- POSTED: 31 Dec 2013 19:53
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The start-up community in Singapore saw 12 successful exits in 2013, according to data compiled by the Business Angel Network Southeast Asia. This is expected to increase significantly in 2014.
SINGAPORE: The start-up community in Singapore saw 12 successful exits in 2013, according to data compiled by the Business Angel Network Southeast Asia.
This is expected to increase significantly in 2014.
But despite more investment going into the community, experts have said start-ups looking beyond early-stage funding will find it challenging.
Singapore streaming site Viki offers subtitles for dramas and films in up to 170 languages.
In an acquisition worth S$200 million, it was one of 12 local start-ups to exit the start-up market through acquisitions or initial public offering (IPO) launches in 2013.
In the last six years, the average number of exits was estimated to be around four per year, valued at a total of less than S$100 million each year.
Industry experts said the upward trend is likely to continue in 2014.
Douglas Abrams, chairman of Business Angel Network Southeast Asia, said: "We are just at the beginning of explosive growth of exits in the market. This year, we have already seen S$600 million worth of exits. These are exits of venture-funded start-ups that were sold in a trade sell to a usually regional or global player.
"This signals exponential growth in the market because as we get more and bigger exits, this stimulates more investment in start-ups."
Regionally, industry participants expect social enterprises, still in their infancy, to receive a push in the coming year.
Nusantara Development Initiatives received some S$82,000 in early-stage funding, and has lit up some 2,000 Indonesian homes in the last two and a half years.
The enterprise has hired 21 women, giving them the necessary training to sell solar-powered lamps in their villages.
Nusantara also has plans to scale up its impact by five times in the coming years, using the same amount of resources.
One of its strategies is to partner organisations based in Indonesia with extensive connections to prepare the villages for their presence and business model, by reaching out through their contacts and networks.
Fairoz Ahmad, executive director of Nusantara Development Initiatives, said: "The profit model is minimal. For us, it is about US$2-3. And for the women, when they sell the lamps, it is also about US$2-3.
"For the women, it represents a big jump in income as for typical businesses they do, for example, selling cloth or phone credits, they earn less than 80 US cents per transaction. So for them it is good income.
"For us, that additional revenue that we earn is used to cover costs of doing things in the villages like training materials, but it is not enough to cover the whole operations."
Start-ups will be receiving more financial support from the government in the year ahead.
But some industry experts said this still may not be sufficient and some start-ups may face difficulties finding suitable talent.
Darius Cheung, founder of Homie.co, said: "We have a lot of hidden talents not fully utilised yet and I think by creating an exciting start-up ecosystem, we will be able to tap on those talents and attract them back into the start-up world.
"Capital is also a problem, as if you try to build a billion-dollar technology company in Singapore, we may not have the capital structure right now... to fund an unprofitable start-up that is high risk but is going for the home run."
Going forward, industry players said Singapore is well positioned to groom start-ups into global companies.
But the growth of venture capital markets in the region may create competition, offering opportunities to local entrepreneurs overseas.