Singapore ecosystem sees overall decline in output of new emerging tech startups in 2023 even as funding grows year-on-year

The Agrifood and Sustainability domains led the way in funding activity, with a 63% and 33% increase in number of deals closed respectively

23 Apr 2024, SINGAPORE – Following more muted funding conditions in 2022, investments into Singapore’s early-stage emerging tech startups have risen to pre-2021 levels, led by growth in the Agrifood and Sustainability sectors.

These findings are presented in the Singapore Early-Stage Emerging Tech Startups 2023 landscape report released today by SGInnovate. Now in its third edition, the annual report provides an overview of developments in Singapore’s emerging tech startup pipeline, with a primary focus on early-stage companies. Looking at movements across four key verticals – Advanced Manufacturing, Agrifood, Sustainability, and Health and Biomedical Sciences, the report identifies trends and gaps in each of these spaces on a year-to-year basis. 

“The trends we are seeing are an indication of the maturity and growing dynamism of Singapore’s emerging tech landscape, with more specialist investors coming in to support specific verticals,” said Mr Hsien-Hui Tong, Executive Director – Investments, SGInnovate. “As we continue to update the report annually with retrospective information, we can uncover insights around opportunities or areas where further support is needed in the different technological domains.”

Seed-stage deals surge while new incorporations decline

Singapore’s early-stage emerging tech startups saw an uptick in funding in 2023, with total funding climbing to US$402M in 2023, up from US$253M in 2022, growing 59% year-on-year. Complementing this increase, the number of Seed-stage deals have risen by 1.5x between 2022 (20) and 2023 (30) across the four domains. These are likely due to a wider shift towards early-stage dealmaking, and indicate a greater appetite for emerging tech investments as the ecosystem continues to mature. 

Meanwhile, the number of emerging tech startups incorporated in 2023 across the same four domains has declined, with the current number observed standing at 25, in contrast to the 35 incorporated in 2022 .  While the final figure is likely higher as more incorporations from 2023 are uncovered, it is still expected to represent an overall dip compared to 2022; a reflection of the ongoing macroeconomic uncertainties which could lead to deferred incorporations.

Among the verticals that have witnessed a consistent decline in number of new company incorporations is Advanced Manufacturing, which has seen incorporations drop steadily since 2020. Despite a consistent output of high-quality research in this area, ongoing challenges in areas such as commercialisation and availability of specialised talent point to emerging gaps in the support and resources available to new startups in this space.

Agrifood and Sustainability companies lead growth

In 2023, the Agrifood and Sustainability spaces performed strongly in terms of funding and incorporations, likely in tandem with public and private sector initiatives. Funding events have grown year-on-year for both sectors, with Agrifood startups securing 13 deals in 2023 (vs. 8 in 2022) and Sustainability startups closing 16 deals in 2023 (vs. 12 in 2022). 

Sustainability is the only vertical to see a year-on-year increase in both funding events and funding amounts since 2021. This sector was the most active in terms of the number of startups incorporated last year, while average Seed round sizes have also grown by nearly 4x between 2022 and 2023. 

Meanwhile, the Agrifood sector’s total deal count included seven undisclosed funding rounds, indicating that the full amount raised in 2023 is possibly higher than the current total of US$9.92M. Though the industry has seen a year-on-year dip in incorporations, longer-term data reveals that the Agrifood industry continues to produce a steady stream of new companies (2017 to 2021: 57, 2019 to 2023: 80). Among the industry’s crop of 80 startups incorporated over the past five years, the majority (39%) have been companies involved in alternative proteins or related enabling technologies, highlighting the vibrance of Singapore’s alternative foods space.

Understanding incorporations and strike offs requires a longer-term view

The 2023 edition of this report introduces two new areas the SGInnovate team is tracking to provide a better overview of each domain’s progress and the lifecycles of its startups: Startup visibility trends and strike offs.

In terms of startup visibility, report findings show that it can take up to three years to uncover the majority of emerging tech startups incorporated in a given year, suggesting a higher level of ecosystem activity than initially discovered. For instance, updated data in the current report has identified 93 emerging tech startup incorporations in 2021. This prolonged discovery period may be attributed to a range of factors, such as founders’ preference to increase company visibility only after raising their first institutional funding round, or upon completing development of their minimum viable product. 

In the realm of strike offs, the report found that approximately 9% of the emerging tech startups incorporated between 2019 and 2023 have ceased operations, with many expected to face the most acute risk of strike off from around their third-year post-incorporation – consistent with the additional 18 to 24 months of runway that a round of funding provides. Among the various verticals studied, startups in the Health and Biomedical Sciences and Advanced Manufacturing verticals accounted for around 
47% (15) and 28% (9) of all strike offs respectively, emphasising the ongoing challenges faced by both sectors.

The outlook for 2024 and beyond

Sustained high interest rates may have deterred investors from deploying capital in 2023, instead allocating funds to higher-yield alternatives that carried lower risk such as government bonds. However, forecasted rate cuts in 2024 are expected to boost private market investments, with a renewed interest in emerging technologies.

“While challenges such as political uncertainty will continue to weigh on investment considerations globally, we are optimistic about startups addressing long-term concerns supported by policy initiatives in Singapore,” noted Tong. “These include technologies in areas such as remote patient monitoring and stem cell therapy, which may provide solutions to enhance the care of Singapore’s ageing population, or technologies that will aid Singapore’s continued efforts in decarbonisation, including battery recycling and sustainable materials production.”

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About SGInnovate
At SGInnovate, we build and scale Deep Tech startups into high potential companies with global impact. We believe that hard global problems can be solved using Deep Tech, and Singapore, where we are based, is uniquely positioned to realise Deep Tech innovations that can tackle these challenges. We focus on adding tangible value to the Deep Tech startup ecosystem in two key areas – development of Human Capital and deployment of Investment Capital. With the support of our partners and co-investors, we back entrepreneurial scientists through equity-based investments, access to talent and business-building advice. Our efforts are prioritised around emerging technologies such as Advanced Manufacturing, AgriFood, Healthcare and Biomedical Sciences and Sustainability, which represent impactful and scalable answers to global challenges.

SGInnovate is a private-limited company wholly owned by the Singapore Government. For more information, please visit www.sginnovate.com.

For media queries, please contact
Zachary Wickeremasuriya, Manager, Communications, SGInnovate
[email protected]