SGInnovate has Put $40m into Deep Tech Firms Since Inception | SGInnovate
 

SGInnovate has Put $40m into Deep Tech Firms Since Inception

Wednesday, October 16, 2019


SGInnovate's founding chief executive Steve Leonard says that besides nurturing start-ups, the government-owned venture firm, set up almost three years ago, has also built up a 30,000-member deep-tech community. PHOTO: SGINNOVATE

 

The 70 startups have gone on to draw $450m of funding from the market, says venture firm's chief

Government-owned venture firm SGInnovate has racked up an impressive strike rate since its inception almost three years ago.

The firm has invested $40 million in around 70 local and foreign Deep Tech startups, which have also gone on to attract $450 million of funding from the market, said SGInnovate founding chief executive Steve Leonard.

"It is important to note that if we had invested 40 (million dollars) and the market had invested 20 (million dollars), it would have meant we were too heavy-handed, too interventionist," Mr Leonard told The Straits Times.

"But we are very thankful that we invested 40 (million dollars) and the market invested (10 times of that)," he said.

SGInnovate was set up in November 2016 to fund and support projects applying deep technology - such as Artificial Intelligence (AI), Robotics, Quantum Computing and Autonomous Technology - to solve problems in areas including healthcare, food, climate and transport.

"Our niche is to work with those entrepreneurial-minded scientists, different from working with startups that are cool, because the market can take care of those things," said Mr Leonard.

He noted that while consumer tech tends to capture more headlines and more money, it essentially is just solving problems of convenience. "Can I have my food delivered more quickly? Can I find a ride more easily? It doesn't mean those are not helpful or important, but I would argue that those are problems of convenience," he said.

"Whereas when we talk of some other areas, I would argue that they are problems of humanity, problems of existence."

Fewer than 10 per cent of the startups that SGInnovate has backed "haven't made it" - they did not manage to raise sufficient funding or did not get their technology validated. This is in stark contrast to the 90 per cent failure rate in general start-up statistics.

Mr Leonard attributes the high survival rate to the "level of seriousness" that these startups have at the outset. "These are serious people. Scientists who have spent years on their research trying to form a company."

Mr Alan Goh, co-founder and chief executive of NDR Medical Technology, said Deep Tech companies tend to have a long gestation period of at least five years.

He estimates that his 11-man medtech start-up, which specialises in developing AI-powered surgical robotics, will break even only in mid-2021, almost seven years after it was set up in late 2014.

"Without SGInnovate, I don't think we could find others who would put a bet on us," said Mr Goh, adding that venture investors generally will want to see results faster as they operate on a maximum three-to-five-years fund cycle.

SGInnovate, on the other hand, takes a longer-term view without applying too much pressure on the startups to show revenue, he said.

Its funding early last year has since helped Mr Goh's start-up to "take baby steps to globalise", completing clinical trials in China, Japan and Malaysia.

Dr Tan Geok Leng, founder and chief executive of AIDA Technologies, said that being a Deep Tech company means it competes on the strength of its technologies.

His AI-driven fintech startup is focused on helping banks and insurance companies to improve operational efficiency and manage risk and compliance.

While there are many possible investors out there, he needs those that can follow how his firm's AI-driven algorithms give better results than others.

"We want to work with investors who understand what we are doing. And SGInnovate is able to value our work with its domain knowledge," he said.

And SGInnovate's investment in his firm has also provided a signalling effect for future investors, he added.

Mr Leonard said that besides nurturing start-ups, SGInnovate has also built up a 30,000-member Deep Tech community, with more than 100 people attending each of its 20 events a month.

He added that its biggest challenge is getting people within Singapore's ecosystem to believe that the country has all of the inputs that it needs to create globally relevant deep-tech companies.

"SGInnovate spends a lot of time trying to keep people believing," he said. "It's already hard to build a company. It's even harder to build a deep-tech company.

"The last thing we need is our own home team asking questions about whether it's working at every step of the way, versus saying 'we're excited that you are giving this a try' and 'go for it'."

Mr Leonard noted that every great technological advancement, such as the invention of steam engine trains and cars, took years to come to fruition, so he thinks it is crucial that people here continue to believe that Singapore can play an important role in this area.

"(And) not just being a great place for companies to set up but being a great place from where companies can be born," he added.

Original article: The Straits Times

Topics: Investments, Startups

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