Because S’pore doesn’t have smart $$$

Singapore is home to 160+ VC firms managing a total of S$X billion. Fact.

Singapore has a successful venture capital industry. Myth.

The truth of the matter is, out of these 160+ VCs, only a handful are known to be open to the idea of investing in Singapore start-ups. The majority raise and park their capital here and invest in India and China, because as one venture capitalist once told me, “the deal flow quantity and quality is just so much better.”

Whoever mooted the idea of using US$1.3b to attract venture capitalists to set up shop in Singapore (in the form of EDB’s Technopreneurship Investment Fund) in the hopes of completing the Singapore entrepreneurship puzzle could have been somewhat misguided. Bring the VCs and you’ll get your start-ups? HMMMMMM…I salute your spirit and intent, but not your methods.

Our venerable business angels don’t fare much better on the scorecard either. Most of Singapore’s angels made their wealth from traditional businesses, such as real estate or banking and finance. To most entrepreneurs, these angels continue to maintain their relevance, and more often than not have a tremendous impact on their F&B-or-what-have-you enterprises. Yet anecdotal evidence suggests Singaporean angels, by virtue of their poorer risk appetite, lack of domain knowledge and insistence on positive cash flow, have missed out on one of the largest slices of the entrepreneurial pie – technology innovation.

And so our government resorts to market-distorting policies to plug the funding gap in the ecosystem, through a co-investment model (in the form of SEEDS funding and Growth Financing) for start-ups. I say these are market-distorting, because public funds are being used as a means to lower the risks borne by VCs and angels, to incentivise them to invest in 2nd-tier start-ups in Singapore. The really good start-ups will have no problems securing access to capital – VCs and angels would be falling over their feet to stake a claim on them before you can say return-on-investment. The question all of us should raise then, is: “Is this the best/most effective and impactful use of public monies?”

Ok ok ok…hold your horses. Not all SEEDS-invested start-ups were 2nd-tier. These funding certainly give entrepreneurs a shot at proving John Fischer (the F in DFJ) wrong about Singapore.

I don’t believe Singapore will ever produce a world-class start-up in the next 20 years.

- John H. N. Fischer at Stanford GSB, when asked after a class about why DFJ stopped investing in Singapore

I don’t need to extol too much on the mega-high returns that start-ups are garnering in the Information economy and increasingly so, in the Attention economy. Singapore has wasted a good 5 years chasing the shadows of the dotcom boom, and it’s about time our nation’s leaders start taking a serious look at this, with a different eye. Your MNC-courting ways won’t work when it comes to nurturing world-class SMEs.

At the end of the day, it’s all about the team behind the start-up. Court the talent, and all the capital and wealth of the world will flow into Singapore.

When that day comes, I will gladly close this blog down. Until then however, the rest of you will have to put up with my endless tirade.

Because our businessmen & domain experts don’t talk to one another more

The next time you come across a man in a suit having a serious discussion with a geeky-looking engineer in Singapore, stop dead in your tracks, whip out your handphone and snap a picture. You’ve just captured history .

Thanks to the Singapore education system, our schools and universities have churned out cohort after cohort of excellent lawyers, accountants, businessmen, programmers, engineers, even expert test-tube cleaners for our life sciences industry – you name it, we’ve got some of the best in town!

Yet, our best-of-the-breed seem to exist in separate worlds. In primary school, we were streamed into various bands of academic excellence – peer pressure deemed hanging out with folks from a lower band as un-cool. In junior college and university, we were likely to spend more time interacting across faculties at canteens during your breaks, than working on inter-disciplinary projects. The majority of local varsity coursework continues to value domain experts more highly than ‘Jack of all Trades, Master of None’ generalists.

Couple all of the above, with a general lack of interaction between businessmen (who kept to their swanky business schools and pompous fellow students) and domain experts (we know better than those snotty businessmen) and what do we get? Yet another piece of the puzzle to the question that whysgentrepreneurssuck seeks to answer!

Because our businessmen and domain experts don’t talk to one another more, we end up with the following:

• Domain experts developing products and services with technology they love , but without market demand or sensible business models
• Businessmen selling business ideas or products without true competitive advantage, and thus having to resort to an insane amount of fluff

What can we do about it then?

• Be aware, and do not discriminate! Businessmen or not, we’re all keen on building that next big start-up, and join the ranks of Osim, Banyan Tree, Hyflux, e.t.c. Instead of exclusion, try picking the brains of that next smooth businessman you come across – you might just find a new partner for your start-up.
• Leave the comforts of your safety zone, and make contact with all kinds of people – you’ll never know when you need to invite that accountant friend of yours to be your start-up’s CFO, or that nerdy geeky class loser as your CTO.
• Keep the talking alive! Fire that email off to that cool dude you met at the last event. Perhaps Entrepreneur27, SGentrepreneur, Barcamp Singapore, Mobile Monday, etc could consider a regular combined event to allow the entire community to mingle and exchange ideas?

More ideas people?