News: Singapore government launches funding initiatives for startup success, but will local talent benefit?

Technology

Singapore government launches funding initiatives for startup success, but will local talent benefit?

The Singapore government is pouring money into attracting high-growth technology companies, but the question is, will the jobs created be filled by local talent?
Singapore government  launches funding initiatives for startup success, but will local talent benefit?

We’ve covered time and again how Singapore is conducive to startups. According to Cisco’s Annual Digital Readiness Index, Singapore is the most digital-ready country and has 88% internet penetration. The city-state has always been a financial hub, but over the years, the government has poured resources into turning it into a technological hub as well, and the multi-billion-dollar package announced last Friday is the latest move.

The new package, which involves Temasek Holdings, the Economic Development Board, the Monetary Authority of Singapore, the Singapore Exchange (SGX), and others, is intended to aid high-growth, technologically advanced local and regional companies as well as start-ups to achieve public listing on SGX, with the objective of building them up to contribute to the economy and the employment landscape. Some of the most notable initiatives are:

The Anchor Fund @ 65 which will start with capital of S$1.5 billion and will be invested in by both the Government and Temasek Holdings. This fund's objective is to get high-growth startups and portfolio companies listed on SGX, where they can raise capital from the public markets. It will be managed by 65 Equity Partners, a wholly owned investment platform of Temasek, which currently also manages the Local Enterprise Fund @ 65.

The Growth IPO Fund has the same objective of helping companies list, but it targets late-stage companies that are already well along their funding journey and have only two or more funding rounds to go. It starts with capital of S$500 million and will focus on companies that are technology innovators and/or projected to be future market leaders. This fund will be set up by the Economic Development Board's corporate investment arm, EDBI.

The Strategic Partnership Model will be a new initiative by SGX to help high-growth companies improve fundraising, liquidity, and terms with international investors.

And the Monetary Authority of Singapore (MAS) is doubling the assistance it provides to companies seeking to list. Given via the Grant for Equity Market Singapore (Gems) scheme, the funding is currently capped at S$1 million but will be doubled to S$2 million, and will be expanded to support listings by special purpose acquisition companies that are set up to bypass the sometimes-lengthy and red-tape-riddled IPO process.

Commenting on the funding packages, Minister for Trade and Industry, Gan Kim Yong said, “It is to give the most promising start-ups and entrepreneurs from Singapore and across the region another engine of growth, and to allow them to stay rooted here as they ride the wave of opportunity globally.”

The vision behind such funding and investments is to help start-ups, and high-growth companies to more effectively raise capital and drive the economy. High-growth companies and start-ups generally render significantly greater economic contributions - including hiring at scale as they grow - as their gains are largely channelled back into developing the business, rather than paid out to shareholders.

However, the talent landscape in Singapore may yet prove to be a considerable challenge for the high-growth and start-up ecosystem. 

More tech jobs than tech talent available

The new wave of funding and government support for startups will likely create more jobs in Singapore's economy, specifically the tech sector. Even before last week's announcement, estimates from Randstad suggested that there might be about 55,000 new jobs in the technology sector in the next few years.

But the size of the local talent pool is a huge limiting factor. For one thing, the talent pipeline can't keep up. Figures cited in Parliament last week indicate that local universities can only cater to roughly 15-20% of the job openings in tech every year (3,100 places in ICT and related undergraduate courses against over 20,000 new jobs annually). While the government has made a tremendous push to reskill and upskill mid-career professionals in the hope that they can make the transition to tech jobs, success stories remain largely anecdotal.

To date, the majority of tech jobs have been filled by international talent, but strict border control measures implemented to tackle the pandemic have choked that inflow. And discussions of foreign talent have become socially and politically charged, with the latest Parliamentary debate running for 11 hours just on the one topic.

Large-scale, multiple-agency initiatives like these latest funding schemes seem on the surface to be an excellent way of driving economic growth and the development of industries considered desirable. But it remains to be seen how successful they will be in the local Singapore context, especially when it comes to employment and the state of the talent pool in the city-state.

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Topics: Technology, #FundingAndInvestment

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