- Edwin Chow, group director, Industry & Enterprise / Innovation & Start-ups, SPRING Singapore
- Titus Yong, vice-president, Business Sales, Business Group at Singtel
- Kwan Chong Wah, CEO and co-founder of Acorn Marketing & Research Consultants
- Dennis Lee, director, RSM
Moderator: Michelle Quah, BT Senior Correspondent
THE push to foster and further develop the spirit of entrepreneurship in Singapore will be given even greater focus in the conceivable future, with the Committee on the Future Economy (CFE) having earlier this year prescribed the need for innovation, value creation and entrepreneurship in order for the city-state to stay ahead amid challenging times.
But just how will Singapore achieve its desired level of entrepreneurial fervour? We share excerpts from a roundtable comprising partners of the Emerging Enterprise Awards.
Michelle Quah: The CFE's report talked about the need to invest in entrepreneurship. What constitutes an effective investment in this sense, given the entrepreneurial culture Singapore already has and the efforts it has made to bring it about?
Kwan Chong Wah: For an "effective investment" in entrepreneurship, I am in favour of teaching the man how to fish, that is, to provide education in entrepreneurship. I understand that some businesses would argue for the CFE to provide them with some financial step-up, whether it is to seek expansion abroad, or to upgrade operations, or to innovate. I am not against this at all. By all means, do provide financial assistance, but only when you have a better evaluation tool to identify deserving enterprises. Experience has shown that a lot of good intentions in the past have not produced the desired success quotient.
Edwin Chow: An effective investment is one that results in: more innovative technology startups being formed in Singapore; more of such startups scaling up through Singapore to make a global impact; and greater spinoffs to our economy through direct job-creation and business partnerships formed with other companies.
To increase a startup's chances for success, SPRING created the Startup SG branding to unify the government's startup schemes. In the coming months, we will work closely with our partners to increase the support given to startups.
Titus Yong: Entrepreneurship is about setting up a business and taking on the associated risks to reap profit, but before a business can be profitable, it must be resilient enough to get through challenging times. Business owners can do this by working smart and leveraging a "force multiplier", which is what we do to increase our overall effectiveness.
One of the ways is for businesses to invest in digital technology to scale business growth and widen market access while combating cost pressures, manpower constraints and rising competition.
Dennis Lee: Entrepreneurship is not an investment. It is a choice that one has to make, knowing very well the probability of failure is very high. No amount of "effective investment" will encourage entrepreneurship. In fact, we should question whether the government is doing too much to encourage entrepreneurship.
If there is to be an effective investment in entrepreneurship, it has to start by changing the mindset of our people to embrace failure and encourage risk taking. It means parents have to accept that academic excellence and government scholarships are not the only proven paths to succeed.
Our young must be encouraged to pursue their passions and accept that there will be many failures before they taste the fruits of their labour.
Michelle: How can we ensure an effective allocation of resources so that more startups - as opposed to just a handful of the most successful ones - benefit from such efforts?
Dennis: As a meritocratic society and one that has to tackle the issue of finite resources, we believe that specific criteria should be defined to establish milestones when giving funding, additional support and resources. (And) channelling of resources to startups is only part of the solution. In order to realise these benefits, startups and entrepreneurs need to know how to properly apply such funding and grants, through basic disciplines such as cash-flow planning, budgeting, basic internal controls and implementation of sustainable governance.
Edwin: We see the government's role as that of a catalyst to get the private sector involved in resource allocation decisions. For example, in the early 2000s, after the dot-com bust, there was a dearth of startup capital.
SPRING, NRF (National Research Foundation), IDA (Infocomm Development Authority of Singapore) and MDA (Media Development Authority) introduced a series of early-stage grant and equity schemes to encourage more tech startups, and more private investors to enter the market. Today, we see much more private angel and VC investor interest, particularly in the ICT (Information and Communication Technology) startups.
However, we recognise that the journey for deep-tech startups - generally those whose business models are built around a differentiated and difficult-to-replicate intellectual property - is a much longer one, with challenging developmental pathways and heavy capital expenditure. To catalyse the growth of more of such startups, the recently announced Startup SG Equity would have an increased funding ratio of government co-investment - from 50 per cent to 70 per cent. The investment cap for these startups has also been raised from $2 million to $4 million.
Titus: It is important that smaller businesses be given more help so that they have the opportunity to grow and thrive in the digital economy. This is the reason the 99% SME initiative (co-founded by Singtel and DBS Bank) was launched: to give local SMEs (small and medium-sized enterprises), from mom-and-pop stores in the heartlands to retail outlets in shopping malls, a leg-up. Together with our corporate partners, which represent 1 per cent of large corporations in Singapore, we partner government agencies, trade associations and chambers of commerce to give local SMEs, which form 99 per cent of registered companies in Singapore, a much-needed boost.
Chong Wah: Teach entrepreneurship well, and you would have a self-selecting, self-assessing, self-adapting, self-correcting entrepreneurial strata rising above the rest. Successful start-ups by definition don't need public funding. Private investments would be quick to snap them up.
Michelle: What are some specific measures or approaches Singapore can adopt to help domestic enterprises more effectively tap on global organisations and networks?
Edwin: The government can play the role of a lead demand driver. At Budget 2017, Govt-PACT was announced. (SPRING's PACT or Partnerships for Capability Transformation programme links up SMEs and startups with large companies.) Under this scheme, participating agencies identify the solutions needed and seek partners through calls for proposals. With the support of the lead demand agency, SMEs and startups can build up their technological know-how and innovation capabilities. With the government as a reference customer, it will aid them in their expansion plans.
The Global Innovation Alliance (GIA) will act as a platform to bring together overseas networks of government agencies and universities. Singaporean students, startups, and researchers can leverage this alliance to link up with overseas partners from major innovation hubs and demand markets.
Dennis: We should attract new-age MNCs (multinational companies) to set up in Singapore so that our young people can acquire the knowledge, first by working for these new-age MNCs and subsequently by becoming new-age entrepreneurs themselves.
Many of our SME clients already know how to do this well. In their business models, they are servicing big global names, are already resilient, working to meet quality, competency and reliability standards imposed by these key customers. The government can continue to lead the way and open the doors to new markets. The call to invite local SMEs to support in G-to-G projects will also build the runway and credibility for SMEs to go global.
Chong Wah: Don't overly encourage learning from "global" organisations. By these, I mean those which are not home-grown. For sure, they would have something to teach us, but they are not the only ones we could learn from.
I feel the best people to learn from are the home-grown enterprises that have gone global recently. And the key word here is recently - say, in the past five to 10 years - companies like OSIM, Super, BreadTalk/ToastBox, and Thai Express. "Recent" because their experiences are still fresh. "Recent" because the conditions of the past five to 10 years are very different from those of more than a decade ago. Why home-grown? Because we share the same cultural sensitivities when doing business abroad.
Michelle: Training and re-skilling will clearly play a big part in Singapore's efforts to develop a successful entrepreneurial culture. What needs to be done to ensure that companies and organisations are onboard with this? What sort of role do you see foreign talent playing in this space?
Dennis: A proper and structured approach with established timelines and goals needs to be set out for all business functions and a profiling of the current and future workforce.
Injecting foreign talent has to be an approach taken with strategic intentions. Foreign players do raise the competitive bar and force a change and innovation agenda more quickly. But we feel that this has to be done in a progressive manner without over- marginalising SMEs that cannot attract the right talent or adapt to change as soon as they would like.
Chong Wah: I would posit that the entrepreneurship culture does not need too much re-skilling. The entrepreneurship culture only needs to go back to basics - knowing how and when to do formal or informal market research, understanding marketing, understanding competitive strategy, branding, pricing, distribution, communication, and clear, simple common sense thinking. These are skills that have been around for the longest time. The techie stuff is supposed to be an enabler of the entrepreneurial culture, and my biggest fear is that it has become the end-all.
Edwin: Startups compete with international firms in international markets, and would need to assemble a good mix of both local and foreign talent to succeed. Many startups here have at least one foreign founder. This is not unique to Singapore.
In the United States, a study by the National Foundation for American Policy found that immigrants started 51 per cent of the current crop of US-based startups valued at US$1 billion or more. Another survey by the 2016 Silicon Valley Competitiveness & Innovation Project revealed that 58 per cent of their high-tech workforce is foreign-born.
Michelle: What other challenges need to be addressed?
Titus: Beyond just training and getting SMEs to go digital, SMEs must know how to generate demand for their products and services online. In addition, SMEs also need to address the challenge of attracting and retaining talent, especially those who have digital know-how.
Dennis: Our small market size is a critical constraint. Our key challenge is how do we continue to retain our pioneer generation ethos of staying vigilant, willing to work hard and living with a paranoid mindset. This is the Singapore Dilemma.
Chong Wah: I guess the challenge is how not to overdo things. The CFE is a good framework for us to think about the future. It should not be the only road map to the future. By all means, embrace digital transformation, but let us not forget that digitalisation is supposed to be an enabler, not an end in itself.
Edwin: While we have made good strides, we recognise that our startup ecosystem is not fully mature, particularly in the deep-tech space like biotech and advanced manufacturing. We lack the rich networks of angel investors, incubators and VCs able to guide rookie entrepreneurs in these sectors. This will come when we have a few successful exits - unicorns - in this space.