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Public funding in deep tech means private money in startups, which will result in a true ‘fail fast’ ecosystem
Towards the end of 2016 and for the first half of 2017, the government has been shifting its focus away from “commercial” startups and towards deep-tech.
By “commercial” startups, I am referring to companies like Carousell, e27 or Perx — services that are successful and localised, but are building upon technology invented outside of Singapore.
The launch of SGInnovate was the first ‘big moment’ when the government made it known that developing IP technology was important. At the event Tharman Shanmugaratnam, Singapore’s Deputy Prime Minister & Coordinating Minister for Economic and Social Policies, specifically highlighted the fact that patent output in Singapore is relatively low for a country with its economic wealth and well-respected higher-education institutions.
Prime Minister Lee Hsien Loong commented that the city’s Smart Nation drive is “not going as fast we ought to” and said it had run into speed bumps.
The rhetoric finally came to a head when the bulk of the government’s technology agencies were restructured and a new agency called the Smart Nation and Digital Government Group was formed. Furthermore, it operates under the Prime Minister’s office.
Yesterday, the big story was a new data science and AI consortium that will invest US$107 million into AI projects.
An ‘under the radar’ story from yesterday was the launch of a new 5,000 sq. ft. deep-tech facility in Science Park 1. It is a collaboration between Ascendas-Singbridge and NUS Enterprise (although, to be fair, Ascendas-Singbridge is a private company).
Often, when attending minor news briefings, officials will talk about a shift towards IP, but the quote is often buried in a story about a standard ‘hard news’ update.
Also Read: Singapore to launch data science consortium and AI initiative to enhance digital economy
Over the last six-months, this shift towards IP has felt like an open secret — an initiative that is not being advertised but if someone were to ask government officials had no problem talking.
I say this because I make an effort to attend one event per week, and when I do so I often talk about the deep tech drive when people ask about trends in Singapore’s tech scene. Often, after talking for 5-10 minutes, I have to stop and explain that I am not discussing anything controversial, there just is a gap between the policy and public awareness.
This week, in my estimation, innovfest unbound 2017 marked the end of the ‘open secret’ era and the start of the next stage. IP and deep tech will take center stage took center stage this week and will drive conversation for the rest of 2017 much in the same way that fintech exploded last year.
Privatising commercial startups
As public money pours into deep-tech projects like AI, Big Data and IP technologies, it will be accompanied by a privatisation of funds invested in companies we would normally dub ‘startups’. (The jargon leaves something to be desired; AI startups certainly will receive government attention and are no more or less “startups” than a B2C e-commerce company).
According to Edwin Chow, group director, Industry & Enterprise / Innovation & Start-ups, SPRING Singapore, the government sees its role as a catalyst. Because of its resources, the government can kick-start an ecosystem with early-stage grant and equity schemes to keep companies alive while the private investment sector catches up.
In Singapore, the private VC scene has grown into one of the most dynamic hubs in the region and, in my opinion, the government will start to pull back its support and allow the private sector to take control of the “startup ecosystem”.
But this does not apply to deep-tech technologies is because, as mentioned above, Singapore is lagging in IP development. Furthermore, an IP-driven economy needs large funds to support the entrepreneurs because the technology takes longer to go-to-market.
“We 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,” said Chow.
Overall, the shift towards deep-tech should make Singapore a more dynamic technology hub and I am personally excited to see if the city produces a truly groundbreaking technology in the coming years.
But, the privatisation of startup funding will bring the ‘fail fast’ mantra of Silicon Valley to Singapore. VCs manage smaller funds than the government, and as a result are more picky about the companies that receive money.
A private-market driven funding culture will require adaptation as startups shift from pivots to full-blown failures.
If the failure model (steel sharpens steel) is going to be successful, entrepreneurs who fail cannot be shunned out of the ecosystem or pushed into corporate jobs. They must be pushed to restart and to do so quickly (maybe give them a couple of months to take a breath/holiday but not any longer). And if that fails? Start again. And again. And again.
My dream is, in a few years, the darling startup Founder of Singapore had failed not once, but three, four, five, six times before finally hitting it big.
This will require a bit of a shift from how the ecosystem operates today.
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