For a long time, Singapore has been famous as a country that attracts many Asian startups to establish themselves. In recent years, the country has continued to assert its position as an ideal destination for businesses looking to grow in Asia. According to the annual ranking by the Financial Times (FT) based on business results over the last four years, the lion island nation has the most companies on the list of the 500 fastest-growing businesses in the Asia-Pacific region. So why do startups choose Singapore?
Neutral country
The above ranking is not a surprising result for this country of just 6 million people, which is an important trading hub connecting the East and the West. Singapore has long been a top destination for entrepreneurs and investors due to its strategic location in Southeast Asia, government support policies, a transparent legal framework, and a high-quality workforce, combining both local and international elements, which are key factors that create the appeal of this nation.
Recently, Singapore's neutral stance in the context of US-China tensions has further reinforced the country's attractiveness as an ideal place to lay the business foundation. Many companies choose Singapore as their headquarters to avoid risks from geopolitical instability and supply chain disruptions. With 93 companies featured in FT's list of the 500 fastest-growing businesses in the Asia-Pacific region, Singapore firmly holds the number one position, surpassing other major cities in the region such as Seoul and Tokyo. However, when considering the national scope, South Korea and Japan are the two countries with a higher number of businesses on this ranking than Singapore.
According to FT, China is not ranked due to difficulties in assessing data from its businesses. The growth companies in Singapore operate in various fields from artificial intelligence, software, goods to healthcare. Singapore is a neutral country likened to Switzerland of Asia. This is very important in the current global geopolitical context. The country also possesses a rich talent pool and is known for its strict adherence to the law.
Dylan Ng, co-founder of Lionsbot, a cleaning robot manufacturer ranked 23rd in FT's ranking, said that most of Lionsbot's customers come from markets outside Singapore. After successfully raising $35 million in a funding round last year, the company is now focusing on expanding into foreign markets including the US and Europe.
Easy fundraising
Not only attracting businesses wanting to grow in the domestic market, Singapore is also an ideal destination for companies looking to expand their operations globally. Even companies that do not directly operate in Singapore appreciate the benefits of having their headquarters in this island nation. A typical case is iCare, a startup ranked 65th in FT's list of the 500 fastest-growing businesses in the Asia-Pacific this year, with an average annual gross revenue growth rate of 115% from 2019 to 2022. iCare is headquartered in Singapore but has no business operations or core personnel here.
This startup focuses on providing access to essential household appliances such as washing machines, refrigerators, and rice cookers for low-income female factory workers in developing countries like Laos and Cambodia. Pablo Alonso Caprile, co-founder of iCare, said that being headquartered in Singapore provides the company with a safety net. The benefits of being based in Singapore are evident in many aspects; for example, Singapore has simple paperwork and reporting procedures, while the clear and transparent accounting and disclosure standards here provide peace of mind for investors, Caprile shared. He also added that Singapore is an important fundraising hub in the region; Caprile himself, although primarily working in Cambodia, frequently flies to Singapore because many of iCare's investors are present in this island nation.
iCare collaborates with factories to facilitate workers in purchasing necessary household appliances through interest-free installment plans. The company profits from agents and handles repayments directly with the factories; this business model has been successfully implemented by iCare since 2015, even before the buy now, pay later trend exploded.
Skrya, another company based in Singapore and ranked 10th in FT's ranking, is also a testament to the island nation's appeal to global businesses. Skrya primarily generates revenue from markets outside Singapore, supporting customers mainly in the automotive parts industry to purchase recycled materials such as palladium, rhodium, and platinum found in automotive exhaust filters through the Catal Pedia app, which integrates AI and 3D technology to allow customers to identify the best prices for recycled materials. "We are striving to modernize the traditional recycling industry by applying advanced technology.
Sivakumar Avaidiar, CEO of Skrya, said that Skrya currently has several recycling facilities and a team of about 10 employees in Singapore. The company plans to expand its operations into international markets this year with the goal of building an additional recycling plant in India and increasing revenue by an additional $30 to $40 million. Thus, with a favorable business environment, a transparent legal system, and its position as a financial hub of the region, Singapore continues to assert its strong appeal to businesses both domestically and internationally, regardless of size or field of operation.
Launchpad for businesses to reach the world
Singapore has long been known as one of the countries with the most favorable business environments in the world. Its solid reputation and simple company establishment procedures are factors that make this island nation the top choice for businesses looking to expand into international markets. However, alongside its outstanding advantages, Singapore has also faced some challenges, especially the issue of rising business costs.
Mr. Avaidiar, CEO of Skrya, noted that Singapore's stable reputation and easy company establishment process are its biggest advantages. However, he also pointed out that the cost of operating a business here has been trending upward in recent years. A business sentiment survey conducted by the Singapore Business Federation in January showed that rising business costs are the top challenge businesses are facing, with labor costs being one of the biggest pressures.
Even for tech startups, the business environment is no longer as easy as before. Nina Suri, founder of Xopa AI, a software company applying AI and automation to the recruitment process, said, "The market has undergone significant adjustments in recent years; we have to readjust and take a step back to focus on more sustainable growth." Xopa AI is currently planning to raise additional funding and expects to break even this quarter and be profitable by the end of 2024.
Although Singapore is Xopa AI's largest market, the company is currently focusing on expanding into Europe, the Middle East, Africa, and the US. Sharing about the choice of Singapore as its headquarters, Suri, who splits her time between Singapore and London, said that Singapore's favorable ecosystem, including talent resources and government support policies such as grants, are factors that made her decision easy. Suri said, "However, businesses like ours cannot only operate in the Singapore market if we want to survive and grow. The Singapore government understands this, and we have received grants to expand into foreign markets such as the United Arab Emirates and the UK."
Despite this, there are still many Singaporean businesses featured in the rankings of the fastest-growing companies in the Asia-Pacific region. In 2024, there is still potential for growth in the domestic market. Doctor Anywhere, a startup operating in the telehealth sector, is a typical example. In addition to robustly developing online services, Doctor Anywhere is also actively expanding its offline operations. Recently, the company launched a diagnostic imaging and health screening facility.
Doctor Anywhere is currently ranked 55th in FT's ranking, with an annual gross revenue growth rate of 124%. Wai Mun Lim, co-founder of Doctor Anywhere, shared that they are focusing on building and strengthening their business in Singapore before expanding services to other markets in the region such as Malaysia and the Philippines.
Starting from Singapore is a significant advantage as it builds trust for partners and customers. When you are a business from Singapore, people will automatically assume you are a reputable and law-abiding company. It can be seen that despite facing certain challenges, Singapore remains an ideal launchpad for businesses looking to reach the world while still being a fertile ground for those wanting to tap into the potential of the domestic market.