Count on Singapore's startups

As the country celebrates its 42nd birthday this week, ZDNet Asia profiles three Singaporean IT startups and tracks their progress thus far.
Written by Victoria Ho, Contributor

SINGAPORE--Entrepreneurs these days arguably have it easier, thanks in large to the new Web 2.0 era.

The emergence of Web 2.0 business models and the buzz surrounding such tools have opened doors a little wider for IT startups seeking seed or angel funding.

According to PricewaterhouseCoopers, the global mobile entertainment and games market is expected to be worth US$73 million by 2009. And the growth has caught the attention of the Singapore government, which announced earlier this year that it has allocated S$500 million (US$332.2 million) over the next five years to fund interactive digital media projects.

As for the local startups borne during the dot-com bubble, the perilous times after the bubble burst meant many did not surface after.

Singapore celebrates its 42nd National Day, or day of independence, ZDNet Asia celebrates a diverse group of companies--some of which started small and managed to keep afloat during tougher times--that have progressed far enough to now share some of its wisdom.

muvee Technologies
Founded in 2001, the software company offers a "dummy-proof" automatic video editing tool designed for the consumer market. Once described by a magazine as muvee's "secret sauce", the software enables pictures, video and music files to be stitched automatically, without user intervention.

"If you're creating something useful to large numbers of people and hard to copy, anytime is good to get started."
-- Pete Kellock
muvee Technologies

The company was spun off from Kent Ridge Digital Labs, now a part of statutory board and research company A*STAR, with a team of eight people, which has since grown to some 90 employees.

Headquartered in Singapore, muvee has expanded its global presence and has offices in Lynbrook, New York, and representatives in Japan and Korea. It counts Hewlett-Packard, Sony, Nikon and Dell Computer amongst its OEM (original equipment manufacturer) customers.

More than 50 million copies of muvee's flagship product autoProducer, shipped through its channel partners, have been sold into over 100 countries, according to Singapore's Media Development Authority.

muvee started with two rounds of solo venture funding in 2002 and 2004. The first round of funds came from Vertex Venture Holdings and the second from Walden International Investment, which muvee explained, was raised for expansion plans, and not to cover operating costs.

"In fact, we haven't even had to touch the second round of money as we continue to be cash flow-positive," Pete Kellock, muvee's founder, told ZDNet Asia. "We have been profitable since our third year of operation in 2004, doubling revenue year-on-year."

Speaking on the Web 2.0 phenomenon, which some say may play out to be the next Internet bubble, Kellock noted that "fashions come and go" but "competitive advantage" is the way to weather any storm from a bust.

"If you're creating something useful to large numbers of people and hard to copy, anytime is good to get started," said Kellock, adding that there is strong value in finding something unique to create.

Catcha is one company that comes to mind when one thinks of early Singapore Internet startups. The company has gone through a lot, transforming itself from a portal to a publishing house and becoming one of the largest independent players in Southeast Asia today.

"We almost went bust at least twice, but kept finding ways to stay alive."
-- Patrick Grove

But this was not the company's strategy at the start. In an e-mail interview, Catcha CEO Patrick Grove told ZDNet Asia his initial goal was to become a horizontal portal for all the key Southeast Asian markets--that is, until the dot-com bust.

"We believed strongly in the value proposition of such a product, but unfortunately, the financial markets turned against us and we were not able to raise the amount of funding we needed to grow such a business," Grove said.

Seeing advertisers beginning to shun online media after the bubble bust, Catcha moved into the magazine business in 2001. "We noticed people were a lot more willing to spend money advertising in magazines, even though online media had more users," Grove explained. To date, the group's collection of magazines standards at 17.

Catcha's funding came in June 1999 from angel investors, venture capitalists and public companies, and the company managed to raise three rounds of funding before the market collapsed in April 2000. The company had already spent all the funds by then, Grove said.

"We almost went bust at least twice, but kept finding ways to stay alive," he said.

Grove's advice to aspiring entrepreneurs: "Raise 50 percent more than you need, and try not to dilute [your share] too much so that you still have control of the company."

"You should never make your game plan be to build something and sell out," he cautioned. "At the end of the day, you have to focus on building a great company regardless of whether or not someone buys you out."

Catcha now has two key revenue streams: magazine publishing, and an online property portal business. In fact, within the next two months, Catcha's Malaysian property portal www.iproperty.com.my will launch its IPO (Initial Public Offering) in a bid to raise extra funds for expansion.

A relative newcomer to the scene, tenCube has already built a team of over 20 people and a customer base that includes leaders in IT security, such as the Singapore Police Force.

"There is no hard and fast rule on what is a good figure."
-- Darius Cheung

tenCube's anchor product WaveSecure is an internationally-patented mobile phone security application, allowing users to perform various functions such as remotely locking the phone, backing up data through the Web and erasing data from the phone. The product was also identified by analyst firm Frost & Sullivan, as one of the "Top 10 Wireless Innovations in Asia-Pacific" last year.

Founded two years ago, tenCube got its first leg-up with funds the company received from taking the top prize in Start-Up@Singapore, an annual competition from the National University of Singapore (NUS) Entrepreneurship Center, which offers a prize money of S$30,000 (US$19,932) to the winner.

According to tenCube CEO Darius Cheung, the company's four founders dug into their savings to fund its operations in the first six months. Subsequent funding came from the NUS, Singapore's Economic Development Board (EDB) and angel investors, with the company pooling in "close to a million [Singapore dollars] in working capital".

"There is no hard and fast rule on what is a good figure," said Cheung, on a suitable amount of funds for one to begin a startup. "On hindsight though, financiers are a lot more careful in Singapore, and thus, startups need to be prepared [to run on their own] a longer period before they can [secure] the first round of financing, compared to Silicon Valley."

"Therefore, a good figure to start with is the expected expenditure of the first 12 months," he said.

Cheung also ruled out the possibility of tenCube being acquired for "at least three years".

"We are very optimistic about the market potential," he said, on plans first to grow the company's value. "We will be able to command a much better price then."

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