At the Echelon Ignite conference in Sydney this week, Singapore was hailed as the easiest place in the world to set up a company, even if there weren't any Singaporeans in the startup.
Innov8 CEO Edgar Hardless noted how it would take minimal effort and just three to four days for anyone to establish a company here. "I've seen lots of Singapore startups, but with no Singaporeans in them. So lots of companies with Australians, Americans, Spanish people all setting up their companies in Singapore as their base of operations. "He also noted the readily-available assistance dished out to help entrepreneurs.
Another speaker, Catapult Ventures CEO Vinod Nair, pointed to the various schemes and grants startups in Singapore can apply to obtain funds. For instance, he said the government would subsidize 60 percent or 70 percent of the cost of laptops startups purchase.
"It's like the Great Singapore Sale all year around," Nair said, referring to the country's annual shopping fiesta where many retailers and malls nationwide offer discounts and sales promotions, usually over a two-month period starting June.
As a Singaporean, I'm not sure whether that necessarily bodes well for my country. Should I really applaud a startup community riddled with "Singapore startups with no Singaporeans"?
Why is my government taking taxpayers' money to fund startups devoid of any local talent, and that will likely use the funds to develop a technology they may end up taking back to their home country?
This brings me back to a dinner conversation couple of years back when I posed the same questions to a senior executive from a government agency, one of several which offered startup funds. I put it plainly: "Aren't we being stupid, giving out all this local money to foreign startups which will take their Singapore-funded innovation back to their home country?"
He smiled, and said one of the government's key objectives here was to generate buzz and create a hub bustling with startup activities. lt would help grow an ecosystem with positive spillover effects on the local economy and business community, so whether these "foreign" startups end up labeling their innovation "Singapore-made" wouldn't necessarily matter. Presumably then, it would also spur Singaporeans themselves to take that plunge toward entrepreneurship.
The government's efforts appear to have paid off. The city-state was ranked the world's 17th most influential startup ecosystem in Startup Ecosystem Report 2012, which said Singapore had the potential to become Asia's central hub--bringing together the markets of China, India, Indonesia, and Malaysia. The Little Red Dot was ranked 8th in the funding index, which measured the activity and comprehensiveness of risk capital in the startup ecosystem.
So, does it matter if foreigners make up the bulk of startups in Singapore? I'm inclined to say not really.
The points raised by the government offiicial over dinner are completely valid. It looks at the bigger picture. Funds the government is seemingly foolishly giving out, should instead be deemed necessary investment to cultivate a working ecosystem that may in future produce a made-in-Singapore killer app that will take the world by storm.
However, I think there needs to be guidelines to ensure we not only develop, but also retain innovation, so the local ecosystem can better benefit from the country's efforts to be the next Silicon Valley. For instance, before it hands out funds to a startup, the government can stipulate the company files its patents in Singapore. The startup can also be encouraged to work with local schools and research labs, so some of that innovation can be passed on and further developed locally as well as help spin off other innovations.
Startups that are unwilling to meet these conditions are free to then look for funding assistance elsewhere or in another country. This give-and-take approach would help ensure Singapore attracts only startups with genuine vested interest in setting up shop here.
In a previous blog, I'd discussed whether Singapore would take pride in innovation created here but by a foreign talent such as Facebook co-founder Eduardo Saverin. I still believe the original roots of an individual don't matter as much as the environment in which the startup was able to thrive and succeed. I'm pretty sure Silicon Valley now isn't all American either.
Ultimately, for the millions the Singapore government throws into funding startups, if just one--that one lone ranger from the many hundreds--develops a killer app that will put the country on the tech innovation map, it'll be totally worth it.