Tech startups unfazed by challenging early-stage fundraising environment: report

In Singapore, about 60 tech startups get incorporated annually.

Despite a challenging early-stage fundraising environment, many emerging tech startups in Singapore have reached a “steady state” in 2022, data from SGInnovate showed.

According to SGInnovate’s Singapore Early-Stage Emerging Tech Startups 2022 landscape report, there are approximately 60 startups incorporated annually in the Lion City.

In 2022, 20 early-stage emerging tech startups raised Seed+/Pre-A or A+ funding rounds, more than double the number that did so in 2021 (9).

On the flip side, fundraising amounts have decreased by 28% on average across all verticals and funding stages.

Funding deals completed by emerging tech startups likewise fell, dropping 17% between 2021 (58) and 2022 (48).

“While the venture capital scene in Singapore continues to be very active, early-stage emerging tech startups here should also tap on other strengths of the local ecosystem, such as the availability of alternative funding mechanisms and openness to corporate innovation for co-development,” said Hsien-Hui Tong, Executive Director – Investments, SGInnovate. 

“Besides extending their runway to focus on product development, this also allows startups to minimise the impact on their valuations until the macroeconomic environment improves,” Hsien-Hui said.

Meanwhile, investor activity varies across the advanced manufacturing, agrifood, sustainability, and health and biomedical sciences verticals.

Within the advanced manufacturing vertical, average seed round sizes decreased from US$1.5m in 2021 to US$0.6m in 2022.

“This may reflect a shift in investors’ interests to other verticals and a general slowdown in the manufacturing industry,” the report stated.

In contrast, average seed round sizes in the health and biomedical sector more than doubled, even though fewer startups in this vertical were incorporated. 

“This could indicate that startups in this sector are facing challenges beyond fundraising, including perennial talent gaps…These factors may result in a ‘winner-raise-all’ scenario where a small number of startups raise larger rounds to capture limited resources,” the report added.

Looking ahead, SGInnovate expects Singapore’s emerging tech startup ecosystem to produce a steady pipeline of startups.