerships with other countries are an important part of this. For many years, the city-state has also topped the list of places in the top ranks that make it particularly easy for companies to expand their business activities there. The start-up landscape in Singapore is still very young and therefore extremely dynamic. Many factors also make the location attractive for start-ups and offer very good opportunities for internationalization or further development of young companies from overseas in certain areas. The following study will deepen the above-mentioned aspects and provide additional information. The study does not claim to be complete and the opinions expressed by the interview partners do not necessarily reflect the views of the AHK Singapore. The study is intended to provide a first impression in order to better assess the risks and possibilities. In any case, start-ups are recommended to visit the location first and carefully consider the possibilities for their own local business model. 6th

7 2 Brief overview Economy Singapore context in regional 1 Official designation Republic of Singapore system of government Parliamentary democracy Official languages ​​English, Chinese, Tamil and Malay Head of State President Tony Tan Ken Yam Head of Government Prime Minister Lee Hsien Loong Area 719.2 km² Population 5.6 million Population density 7800 inhabitants per km² gross domestic product 294.56 mil. US $ GDP per capita US $ Currency Singapore Dollar Independence August 9, 1965 Singapore is a central hub for more than 1500 German and thousands of international companies, for which the city-state serves as a hub for their regional strategy. The rapid development in industrial production, urbanization, use of ICT and many other factors will determine the future of the 17

8 shape the entire ASEAN region and Singapore has to assume a leading role in certain areas in order to remain at the forefront of the competition. Areas in which Singapore could take a leading role within the region include governance, education, technological progress, urban planning / smart cities and digitization / Industry 4.0. The Singaporean economy is globally networked, export-oriented and heavily dependent on trade. The foreign trade quota in the year was%, the export quota 118%. 2 Therefore, global growth and demand have a disproportionately large impact on the economy. Due to the uncertainty in the world markets, the export-oriented sectors have recently come under increasing pressure and the forecasts for GDP growth have had to be revised. The industry in Singapore is traditionally based on multinational and government-affiliated companies. 3 These companies have benefited from Singapore's pro-business policies, local small and medium-sized enterprises (SMEs) 4 and infrastructure investments. In return, they have made a decisive contribution to the immense growth of the Singaporean economy. Lately more attention has been paid to local SMEs. Of all companies in Singapore, 99% are SMEs and 82% are primarily locally owned. However, 55% of the value added (gross value added) can be attributed to foreign companies. 5 In manufacturing, for example, fixed assets amounted to around SGD million in 2015, of which SGD million came from abroad. 6 As one of the founding members of the Association of Southeast Asian Nations, or ASEAN for short, Singapore has always played a prominent role in this region. Among the ten member states Brunei, Indonesia, Cambodia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, Singapore is considered to be the most developed agricultural data compact --- singapore.pdf? V = 1 3 Cf. OECD. (2013). Southeast Asian Economic Outlook Definition of SMEs according to SPRING (2011): Annual Sales turnover of not more than 100 mio S $ or Employment size of not more than 200 workers 5 Cf. Economic Development Board. (2014). Report on the Census of Manufacturing Activities

9 According to the United Nations Development Program, Singapore ranks eleventh in the Human Development Index 7 worldwide and the first in ASEAN. The index looks at three sub-areas, including health (measured life expectancy at birth), education (measured as the mean school years for adults aged 25 and over, and expected years of schooling for children of school entry age), and standard of living (measured in terms of gross domestic product) per person). The highest index that countries can achieve is 1.0. In 2015, Singapore achieved a value of 0.901, only five places behind Germany. The Federal Republic, in sixth place overall, achieved a value of 0.916. In ASEAN, Brunei ranks second with a rating of 0.852. The average index in ASEAN is 0.669. Due to the high level of development in the educational landscape, in technology and its global network, the city-state is able to provide a pool of very good talent and professionals. This role could be further enhanced by providing leadership, technology and infrastructure to ASEAN. Singapore is considered the region's financial and trade center anyway. In recent years it has campaigned for further economic integration in ASEAN and at times acts as a bridge between ASEAN and other nations. 8.9 The general economic conditions in Singapore are very good. In both 2014 and 2015 it was voted the easiest place of doing business in the world. The other ASEAN member states achieved a far lower ranking (see Table 1). This goes hand in hand with a low corruption perception index in Singapore in 2013 and 2014 (see Table 2). The other ASEAN countries have not been so successful yet and have to find a strategy to cope with corruption in the future.According to the United Nations Development Program, the Human Development Index is defined as a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions

10 Table 1: Business transaction ranking 11 Table 2: Corruption Perception Index in 2013 / Position Paper: Regional Role of Singapore 10

11 ASEAN is one of the most critical and interesting regions to do business in as the forecast growth over the next three to five years is expected to be relatively stable compared to other regions that are viewed as less stable. 13 The ASEAN region is very heterogeneous and comprises countries with different levels of economic development, population growth, education, quality of life and income. Because of this starting position, companies in the region see many more opportunities than obstacles in order to establish their business activities in Southeast Asia. However, Singapore is the clear favorite when it comes to locating the regional headquarters. There has been a shift away from labor-intensive sectors, such as agriculture, to more capital-intensive sectors in the industries based in the region. For example, the share of the labor force employed in agriculture in Vietnam has decreased from 61% in 2000 to 44% in 2015. Indonesia and the Philippines have seen a similar shift. However, there is little impact on high-income ASEAN economies such as Singapore and Malaysia, as sectoral shifts have already taken place over the past few decades. High value added sectors, such as financial and business services, account for a small share of employment in most countries in the region. While in Indonesia the workforce employed in these areas is only 2%, in Malaysia it is 10%. In Singapore, however, the proportion is much higher as it is the financial and economic center of ASEAN. 14.15 Due to the sectoral shift, urbanization has also advanced significantly and is causing a chain reaction. Since jobs with high added value are mainly found in cities 16, job opportunities have shifted from rural areas to cities, causing an increase in the rate of urbanization. Urbanization is key to access to technology. 12 Position Paper: Regional Role of Singapore wcms_ pdf 11

12 to simplify logics, and also keeps company transaction costs at a low level. 17 If urbanization in ASEAN continues, this could help the region to better compete with the economic powers China and India. Ideally, urbanization would be a steady expansion of existing regional centers and not individual megacities. However, greater integration of the AEC (ASEAN Economic Community) would be desirable. Acting as a group should replace the individual structuring of states and economies. This would probably also further strengthen Singapore's status as the most important financial and economic center in Southeast Asia. In the next few years there will be a growing proportion of residents in urban areas in Vietnam, Indonesia and Malaysia, the increase is forecast to be 7% in Indonesia, 6% in Malaysia and 3% in Vietnam. 18 Based on this development, there will be a further shift in all three countries towards sub-areas with high added value, such as production and the service sector. The increasing urbanization of Singapore's neighboring countries goes hand in hand with an overall improvement in the economic development of these countries. This offers enormous opportunities for the highly developed city-state to become active in these emerging markets. One of the areas Singapore has great expertise in is urban planning and development. Exporting this knowledge to ASEAN countries could benefit Singapore in many ways. It should help create jobs in Singapore and generate a stream of income. It also helps to set standards in the region and see Singapore as best practice in certain areas. It also helps to minimize undesirable side effects, poorly planned urbanization and urban development. Other highly developed areas in Singapore are finance and insurance, logistics and infrastructure, research and development, production of high-quality products, protection of intellectual property, the start-up scene and trade. For start-ups, however, the

13 increasingly urbanized centers options, but also with adapted solutions in rural and less densely populated areas. 3 Future challenges for the Singapore economy Singapore's SMEs are currently facing uncertain prospects for the global economy.In addition, manufacturing in labor-intensive sectors faces high competition from surrounding countries, where labor costs are below Singapore's. In addition, the workforce in Singapore is aging, which is in contrast to the otherwise strongly pronounced young populations of the surrounding countries. 19 For many years the economy has been able to meet the demands of growth by bringing more overseas workers to Singapore. The situation has changed a lot, however, and six years ago the Singapore government began restricting the influx of foreign workers. At the same time, numerous programs and initiatives have been launched to improve the knowledge and skills of Singapore workers and to support technological advances. The government is also providing support to increase automation in companies and prepare them for the fourth industrial revolution. The next step will be to prepare companies and workers alike for the demands of the future. Like most industrialized countries with a significant share of production, Singapore and Germany are working on measures and programs to prepare for future needs, such as: Industry 4.0, big data, digitization and the Internet of Things. This is to be achieved through advanced training programs and specifically tailored courses. 19 cf. McKinsey. (2014). Understanding ASEAN: The Manufacturing Opportunity .; /publications_and_papers/population_and_population_structure/population2016.pdf 13

14 The rise in costs and the shortage of labor cannot currently be compensated for by increases in productivity. 20 Singapore, however, is the clear quality leader in the region and can use this advantage particularly in areas such as biomedicine, semiconductors or chemistry. 21 German multinational and medium-sized companies very much appreciate the highly qualified workforce in these areas. In addition, the domestic market for SMEs is too small in the medium term. Dr. Michael Teng, CEO of the Singapore Innovation and Productivity Institute (SiPi) of the Singapore Manufacturing Federation (SMF), explained in a panel discussion that many SMEs in Singapore are still very focused on operations and are fully focused on day-to-day operations. Other experts also confirm that SMEs are often not yet approaching their internationalization plans strategically enough and are not investing enough in the technological development of their companies. A modernization of the technology or the implementation of new processes would usually take place as part of an investment instead of taking the return on investment into account. But with the vibrant start-up scene in Singapore, the availability of financial support has also improved in recent years, which could also offer new prospects for established SMEs. Analyzes show that an innovative ecosystem also benefits established companies through competition and collaboration. Due to risk-averse financing institutions, innovative entrepreneurs have had difficulties obtaining financing. 22 With the growth of a vibrant start-up community in Singapore, funding opportunities have improved many times over and financial institutions should increasingly look at the opportunities. McKinsey. (2014). Understanding ASEAN: The Manufacturing Opportunity .; df 22 cf. PwC. (2015). Singapore s tech-enabled start-up ecosystem .; Compass. (2015). The Global Startup Ecosystem Ranking

15 4 Innovation in Singapore So far, Singapore's inflow of knowledge and technology, i.e. innovation, has mainly come from multinational companies. 23 Singaporean SMEs have historically been rated "defenders", which means their strategy has been to find and maintain a safe niche in a relatively stable product area. 24 At the moment, new and innovative start-ups are coming to Singapore with some government support. The Singaporean government has already invested considerable sums in promoting business innovation. These measures aim to create an ecosystem for research and development that connects public and academic research institutes as well as company-owned facilities for research and development. 25 According to the Global Innovation Index, Singapore produces comparatively few innovations. 26 In 2010, the Economic Strategies Committee pointed out that R&D efforts were not yet sufficiently commercialized. The feedback from members of the AHK Singapore also supports this statement. Factory automation, investment in modern equipment and a shift in focus from short-term profitability to medium-term planning are urgently needed to prepare Singapore's SMEs for industrial change. Cooperation with universities and technical colleges could also be helpful for SMEs. German medium-sized companies faced comparable challenges around three decades ago and even today some smaller companies do not have the capacity to participate in product innovations or collaborations with research institutes. However, almost all innovative companies cooperate over time with external partners Cf. Ghosh, Liang, Meng, Chan. (2001). The key success factor, distinctive capabilities, and strategic thrusts of top SMEs in Singapore. 25 cf. OECD. (2013). Southeast Asian Economic Outlook

16 5 Start-up scene 5.1 Overview in numbers Due to a lack of official data from the Singaporean government institutions, the number of start-ups active in Singapore can only be estimated approximately: According to SPRING 27, estimates of a total of around start-ups exist for 2015. ups, which according to a study by PwC 28 include around tech-based start-ups, while the Compass 2015 ranking of up to active tech start-ups and SPRING again assumes high-tech start-ups in Singapore. 29 The latter have established themselves particularly in the areas of ICT, life sciences, cleantech, electronics and mechanical engineering. Along with its philosophy of an innovation-oriented economy, according to SPRING, the focus of the Singapore government in the start-up area is on promoting start-ups with high potential. That means start-ups with a scalable business model, disruptive technology and good investment potential, which in turn serve to underpin Singapore's status as a Southeast Asian hub and gateway to the region. 5.2 Comparative figures with other start-up locations While Singapore's start-up ecosystem is quite young in an international comparison and is still developing, it has recorded considerable growth in recent years and thus ranked 10th in a pioneering global ranking in 2015. Place occupied. 30 Next to Bangalore (15th place) one of only two Asian start-up ecosystems within the Top 20 of the Compass 2015 Ranking 31. Most recently, the tenth-placed Singapore stood out due to its tax system that is advantageous for companies, excellent state funding opportunities and the explicit will of the government, Singapore as a Southeast Asian start-up 27 Cf. SPRING Singapore (2016): Overview of Singapore's Startup Ecosystem. 28 cf. PwC Strategy (2015): Singapore s tech-enabled start-up ecosystem. 29 Differences in the estimates can arise due to different survey methods and must be viewed differently. 30 cf. Compass (2015): The Global Startup Ecosystem Ranking Due to problems with data collection and a lack of survey feedback, China, Taiwan, Japan and South Korea were not included in the Compass 2015 ranking, but it is estimated that Beijing is in the top 5 and Shanghai is in the top 5 would be in the top 15. 16

17 center to establish out. In addition, Singapore relies on a risk capital pool that is unrivaled in regional comparison, which in 2015 was worth 1.1 million. US $ 32 earned Singapore a remarkable ninth place in the Financing category in the global Compass comparison. Singapore also took an impressive ninth place in the market reach category, which, according to Compass 2015, is primarily due to the relatively easy access to neighboring markets in the region for Singaporean companies, which in turn offers start-ups a simple, profitable and regional scaling process: With a value of 49%, the island nation ranks third in terms of the foreign customer base of its start-ups in the Compass 2015 ranking, behind Tel Aviv (74%) and London (50%). Start-up location by ranking Estimated value of the ecosystem in US $ Average seed round in US $ Table 3: Financing comparison (source: Compass 2015 ranking). Average Series A Round in US $ rounds with only local investors 1. Silicon Valley billion 6.5-7 million 61% 2. New York City 40.8-49.8 billion 7.5-8 million 67% 3. Los Angeles 42.1-51.4 billion th 6-6.5 million 52% 4. Boston 41.7-51 billion, 5 million 60% 5. Tel Aviv 23.7-28 , 9 billion th. 4.5-5 million 53% 6. London 39.5-48.3 billion th. 7-7.5 million 53% 7. Chicago 18.6-22.7 billion th. 5 .5-6 million 85% 8.Seattle 12.2-14.9 billion thunders 5.5-6 million 78% 9. Berlin 24.7-30.2 billion thunders 5.5-6 million euros 64% 10. Singapore 11.8-14.4 billion thsd. 4-4.5 million 67% 15. Bangalore 11.9-14.5 billion thsd. 4-4.5 million 57% Singapore scores comparatively disappointingly on the other hand in the area of ​​skilled workers. Although it is of high quality and relevant to the subject, the absolute number of local university graduates from technical courses such as computer science, engineering or economics is quite low. 33 According to the Compass 2015 and PwC rankings, the generally risk-averse Singaporean mentality adds to the difficulties. Many graduates are poached by established multinational corporations in Singapore or overseas competing for skilled workers. This in turn limits the pool of potential employees for start-ups. In order to counteract this circumstance, the 32 Cf. SPRING Singapore (2016): Overview of Singapore's Startup Ecosystem. 33 cf. PwC Strategy (2015): Singapore s tech-enabled start-up ecosystem. 17th

18 Singaporean start-up scene in 2015 more than 52% of employees from abroad. Nonetheless, the start-up scene is positive about the general conditions in Singapore and gives hope for further growth. Start-up location according to ranking Foreign employees in% Remote employees in% Employees with startup experience in% Employee participation in% 1. Silicon Valley New York City Los Angeles Boston Tel Aviv London Chicago Seattle Berlin Singapore Bangalore Table 4: Comparison of the personnel situation (source: Compass 2015 ranking). 5.3 Legal framework for start-ups in Singapore The establishment of a start-up is, like the market expansion of a large company, a complex issue. In this context, we therefore expressly refer to advice from experienced lawyers. Companies in Singapore are predominantly in the legal form of a private limited (Pte Ltd) or a limited liability partnership (LLP). Less common forms are Sole Proprietorship, Public Limited Company, Public Limited Company by Guarantee, General Partnership and Limited Partnership. There are many reasons for the preference of the legal forms of company mentioned above over the consecutively presented forms. For the Private Limited and Limited Liability Partnership, there are reasons such as the independent legal identity and limited liability. For private limited companies, apart from tax breaks, there are advantages of continuous succession and easy transfer of ownership

19 The legal forms Sole Proprietorship and Partnership are extremely straightforward to set up. An important part of these legal forms, however, is the personal liability of the owner or the partner. The Private Limited is chosen as the carrier due to tax advantages in almost all business areas. In branches of the economy in which customer value plays an important role, such as law firms, business and tax consultancies or architecture firms, the limited liability partnership has established itself. 36 The starting point for the most decisive advantage of Private Limited over other forms of business are, as described above, tax advantages. In accordance with the legal requirements of the Singaporean government, private limited companies are taxed at the company level. In return for this taxation at the corporate level, LLPs and Sole Proprietorships are taxed at the individual level. 37 The limits of S $ at the corporate tax level and S $ at the individual tax level are used here for clarification. A tax rate of 8.5% applies to companies up to S $, and the maximum tax rate of 17% applies to every additional dollar. Individuals are subject to staggered tax rates. Income up to S $ already has a cumulative tax of approx. 13%, and the maximum tax rate of 20% has to be paid for each additional dollar. Individual taxation can be beneficial for low incomes, but the tax exemption of the first S $ in the first three financial years means that this consideration is often irrelevant. 38 According to SPRING Singapore, special regulations are possible for start-ups in particularly high-tech areas. More detailed information on this follows in the following chapters. Despite the tax advantages, there are a few things to consider when founding a Private Limited: Requirements for the formation are an ACRA-approved company name, at least one local director, at least one, but no more than 50 shareholders, the provision of starting capital of at least 1S $ and one registered company address. In addition, is within the first

20 six months to appoint a secretary. In addition, a classification as a small company can be made and the examination by an independent body can be suspended. For this purpose, at least two of the three qualifying criteria are required in two consecutive financial years: a) Annual income less than S $ 10 million b) Total assets do not exceed S $ 10 million c) The number of employees remains below 51. 39 Registration is carried out using BizFile or an agency. An application is processed on average within a quarter of an hour. In individual cases, processing can take 14 days to 2 months due to the involvement of several authorities and the corresponding coordination rounds. Corresponding registration requirements can be read online. 40 Trading activities may commence after registration with the ACRA, provided that no further licenses or authorizations are required. 41, Social security contributions In addition to the income tax that each employee has to pay, the employer only has to pay for the individualized pension fund for each employee. This can only be used by Singaporean nationals and permanent residents. Foreign employees with a different residence status must provide for their pension and health insurance themselves. Very often employers offer group contracts for their employees, which, however, are not transferred to the employees when they leave the company. The Central Provident Fund (CPF) is Singapore's social security system into which employees and employers contribute. At the moment the articles are at & contentid = ttps: // 42 The authors are not responsible for the completeness of the information in this chapter. It is advisable to obtain additional legal information. 20th

21 20% of the gross salary for the employee and 17% for the employer. However, depending on age, there are also variations which, in case of doubt, are below the stated contribution levels for the employer. The accounts are individual and contributions to these are payable only by Singaporean Citizens and Permanent Residents in Singapore. 43 The CPF itself is an account divided into four sub-accounts. The sub-accounts are: Ordinary, Special, Medisave and Retirement. In addition to different interest rates, the accounts are also designed for different purposes. Detailed regulations on the CPF can be found on the website of the Ministry of Manpower. Financing of start-ups in Singapore In line with the vision of an innovation-oriented economy, the Singapore government has launched a number of support programs and taken financial measures. These are intended to facilitate the settlement and development of startups in Singapore and also increase investment in Singaporean startups by venture capital companies and other investors. 6.1 Private According to SPRING, Singapore had venture capital activities worth over 1 million in 2015. US $, an increase of 64% since 2014, as well as the majority of the more than 400 venture capital contracts signed in the ASEAN region during the same period. Infocomms Investments 45 reports, citing data from the Asian Venture Capital Journal, that investments in Singapore-based startups account for 19% of venture capital investments in Asia. Accordingly, the proportion in Singapore is higher than that in Japan, South Korea and Hong Kong. The number of active venture capital companies in Singapore is steadily increasing, but, according to PwC, start-ups based in Singapore are still struggling with a lack of Series A and B investments in the growth phase. Infocomm Investments (2015): Singapore Startup Ecosystem

22 In addition to venture capital companies, multinational corporations such as Microsoft, Daimler, 3M, J.P. Morgan or Unilever involved in working with and investing in start-ups. In addition, the number of business angels is growing, to which, according to Angel List 46, almost 6,000 are now interested in Singapore and of which more than 530 are business angels living in Singapore. 6.2 Public Always willing to support innovative companies, the public sector estimated between 2011 and S $ billion for investments in research, innovation and the enterprise ecosystem. At first glance, the resulting public funding options seem diverse and complex, which is partly due to the numerous ministries and government agencies involved. The main actors in this context are primarily SPRING Singapore, Infocomm Investments, the National Research Foundation (NRF), EDB Singapore and IE Singapore. The Agency for Science, Technology and Research (A * -Star) and the Action Community for Entrepreneurship (ace) are also noteworthy. The central government funding options are available in the form of grants, capital financing, government co-investments, loans and tax incentives for start-ups as well as potential business angels and venture capitalists and are briefly presented below. 47 Since the regulations for access to government funds change regularly, it is recommended to visit the respective sub-item Eligibility of a program in order to obtain more information about the accessibility of an offer of the Singapore government. Grants Funding options within the framework of government grants or grants are primarily Line awarded by SPRING Singapore. This is interesting for start-ups. Due to the dynamic nature of Singapore's start-up financing landscape, it is unfortunately not possible to provide an exhaustive overview, but the options available summarize the most important framework conditions and contact points

23 on the one hand, the Technology Enterprise Commercialization Scheme (TECS) 49 from SPRING, through which in the concept stage up to 100% permissible costs (capped at S $) for in-house ideas and in the R&D phase up to 85% additional costs (capped at S $) can be obtained again by the start-up for the production of a prototype. On the other hand, the ACE Startups Grant 50 from SPRING offers the opportunity to increase the capital raised by the start-up entrepreneur in a ratio of 70:30 through a state grant (capped at S $). If the start-up is already sufficiently developed to tackle regional activities, there is, under certain conditions, the option of IE Singapore's Market Access Incubation Program (MAIP) 51, up to 70% of permissible third-party costs for trade fair activities, such as rent an exhibition space, marketing costs or logistics. That's kind of: ace Scheme 52 from the Infocomm Development Authority offers start-ups financial support, which should cover 50% of the salaries of five technical employees up to a maximum of S $ for a maximum of one year, in order to commercialize the product and enter the market make it easier for startups. On the part of the start-up partners, the Incubator Development Program (IDP) 53 by SPRING incubators and venture accelerators holds out the prospect of improving and expanding their range of support for innovative local start-ups with a grant of up to 70%. for example by hiring mentors or developing new incubation programs State capital financing / co-investment Both SPRING and the National Research Foundation (NRF) have funds for state capital financing of start-ups or co-investments in cooperation with venture capital companies and others Third party investors. The NRF invests through the Early Stage Venture Fund (ESVF) 54 in an Assistance / MAIP 52 ratio;

24 out of 1: 1 in venture capital companies, which in turn invest in early-stage Singaporean startups. State co-investment with previously recognized business angels is made possible by SPRING's Business Angel Scheme (BAS) 55 in a ratio of 1: 1 and up to a value of S $ 1.5 million, while SPRING's Startup Enterprise Development Scheme ( SEEDS) 56 offers the option of state 1: 1 co-investment of up to S $ 2 million in cooperation with previously recognized, independent third-party investors. The NRF's Technology Incubation Scheme 57, in turn, enables state co-investment of up to 85% (capped at S $) in start-ups that have previously passed through a seeded tech incubator. Furthermore, together with the venture capital company Innosight Ventures Pte Ltd, the NRF operates the Incubator for Disruptive Enterprises and Start-ups (IDEAS) Fund 58, a fund for start-ups with disruptive business models in their initial phase, with funding of up to S $ possible and is 85% co-financed by the NRF. Finally, with the area of ​​state capital financing and co-investment, SPRING aims with the Sector Specific Accelerator (SSA) program 59, which has a budget of S $ 70 million, to attract start-ups in emerging, very young industries such as the Medical technology, and thus expand this strategically important sector. Credit options In addition to direct subsidies and state participation, there are a number of credit financing options for start-ups in Singapore. With the Micro-Loan Program 60, participating banks and financial institutions grant Singaporean companies loans to finance day-to-day business or automation processes worth up to S $ at an interest rate of 5.75% per annum over a loan period of less than four years. The Loan Insurance Scheme Cf. SPRING (2016): Infopack for BMWi: On the proposal to establish a German Accelerator in Singapore 58;

25 (LIS) 61 offers insurance against credit default risk where the government shares the insurance premium with the start-up; Contribution amount, interest rate, loan duration and repayment plans are determined by the credit institutions involved, taking into account the risk profile of the borrower. Tax incentives and reliefs for start-ups and investors In addition to direct government grants, loans and equity investments, the Singapore government endeavors to include the start-up sector as well through tax incentives and reliefs for start-ups and their investors. For example, startups in Singapore enjoy a tax exemption for the first S $ taxable income and a tax rate of only 8.5% on the next S $ taxable income for each of the first three consecutive tax years under certain conditions 62. The normal corporate tax rate of 17% is only due from a taxable income of more than S $. From the fourth year onwards, the reduced tax rate of 8.5% falls on the first S $ taxable income, and the normal corporate tax rate of 17% applies again. With the Angel Investor Tax Deduction Scheme (AITD) 63 from SPRING, recognized business angels with at least S $ stake in an eligible start-up can secure a tax discount of 50% on their investment at the end of a two-year holding period, with each Assessment year investments are only taken into account up to a value of S $ and the tax rebate is capped at S $. Here are the essential framework conditions of the AITD: Requirements: The start-up must be registered as a corporation in Singapore, have its tax residence there and must not be held by more than 20 shareholders, of which at least one individual shareholder has a stake of at least 10% of the Startups

26 64 The Development and Expansion Incentive (DEI) 65 is intended to encourage Singaporean companies to undertake business activities with high added value, expansion projects and the purchase of machines in order to achieve a reduced tax rate of 5-10% on additional income generated by certain activities have been achieved. With the Investment Allowance 66, companies can, under certain conditions, obtain special depreciation for plant and equipment used for company purposes. The Productivity and Innovation Credit (PIC) Scheme 67 is designed to promote innovative and productive business models and activities by allowing companies to receive up to a 400% discount or grants of up to S $ for spending on qualifying 68 innovative activities Incentives / 67 Scheme / 68 These include: research and development, IP registration, IP acquisition, design activities, automation through technology or software, and employee training. 26

27 7 Indirect support measures 7.1 Office space In the area of ​​non-monetary state support, the work of the Singaporean universities and the government in providing infrastructures in the form of premises, networks and hubs is particularly noteworthy. The core of the Singaporean start-up activities is the JTC. Originally consisting of the so-called Block 71 and meanwhile expanded by Block 73 and 79, the building complex bundles rooms and infrastructures for start-ups, incubators and investors to facilitate the simplest and most productive cooperation possible between the various actors. According to SPRING, the JTC is currently home to more than 700 start-ups and 48 incubators, and the expansion of blocks 75, 77 and 81 is expected to have further capacity growth by 2017. The Singapore government is planning a similar model with the park, focusing on environmentally friendly technology and sustainability. In addition to these hubs, SPRING also operates a total of seven sector-specific Centers of Innovation (COIs) 69 in cooperation with research institutes and universities, which support start-ups and small companies in their technological innovation capacity by offering laboratory space, technology advice and training courses. 7.2 Coworking Spaces The number of co-working spaces in Singapore is also increasing steadily. Some of them are listed below: List of Coworking Spaces in Singapore * SCAPE HubQuarters Smartspace 13 Open House Space at 8 AccountingGuru Space Co Group Big Work Spacemob Club71 Springboard Co.Lab by Silicon Straits The Co 69 Innovation.aspx 27

28 Collective Works Collision 8 Pte Ltd Eclat Office Club Ecosystem HackerspaceSG Hired Turf Inner City Offices JC8 at Kennel Keong Saik Collab Make Space Mettle Work PlusConceptSpace SiTF House The Hive Singapore The Hub The Loft The Office The Tool Room The Working Capitol Tinkerbox Studios Trehaus Tribe by TEC VentureSpace WeHive Woolf Works Work Central WorkHouse WOTSO Workspace 7.3 Universities Singapore's universities make another important contribution in the field of innovation and business promotion. For example, the National University of Singapore (NUS) operates the NUS Incubator and Accelerator for university start-ups and spin-offs with NUS Enterprise, and promotes entrepreneurship and cooperation between industry and science. A strategy that Nanyang Technology University (NTU) is also pursuing with NTUitive. The Singapore University of Technology and Design (SUTD) was founded in 2009 in cooperation with the Massachusetts Institute for Technology (MIT) and provides an incubation program with the university's own SUTD Entrepreneurship Center. Finally, the Singapore Management University Business Innovations Generator of the Singapore Management University (SMU) should be mentioned, which provides incubation programs especially for university start-ups in the ICT area. 7.4 Incubators / Accelerators While there is a sharp distinction between incubators and accelerators in Germany, these terms are used almost interchangeably in Singapore or, under accelerators, primarily the financing aspect is taken into account. According to SPRING, there are currently more than 70 incubators and accelerators active in Singapore, but the following overview is due to the constantly dynamically developing 28

29 Situation as a summary of the most important players, and therefore not to be understood as exhaustive Intel 3M jungle 8capita Majuven AIA-Konica Minolta Medtech Alliance AirMaker MediaCorp Angel s Gate Microsoft Appleseed Modern Aging Singapore biofactory Monks Hill Capvista Mozilla Foundation Cisco muru-d Citi Venutres OCBC Fintech Accelerator Clearbridge Accelerator PLUG AND PLAY Crystal Horse PayPal DBS HotSpot Pre-Accelerator Rakuten Digital Health Accelarator Quest VC DMP Rebright East Ventures Red Dot Ventures edbi Rockstart ef. Sequoia Capital Enchant Silicon Straits Entrepreneur First Singapore Infocomm Technology Federation Expara Singtel Accelerator Fatfish MediaLab Small World Group F&H Spark Accelerator Finlab SPH Plug and Play Founder Institute SPRING Seeds Formation 8 Startup Leadership Games Solution Center Singapore Startupbootcamp Fintech Singapore Garage TAG.PASS Garena Tigris Capital Gree Ventures The Co-Foundry GMO Venture Partners The FinLab Golden Gate Ventures The Joyful Frog Digital Incubator HaxAsia The Mediapreneur Incubator iaxil The Open Vault at OCBC ideas.inc. TNF Ventures Iglobepartners TRIREC 29

30 IncuVest IncubAsia Ventures Innosight Ventures Innov8 UNFRAMED Venture Craft Walden Wavemaker Labs 7.5 Events The range of platforms for exchange and the number of events offered for company founders is very extensive. Starting with blogs with news and information on upcoming trade fairs and events 70, through information platforms on industry or technology-specific events 71 to building-specific events 72, start-ups are provided with extensive options for exchanging information. The field of participants in past events ranges from one-man companies to small to medium-sized companies to delegated representatives from large companies. This also varies with the title of the event and the invited guests. The goals and intentions of the participants may be completely different. Nonetheless, each participant is given the potential to realize their intentions. Two particularly successful events are highlighted below as examples: A must for every founder is the monthly start-up grind. Many familiar faces of the start-up scene gather at this monthly event to discuss the regular changes in the start-up life. While a main speaker introduces and explains the core topic, there is the possibility of constructive exchanges in advance and afterwards. Well-known speakers from the past include Matt Tillman, CEO of Haven, Kelly Jay Lim, Head of Grab Singapore, Brian Wong, Co-Founder and CEO of Kiip, and Chang Wen, Founder and CEO of NinjaVan

31 In addition to the monthly start-up Grind, the National University of Singapore Entrepreneurs Conference, which takes place annually, is also very popular. Over a one-week period there is the opportunity to participate in private networking sessions, panel discussions, start-up master classes, start-up tours, the Entrepreneurship Pitch World Championship and a cultural tour. In addition to well-known founders, there are also well-known supporters of the scene on the list of speakers, which can be viewed online (cf. footnote 73). In particular, next year's hosting of the Entrepreneurship Pitch World Championship is reason enough for many potential founders and renowned entrepreneurs to take part in this event Expert interviews on the topics 8.1 Access to finance As already mentioned several times, access to finance in Singapore is well developed at an early stage. In addition to the various programs of SPRING Singapore, ACE and Infocomm Investments Pte Ltd (IIPL), a wholly owned subsidiary of the Infocomm Authority of Singapore (IDA), there are a large number of venture capitalists (VCs) and business angels. IIPL has a total of more than US $ 200 million available to develop a sustainable start-up ecosystem. In block 79, ILPT set up the so-called BASH (Build Amazing Start-ups). This is where founders, VCs, angel investors, incubators and business people from different areas meet to carry out hackatlons or events. 75 VCs partially focus, for example Get2Volume, which only support B2B solutions for start-ups with IT solutions, or the ESCO Group, which focuses entirely on the healthcare industry. Others, such as Red Dot Ventures, make the industry distinction wider, but have to be convinced of the product and its ability to develop. The founder of Get2Volume, Mr. Mike Hold, describes his business model as unusual for the environment in which his company is located. He focuses exclusively on info-tech companies. His Unter Cf. Infocomm Investments (2015): Singapore Startup Ecosystem

32 haben not only holds shares, but is also a mentor for the founders and supports them, if necessary, with investment decisions and pitches. This is primarily due to his own professional background and the beneficial support provided by the NRF's Technology Incubation Scheme (TIS) program. In his opinion, it is important to cooperate with suitable partners outside of Singapore at an early stage (interview on). An opinion that, by the way, is shared by all interviewees. Especially when production is involved, or also when the goal is to start the product in another country in the medium term.Charlie Ill, Investment Director of the VC Red Dot Ventures, recommends that founders hire employees from the country in which the respective product is to generate the greatest sales or success from the start. Since, among other things, the infrastructure, access to capital and multinational companies in Singapore are much easier than in other locations, it makes perfect sense to set up a company here. The costs are relatively high due to salaries and rents. However, Singapore is already attracting many professionals from all over Asia and other regions around the world, so that the inclusion of their networks and market knowledge can be decisive for the success of a company (interview on). However, both affirm that when it comes to Series B and C, access to capital becomes very thin. When companies had reached this size, they should look for capital in other countries, so the unanimous opinion of all interviewees. According to Mr. Tam Hock Chuan, Investment Committee, Trirec Pte Ltd, the reasons for this are, among other things, that the start-up scene in Singapore is still relatively young. Before joining Trirec Pte Ltd, Mr. Tam headed various departments at EDBi 76 (the investment arm of the Economic Development Board Singapore) and Temasek Holding (interview on). His current role gives him the opportunity to focus his investments on companies from which he expects a high return on investment. He is thus investing in solar energy companies, a vertical farm and other energy-efficient start-ups. According to Mr. Tam, it wasn't the lack of capital in

33 Singapore, in order to also invest larger sums, but rather on the goals (KPIs) that are given to the employees in the public or government-related institutions. However, since public institutions in Singapore often react very quickly to changes or new needs, it is quite possible that this will change in the future. In the future, more money is expected to be spent on projects and start-ups that have a high-tech approach, are spin-offs from Singapore's research institutions, or want to introduce new technologies. At SPRING Singapore this is subsumed under Deep Tech (interview on). The background to this is Singapore's desire to promote innovation in the country and thus continue to be successful at the top of the value chain. By 2020, NRF will provide S $ 19 billion under the Research, Innovation and Enterprise Plan (RIE 2020). With the help of these measures, research results are to be converted into practicable solutions. The main focus here is on the government's Smart Nation Initiative, which will determine the living environment of the city-state in the coming decades. According to a presentation by A * Star, Singapore's largest research institution, the funding will be divided into the following areas, among others: 17% in Advanced Manufacturing and Engineering, 21% in Health and Biomedical Science, 17% in Innovation and Enterprise. 77 Public bodies can also call up funds under these initiatives if they are in line with the objectives of the NRF. In interviews with Mike Hold and Charlie Ill it was stated that the so-called TIS program existed in the last financing round, which VCs co-financed when they support start-ups in certain areas. This expired at the end of 2016 and the successor could possibly take place as part of the RIE2020 initiative. Since SPRING has recently become the key institution for the start-ups in Singapore, a coordination process is likely to be imminent. In a conversation with Ms. JingXi Yew, Head, Partnership (Innovation, Internationalization and Entrepreneurship Division), Industry and Enterprise Development Group, 77 Cf. Presentation A * Star, RIE2020 Advanced Manufacturing & Engineering (AME) Roadshows 5 and 11 May 2016, Fusionopolis 2 33

34 also stated that the agencies are promoting and optimizing the development of the start-up scene with each other in ever more intensive coordination processes. (Interview on) Overall, the various interviewees did not make a clear assessment of whether there will be more or less financial support for start-ups in the future, as some of the respondents tended to refer to public financing, while others referred to other financing. However, the position of the government agencies, which play a not insignificant role for the economy of Singapore, is that deep tech should be given priority, as well as technologies that can be meaningfully integrated into the Smart Nation initiative. 8.2 Insight into one's own environment: challenges, success, expansion Singapore's challenges are primarily due to the limited land area and thus the relatively small population of around 5.4 million people. This means that the scaling options in the local market are also limited. However, the city-state offers some very good prerequisites for exploring difficult Asian markets from here and gaining access to customers who operate regionally or globally. Especially in the B2B area, as Mike Holt from Get2Volume explains, the opportunity to address multinational companies is very good. The geographical proximity of all companies is also in many cases associated with better accessibility. Singapore also has some good prerequisites that make a healthy ecosystem for start-ups, confirms Charlie Ill from Red Dot Ventures. In addition to access to international companies, this is thanks to excellent universities and their graduates, as well as opportunities for cooperation. One example of this is the very young company Clop Technologies. Founder Albert Chia worked for five years at the A * Star research facility to enable high-speed storage and transmission of large amounts of data (interview on). The product of his own company is accordingly High Speed ​​Wireless Technology. He secured the first round of financing in mid-2016 and was then able to employ employees. However, the 34

35 further financing faces major challenges. Not only is the production of semiconductors necessary, but also a large supplier who wants to try it out. However, he falls back on the secured research results, which he now rents from A * Star. He is convinced of the relevance of his product and knows that he has set himself high goals in a highly competitive market. However, he would not want to run his company in any other location. The mentioned positive aspects outweigh the challenges that are primarily due to his product. The excellent networking of Singapore also gives access to investors in the USA, as well as locations such as Taiwan or South Korea, in which a suitable producer can be found under certain circumstances. Although Singaporeans tend to be considered low-risk 78, it is now more common for young Singaporeans that their first job in a start-up is an interesting option. In general, Singaporeans tend to try to go into very secure occupational fields, as the financial challenges and social pressures support this. However, all interviewees confirm the trend that the generation of under 30s in Singapore has a greater appetite for innovation and lesser-known career paths and images than the generation before them. Two of the interviewees were good examples here. Mr. XQ Lin, Managing Director of ESCO Group and Ivan Cheng from Wonderlab. Both come from family businesses, although Mr. Lin and his father led the parental company back to profitability and success in difficult times when he was only in his mid-twenties. He is still leading the group, but explained during the conversation on that he was getting bored in the long run. Therefore, he built up his own start-ups and took on those that fit the ESCO Group's product portfolio; namely primarily health economics and reproductive medicine. The parent company is active worldwide and he said that he could certainly have expanded this further. However, he was more interested in innovative approaches and is now pursuing other options related to small, dynamic startups. This is certainly an exception, but it makes it clear that young companies disregard conventional conventions and in several ways

36 implement your own ideas. The classic business model in Singapore for SMEs is trading, as SPRING confirmed in an interview. According to his own statements, Mr. Cheng quickly set himself apart from his parents' SME and founded his own platform, originally in the B2B area. This was sold and he founded his second start-up, Wonderlab. He uses the platform to manage employees in Indonesia. He offers accounting services for companies, as well as the placement of employees. His next step is to set up a branch in Europe. His experience from the first start-up was useful for the faster success of the second company (interview on). Since he himself spends a lot of time in the USA, he also knows the circumstances there for young companies and thinks that a lot has changed in Singapore and that more young employees are now willing to try something new in Singapore. However, he advises all star-ups who want to become active in Southeast Asia to be active in the place that is their main market. In other words, services for Indonesia should also be developed there despite the initial difficulties, said Cheng. His view was not shared in this form by any of the other interlocutors. For the most part, Singapore has been described as a much easier place for startups than other centers in the surrounding countries. However, in any case, the market is too small to achieve a sufficient size that would allow international competitiveness, according to the credo of all interviewees. It is much more promising to employ employees from the respective target markets and to go with them to the other markets. 8.3 Why Singapore? Location factors for start-ups Mobile technology The general location factors that make Singapore so attractive for companies are set out in the first chapter and also apply to young start-ups. In particular, English as a business language, transparency and accessibility of the authorities, financial support for companies and the central location in Southeast Asia all contribute to the fact that the city-state has for many years been one of the easiest places in the world to start a business and 36

37 build up. 79 However, the limiting factors for certain business models are the small size of Singapore and the high costs for rents and employees. However, Singapore is at the heart of one of the largest growth markets in the world and therefore offers many opportunities that many other regions of the world do not have. In addition, there is the average young population of Southeast Asia, the growing middle class and thus higher disposable income. 80 Young ASEAN population Figure 1: Age structure in selected ASEAN countries 81 The penetration rate with smartphones in all ASEAN countries is also above average, as the next graphic clearly shows: Figure 2: Penetration rate of mobile devices in Southeast Asia

38 The use of mobile technology is high and in countries with less internet usage, experts believe that mobile technology will skip it. (Workshops during the Asia Pacific Conference of German Business 2014 and 2016, as well as the article Why Southeast Asia is leading the worlds most disruptive mobile business models. 83 The analysis of the article is confirmed by most of the interviewees in this study. Alex Ngiam, Company Pool Manager Mobile Technology for the German start-up adjust, is currently concentrating primarily on the Singaporean market, but sees the trends that are gaining in importance in other regions of Southeast Asia confirmed here as well: users have been using mobile technology for years to Buying services and goods, doing business, and more. In other countries in Southeast Asia, this trend is even more pronounced, with larger populations owning cell phones than computers and having access to the Internet. E-commerce and logistics So it's not surprising that the success stories of the start-up community in Singapore and the surrounding area nd countries have a strong focus on e-commerce. Examples include Lazada, Redmart, JobStreet, Luxola, Croupon, Grab Taxi and Viki. These have either been bought or publicized since their inception, Malaysia and Thailand were the largest e-commerce markets in Southeast Asia with sales of US $ 2.3 billion and US $ 2.1 billion, respectively. By 2020, Vietnam and Indonesia will most likely overtake them. Therefore, one of the great opportunities for startups is the e-commerce space in Singapore and the region. However, the challenges should also be clearly shown. The limiting factor in Southeast Asia (except for Singapore and Malaysia) is the low penetration of credit cards in the population (less than 7% on average). In some countries (including Laos, Cambodia, Myanmar) less than 50% of the population have a bank account. The fintech sector is therefore outstanding

39 Significance for the entire region and in particular how the existing restrictions can be safely resolved. Another challenge is logistics. The big cities are all relatively well equipped with infrastructure. Here, too, there are major differences, but urban areas are by and large accessible for the delivery of goods. 84 Carsten Hess, DHL, Vice President, Head of Corporate Public Policy, Asia Pacific & EEMEA took up this topic during an interview in Hong Kong (interview on). According to him, electronic commerce will increase by 15% -18% in the B2C sector in the next few years. However, the administrations of Southeast Asia are often overwhelmed, as they are staffed for lower flows of goods and import regulations also apply, which slow down the flow of goods. He sees particularly good opportunities at this point for innovative start-ups. The topic is particularly fast clearing of goods, modern goods storage and cooperation with the customs authorities of the countries in order to find workable solutions. The geographical conditions in the various countries of Southeast Asia are also enormous for logistics start-ups. Singapore is very good for receiving initial funding and possibly trying out prototypes. However, solutions for large countries such as Malaysia or Indonesia would have to be adapted, said Dan Dunyada from Versafleet in an interview at. He also advises not always reinventing the wheel. In the rapidly developing countries of Southeast Asia, tried and tested but adapted solutions are often the most sensible way of gaining a foothold in the market and gaining market share. Another important aspect of all business models in Southeast Asia is the great influence of Chinese companies. This is already pronounced and will continue to grow. In order to secure market share in the Southeast Asian growth market, every entrepreneur should deal with the topic and factor this dynamic into the business development Cf. Frost and Sullivan, Melissa Tan Corporate Communications Asia Pacific, 85 Cf. German Mittelstand Champions in Asia - Catching the next wave of growth (2015), Prof Gert Bruche and Prof Bernd Venohr, S

40 8.3.3 Access to MNCs and the Smart Nation Initiative Apart from the e-commerce sector, Singapore offers good opportunities for high-tech start-ups. The density of multinational corporations is high, and they often use Singapore as their regional headquarters. In combination with the development of the Smart Nation concept, there are many opportunities for companies and start-ups to design or use products, services and technologies. Singapore is way ahead in this area, the surrounding countries have not yet reached the level of development and planning of Singapore in this point. 86 The aim of the Smart Nation Initiative is to improve the lives of citizens through the use of new technologies, ICT and the sustainable use of resources. The focus is on energy efficiency, products for an aging population and health economy, security, e-government, advanced manufacturing and transport. Singapore observes and accompanies this development on various levels. First of all, the infrastructure for mobile data transmission will be further expanded. 87 The Infocomm Media Development Authority (IMDA) with the Infocomm Media 2025 Plan plays a key role in this area. 88 In doing so, the government attaches importance to holistic development, which also includes the training of professionals and the training of young talents, as well as realistically assessing the realities of life of the population. Furthermore, transport and Industry 4.0 are important topics that can also be relevant for German start-ups with suitable technologies. Since several thousand MNCs are based in Singapore, they also work with start-ups. For example, Unilever has started to support start-ups worldwide and in Singapore with the Unilever Foundry. 89 Daimler is also represented in the city-state with the Startup Autobahn. 90 Some MNCs from other industries are also active, see point 7.4.As JinXi Yew from SRPING emphasized during the conversation on, one of the goals is to attract more companies with high-tech and deep-tech, as they better fit into the concept of the smart nation

41 fit. For the city-state, it is primarily important to generate new technological innovations and incorporate existing technologies that will ensure that Singapore's economy continues to grow and develop. Cooperation with research institutions is another building block here (see above). Singapore is the role model for the surrounding countries in several areas and its reputation is accordingly positive when companies penetrate other markets from here. With government institutions such as International Enterprise Singapore (IE Singapore), companies can easily explore neighboring markets as part of delegation trips or exhibition stands and exchange ideas with companies traveling with them. German chambers of commerce abroad are also successfully active in almost all ASEAN countries. 8.4 Manpower An important issue for all companies in Singapore is access to employees. A result of the study The Global Start-up Ecosystem Ranking 2015 shows Singapore in 10th place, but the country only received 20th place in the talent category. Software engineers are particularly in demand and not available in sufficient numbers, as are engineers from other fields. The reasons are many, but it is emphasized that the government attracts particularly gifted students, as well as large corporations. Unrelated professions such as finance are also extremely interesting employers for graduates, as already mentioned elsewhere. The start-up scene in Singapore therefore works closely with developers in other countries. One example is ematic (interview on), whose developers are in Thailand and Croatia. If companies employ foreign workers (without permanent resident status) in Singapore, a work permit must be applied for in any case. 91 These depend on the level of income, professional experience and level of training. Usually two categories are primarily served, the so-called Employment Pass (EP) and the Entrepass. The EP requires 92:

42 a monthly minimum wage of S $ 3,300.00 for inexperienced employees work in a management position, or qualified position / expert position a suitable academic qualification (usually a degree) a salary that reflects the experience A job offer in Singapore The Entrepass category was specially created for Start -ups and comprises the following components 93: Formation (or intention to form) a Private Limited (Pte Ltd), which is registered with the Accounting and Regulatory Authority (ACRA). If the company has already been founded, it must not be older than six months at the time of application The company must have at least S $ .00 paid-in capital Applicant holds at least 30% of the shares in the company The company must also meet at least one of the following points o Company receives financial support from VCs or business angels o Company holds intellectual property o Company is in research cooperation with A * Star or a university o Company is part of a government incubator program There are other categories for employees that can be called upon if necessary, these are but most commonly found. As mentioned earlier, the workforce in Singapore tends to be conservative and not very risk-friendly. On the one hand, this is related to the focus in schools, but also in the perceived pressures of society. 94 However, there is a pool of very well-trained graduates and young professionals, as well as experienced employees who want to try something new and who are open to a start-up as an employer. The low unemployment rate should also be noted at this point. For one thing, this does

43