The article first appeared on the Business of Fashion.
SINGAPORE, Singapore — To say there are worse places than Singapore to start a business would be an understatement.
No tax on capital gains nor dividends, and an income tax cap at 22 percent are but a few perks offered to lure founders and investors to set up shop on its shores, strategically positioned on the lowest tip of the Malay Peninsula in the heart of Southeast Asia.
An abundance of government-backed and private grants fuel a Singaporean company’s start, while courses and networking possibilities create a nurturing and supportive environment for entrepreneurs, who echo that incorporation involves a few clicks and light paperwork. The result? Singapore’s 112 venture capital deals recorded in 2017 totalled $1.2 billion according to PwC, setting the ecosystem’s value at $11 billion compared to the global median of $4.1 billion.
“Ease of incorporation, access to funding, [and a] good talent base all … help us build and grow the business,” declares former Google employee Rohit Kumar, co-founder of Pixibo — a company that harnesses fit-tech to digitise a personal shopping experience for the likes of Dutch online behemoth Shoeby and Bangkok-based Pomelo. “I’m a huge fan of the support this country offers to entrepreneurs.”
But Kumar’s enthusiasm doesn’t mean that Singapore’s start-ups have it easy — like many buzzy start-up hubs, the island has its own hurdles for young enterprises. Such challenges, when overcome, can better equip entrepreneurs and their companies to set their sites abroad. For starters, B2B players in Singapore need to be quick to adapt to a number of legal jurisdictions and local market realities.
This is because “[Singapore] itself isn't super interesting, it’s the countries around it that make it interesting,” Kumar tells BoF. Singapore is the regional commercial hub for the Association of Southeast Asian Nations (ASEAN,) which encompasses a 650 million strong consumer market across Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Laos, Brunei, Cambodia and Vietnam.
Pixibo has taken full advantage of being strategically placed among other rapidly growing start-up hubs: it began by testing and refining its product with a small online fashion rental business in India, and in addition to Thailand’s Pomelo, has developed a product for Hong Kong-based premium basics retailer Grana. Kumar claims that the personalisation service of his company boosts the retailers' conversion rates by somewhere between 40 and 100 percent.
A Strategic Market, Ripe for Testing
Kumar’s is just one of myriad companies thriving in Singapore’s start-up-friendly ecosystem. In 2014, Singapore launched the Smart Nation initiative to support innovation in the public and private sector. As part of a plan dubbed RIE2020, the government pledged to invest $19 billion in research, innovation and enterprise between 2016 and 2020.
On the receiving end of this funding is a well-educated workforce, with the government’s latest data revealing that 52 percent of people aged above 25 possess post-secondary qualifications, and 62.6 percent of the populace are fluent in both English and Mandarin. Part of Singapore’s undeniable cachet is also low employment cost (less than 20 percent of an employee’s salary paid into the local security system Central Provident Fund) and high work ethics.
“There is also a culture of working hard to succeed,” says Stéphanie Crespin who is preparing the launch of her new venture Reflaunt for March 2019.
Read the full article on the Business of Fashion.