Funding for early-stage tech start-ups in Singapore grew 59% last year: SGInnovate

In 2023, funding for Singapore’s early-stage emerging tech start-ups surged, reaching US$402 million ($548 million), marking a 59% y-o-y increase, as reported by SGInnovate. However, the number of newly incorporated emerging tech start-ups decreased to 25 in 2023, down from 35 in 2022.

More 2023 incorporations yet to be disclosed may push the final figure up, but it is still likely to dip compared to 2022, reflecting ongoing economic uncertainties that could potentially delay incorporations.

Advanced manufacturing is among the verticals that have seen incorporations drop steadily since 2020. Despite a consistent output of high-quality research in this area, those start-ups face ongoing challenges such as commercialisation and the availability of specialised talent.

Alternatively, start-ups in the agrifood and sustainability verticals performed strongly in terms of funding and incorporations. Funding events have grown year-on-year for both sectors, with agri-food start-ups securing 13 deals in 2023 (eight in 2022) and sustainability startups closing 16 deals in 2023 (12 in 2022).

Sustainability is the only vertical to see a y-o-y increase in funding events and amounts since 2021. This sector was the most active in the number of start-ups incorporated last year, while average seed round sizes have also grown by nearly four times between 2022 and 2023.

The agri-food sector recorded seven undisclosed funding rounds, suggesting that the total raised in 2023 might exceed US$9.92 million.

Despite a y-o-y decrease in incorporations, longer-term data shows a consistent emergence of new companies in the agri-food industry. Of the 80 start-ups formed in the last five years, 39% are engaged in alternative proteins or related enabling technologies, showcasing the dynamism of Singapore’s alternative foods sector.

SGInnovate’s Singapore Early-Stage Emerging Tech Startups 2023 report also examined trends in start-up visibility and strike-offs to offer a comprehensive overview of each domain’s progress and the life cycles of its start-ups.

The report also revealed that it may take up to three years to identify the majority of emerging tech start-ups incorporated in a given year, indicating a higher level of ecosystem activity than previously known. For example, the updated data in the current report identifies 93 emerging tech start-up incorporations in 2021.

This prolonged discovery period may be attributed to various factors, such as founders’ preference to increase company visibility only after raising their first institutional funding round or completing the development of their minimum viable product.—