According to an annual national graduate careers survey conducted in 2019 by GTI Media Singapore, interest among local youths to create or join a startup has never been higher. Therefore, it is of no surprise to find the youth startup ecosystem in Singapore thriving.
Today, we will explore the reasons behind this growth by examining various aspects of the ecosystem, starting with current educational programmes in universities to nurture budding entrepreneurs.
University support
What do Carousell, Shopback, and 99.co have in common? They were founded by graduates fresh out of university, which turned out to be their very first career job too. Along with other startups such as e27 and Xfers, the sheer number of young entrepreneurs being produced in universities is no mere coincidence.
In fact, it is a by-product of initiatives in place by schools to cultivate the entrepreneurial spirit of millennials today. Since the founding of the now esteemed NUS Overseas College (NOC) in 2002, there has been a shift in emphasis by universities today to focus on entrepreneurship, as opposed to STEM in the decade before the millennium.
Student clubs such as the NUS Entrepreneurship Society (NES) has grown to become one of the largest in the local university scene, thus solidifying the fact that youths of today are increasingly interested in joining the startup ecosystem.
Also Read: 3 lessons I learned as a student entrepreneur
It is not only the entrepreneurship side of the house that gets increased attention. Venture capital (VC), an important piece of the ecosystem, is getting eyeballs too. Originally started out as a pilot project by SMU in 2017, Protégé Ventures has grown to be the first student-run venture fund in Southeast Asia.
Besides training students in the field of VC investing, they support student entrepreneurs in building their young companies too. With the presence of Protégé complemented by student entrepreneurs coming from NES and NOC, startups in universities find themselves in a micro-ecosystem after all.
Therefore, it is not shocking that Singapore is home to a multitude of startups founded by youth entrepreneurs.
Accelerating growth
Upon exiting the university ecosystem, it is paramount startups get the right support and funding, especially for those at the scaling stage where cash burn would be at its highest. Fortunately, there is generous aid in this aspect.
From accelerator programmes by corporate giants such as Singapore Airlines (SIA) and DBS Bank to incubator programmes by global early-stage VCs such as Antler, resources are aplenty for startups to thrive in the local ecosystem. These programmes are key to fuel the next stage of growth for these budding startups due to the extensive access to market resources and mentorship that they provide.
Furthermore, acceptance into incubator and accelerator programmes serve as validation of startups’ initial business model and instils confidence in young entrepreneurs for further expansion.
Also Read: Entrepreneurship in a pandemic: Seeking success through economic turmoil
Mentors are paramount for startups to succeed given the uncertain environment they operate in and the ecosystem here has been able to utilise past successes to its advantage by bringing in experienced mentors, both from the field of startups and other key players such as venture capitalists and large corporations, to aid youth entrepreneurs. That has certainly been the case for the Startup SG Founder scheme by Enterprise Singapore.
As of May 2020, their mentor network totalled 57 different established partners, ranging from VC firms such as Cocoon Capital to infrastructure support services such as Silicon Solution Partners. The wide variety of mentorship available in a government-led initiative is rarely seen in other parts of the region, where ecosystems are still maturing and thus have a scarcity of mentors.
Therefore, local youth entrepreneurs should fully utilise these opportunities available to their advantage and tap on the vast network these mentors bring about to take their businesses to the next level.
Funding
Given that research has shown that one of the top reasons why startups fail is due to a lack of cash, sufficient funding is a key driver for startups to succeed. This is especially so for early-stage startups given the high cash burn associated at the beginning due to the inability to achieve economies of scale.
Often, founders bootstrap their businesses by devoting personal savings into them and not taking a salary for months at a time. However, there is only so much one can pour into their firm from their savings. Ultimately, external funding must occur to fuel the next phase of growth. Out of the plethora of government agencies providing cash grants and equity financing schemes to assist startups, the Startup SG Founder grant is perhaps the most relevant for youth entrepreneurs to tap onto.
It provides first-time entrepreneurs with a capital grant of up to S$30,000 on a 3:1 co-matching arrangement. Therefore, to receive the maximum value of the grant, entrepreneurs themselves need to raise and commit S$10,000 to the business.
Private equity support for local startups is increasing too with the influx of angel investors and VC firms. Angel investors are high net worth individuals who invest in startups at their seed stage. They invest in companies despite there being no proven success of the company’s business model.
Also Read: Angel investing is full of risks –but that is why it is so rewarding
Therefore, they are advantageous to startups, particularly in the deep tech sector, that requires significant capital for a proof-of-concept to validate their business model. Notable angel investor groups include Business Angel Network South East Asia (BANSEA), Asia’s oldest angel investment network and Business Angel Scheme (BAS), which is supported by SPRING Singapore.
For late-stage startups that require large capital for scaling, founders turn to VCs to pitch their businesses in hope of securing funding. The vibrant VC scene in Singapore has resulted in a diverse range of VCs investing in local startups. From global VCs such as 500 Startups and Sequoia Capital to local players such as KK Fund and Jungle Ventures, the wide variety of venture investors here is a testament to the strength of the local startup ecosystem, driven by the potential of youth entrepreneurs.
The future
Youth entrepreneurs in Singapore are indeed fortunate to find a thriving and supportive ecosystem in place to launch their businesses. The abundance of public resources devoted is also a validation of the fact that the government views startups as the next driver of growth for the local economy, given that the nation has already previously exploited its competitive advantages in manufacturing and engineering.
The highly skilled local workforce would also be able to supplement the rise in startups, particularly in the deep tech sector with increased emphasis on data learning and artificial intelligence in universities today. Therefore, the future does indeed look bright for youth entrepreneurs in the little red dot.
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