SINGAPORE - Singapore’s early-stage emerging technology start-ups raised US$402 million (S$548 million) in funding in 2023, up 59 per cent from the US$253 million raised in 2022, said national investment arm SGInnovate.
The number of seed-stage deals also climbed 50 per cent, from 20 in 2022 to 30 last year, across four sectors – advanced manufacturing, agrifood and sustainability, as well as health and biomedical sciences. This indicates a stronger appetite for emerging tech investments as the ecosystem continues to mature, SGInnovate said on April 23 in its report on the sector’s landscape in 2023.
SGInnovate said it looked at early-stage start-ups from among firms incorporated between Jan 1, 2019, and Dec 31, 2023.
It defined emerging technology start-ups as firms that are developing tangible products, such as devices, machinery, instrumentation, food and pharmaceuticals based on physical sciences, life sciences and/or engineering.
“The trends we are seeing are an indication of the maturity and growing dynamism of Singapore’s emerging tech landscape, with more specialist investors coming in to support specific verticals,” said SGInnovate executive director Tong Hsien-Hui.
The agrifood and sustainability sectors led the charge in terms of funding and incorporations, likely as a result of public and private initiatives.
Both areas saw year-on-year growth in funding events, with the agrifood sector securing 13 deals in 2023 compared with eight in 2022, and the sustainability sector closing 16 deals in 2023 versus 12 in 2022.
According to SGInnovate, the sustainability sector is the only domain to experience a year-on-year increase in both funding events and amounts since 2021. It was also the most active sector in terms of start-ups incorporated in 2023, while average seed funding round sizes in the sector grew nearly 300 per cent between 2022 and 2023.
But while overall funding and deal counts have risen, the number of emerging tech start-ups incorporated in 2023 across the four sectors decreased from 35 in 2022 to 25 in 2023.
SGInnovate highlighted that while the final 2023 figure is expected to be higher as more incorporations from the year are accounted for, it still anticipates an overall decrease compared with 2022. This is due to persistent macroeconomic uncertainties, which will potentially cause deferred incorporations.
SGInnovate also found that approximately 9 per cent of the start-ups incorporated between 2019 and 2023 have been struck off.
“It is likely that early-stage emerging tech start-ups tend to face the most acute risk of a strike off from around their third year of operations – this is consistent with the additional 18 to 24 months’ runway that a company gets after a round of funding,” it said.
Out of all the start-ups that had closed down, nearly 50 per cent came from the health and biomedical sciences sector, of which 60 per cent were from the platform tech or medical device industries. SGInnovate noted that this may be because hardware-based medical device companies often face higher upfront capital requirements and have a longer time to market due to regulatory hurdles.
Looking ahead, SGInnovate said that predicted rate cuts in 2024 are expected to boost private market investments, with a renewed interest in emerging technologies.
Mr Tong said: “While challenges such as political uncertainty will continue to weigh on investment considerations globally, we are optimistic about start-ups addressing long-term concerns supported by policy initiatives in Singapore.”
“These include technologies in areas such as remote patient monitoring and stem cell therapy, which may provide solutions to enhance the care of Singapore’s ageing population, or technologies that will aid Singapore’s continued efforts in decarbonisation, including battery recycling and sustainable materials production,” he added.
