Singapore Venture Capital Report 2024 — The Regional Balance Sheet

Singapore's venture capital figures are among the region's most-cited and least-well-read. The reason is the measurement issue the 2020 report identifies: a substantial share of what is recorded as Singapore venture activity is regional activity domiciled there.

A company serving Indonesian consumers, with engineering in Vietnam and a Singapore holding company for structuring reasons, is recorded as a Singapore company. A fund raised and administered in Singapore that deploys across Southeast Asia is a Singapore fund.

Neither attribution is wrong. The company is incorporated there and the fund is domiciled there. But reading the resulting figures as a measure of the Singaporean economy's startup activity produces a substantially inflated picture — and reading other markets' figures without the corresponding correction produces a deflated one.

Separating the two reveals two distinct things, and both are real:

The regional balance sheet. Singapore functions as the accounting and legal location for Southeast Asian venture activity. The figures booked there are a reasonable proxy for regional activity, and they are more completely reported than most individual markets' figures — which makes them genuinely useful as a regional indicator.

The domestic ecosystem. Separately and genuinely, Singapore has a substantial domestic startup ecosystem — concentrated in areas where its actual advantages lie: deep technology drawing on its research institutions, B2B software serving regional enterprises, financial technology serving the financial sector located there, and logistics and trade technology reflecting its position as a hub.

The composition shift in 2024 is informative. Deep technology and B2B gained share over consumer internet — which aligns with the domestic ecosystem's genuine advantages rather than with regional consumer activity. Consumer internet requires a large domestic consumer market, which Singapore does not have. Deep technology requires research institutions, talent and capital, which it does.

How to read the figures

The correction is specific and worth setting out, because it applies to every published Singapore venture statistic.

What is conventionally reported: funding raised by companies headquartered in Singapore, and capital deployed by funds domiciled there.

What that includes that should be separated:

• Companies operating primarily elsewhere that are incorporated in Singapore for legal, tax or investor-preference reasons.
• Regional funds deploying across Southeast Asia from a Singapore domicile.
• Holding structures for businesses whose operations, customers and employees are in other markets.

What is excluded that arguably should be included:

• Singapore-operating businesses incorporated elsewhere, though this is rarer since the incentives run the other way.

The practical corrections available to a reader:

• Look at where revenue is generated, not where the company is registered. Some data providers report this and most do not.
• Look at where employees are. A company with a handful of people in Singapore and hundreds in Indonesia is an Indonesian company with a Singapore holding structure.
• Distinguish fund domicile from deployment. A Singapore-domiciled fund's regional deployment should be attributed to the destination markets.
• Use providers that make the distinction. Cento Ventures is among the few that report Southeast Asian venture data with operations-based attribution.

Singapore's venture figures are the region's balance sheet, not Singapore's income statement. Both are useful documents; they answer different questions and are routinely confused.

Where Singapore's genuine advantages lie

Separating the domestic ecosystem reveals a specific and coherent set of strengths that follow from the base function rather than from market size.

Deep technology. Singapore has substantial research institutions, government research funding, and a concentration of technical talent. Deep technology companies — in materials, biotechnology, semiconductors, advanced manufacturing — do not require a large domestic consumer market. They require research capability, technical talent and patient capital, all of which are present.

B2B software. Selling to businesses rather than consumers changes the market size question entirely. A B2B company in Singapore can serve regional and global enterprise customers, and business spending is not constrained by domestic household income.

Financial technology. The financial sector located in Singapore is a customer base in its own right. A company serving financial institutions has a substantial domestic market despite the small population, because the customers are large.

Trade, logistics and maritime technology. Singapore's position as a trading and shipping hub creates domestic demand for technology serving those industries, and the customers are global.

The common thread is that none of these requires a large domestic consumer population. They require talent, research capability, capital and proximity to specific customer bases — which is exactly what a base function provides.

The corollary is equally clear. Consumer internet businesses aiming at the Singaporean domestic market face a hard ceiling: a small population, however wealthy, supports only so much consumer spending. Consumer businesses domiciled in Singapore are, overwhelmingly, regional businesses — and their prospects depend on Indonesia, Vietnam and the Philippines rather than on Singapore.

This is why the 2024 composition shift toward deep technology and B2B is informative rather than merely descriptive. It reflects capital allocating toward where the domestic advantages actually are, after a period in which regional consumer businesses had absorbed most attention.

Government co-investment and what it does

Government co-investment programmes are a significant feature of the Singaporean market, and their effects are worth assessing honestly in both directions.

The mechanism. Government-linked vehicles invest alongside private investors, typically matching private capital on commercial terms, with the private investor leading and setting the price.

The supportive effects are genuine:

• Capital availability increases, particularly at early stages where private capital is thinnest.
• Risk is shared, which makes private investors willing to fund companies they might otherwise decline.
• The ecosystem develops. More funded companies means more operators, more experience and more subsequent founders.
• Price discovery is preserved, because the private investor leads and sets terms — which is a well-designed feature and distinguishes these programmes from direct state investment.

The distorting effects are equally genuine and less discussed:

• Capital availability can exceed opportunity quality. If matched funding is available, marginal companies get funded that otherwise would not. This is a feature if the objective is ecosystem development and a problem if the objective is returns.
• Selection incentives change. A private investor whose capital is matched has less at stake per company, which weakens the diligence incentive at the margin.
• Comparisons are distorted. Funding figures inflated by co-investment are not comparable to unsupported markets' figures.
• The exit test is deferred, since companies funded partly by capital with non-financial objectives face a softer test than purely commercial funding.

The honest assessment: co-investment programmes are effective at developing an ecosystem and less effective at producing commercial returns, and those are different objectives that are frequently conflated in how the programmes are evaluated. The evidence that would resolve it is exit outcomes for co-invested companies relative to non-co-invested ones, and that comparison is rarely published.

This is the same analytical point the 2016 US venture report makes about corporate venture and the 2022 Gulf report makes about strategic capital: capital with non-financial objectives changes prices and changes what gets funded, and a financial investor benchmarking against those prices is comparing against something they are not buying.

The base function held

The 2020 report argues that Singapore's base function proved more valuable under disruption. 2024 tested a different proposition: whether it held through a regional funding contraction.

It did, and the evidence was in behaviour rather than in statements:

• Fund domiciliation continued, including for funds whose deployment had slowed.
• Regional headquarters functions were retained rather than dispersed to cheaper locations.
• Structuring preferences did not change. Regional transactions continued to be structured under Singapore law.
• Talent remained, despite reduced hiring across the regional venture industry.

Why the base function is resilient to a funding contraction:

• The costs of the base are modest relative to what it provides. Domiciliation and structuring fees are small; the legal certainty they buy is not.
• Switching costs are high. Re-domiciling a fund or restructuring a group is expensive, disruptive and rarely worth doing to save administrative cost.
• The value is countercyclical, per the 2020 report — legal certainty matters more when contracts are stressed, and contracts are more often stressed during a contraction.
• The alternatives did not improve. Competing jurisdictions would need to offer the full set of components, and none had closed the gap.

The durable observation: infrastructure positions are more resilient than activity levels. Activity fell; the base held. That is the pattern to expect from any genuine infrastructure position — and it is the clearest test the position has faced.

Why deep technology fits a base and consumer internet does not

The composition shift toward deep technology and B2B is worth explaining rather than merely noting, because it follows from what a base function is and therefore predicts what will continue.

What a consumer internet business needs: a large domestic consumer population, purchasing power distributed across it, local logistics, local payment integration, and marketing in the local language and media environment. Every one of these scales with the domestic market, and Singapore's is small.

A consumer business domiciled in Singapore is therefore, overwhelmingly, a regional business — and its prospects depend on Indonesia, Vietnam and the Philippines rather than on Singapore. It also carries the fragmentation cost the 2018 Southeast Asia report describes, since serving those markets means replicating operations across them.

What a deep technology business needs: research capability, technical talent, patient capital, intellectual property protection, and proximity to specialist suppliers or customers. None of these scales with domestic consumer population. A materials science or semiconductor company can be built anywhere those inputs exist and can sell globally.

What a B2B software business needs: technical talent, a customer base of businesses, and a legal environment where enterprise contracts are enforceable. Business spending is not constrained by household income, so the market is sized by corporate budgets — regionally and globally, not domestically.

What a financial technology business needs: proximity to financial institutions, regulatory sophistication, and talent that understands both domains. Singapore's financial sector is itself a substantial customer base despite the small population, because the customers are large.

The pattern is that a base function supplies talent, capital, legal certainty and proximity to specific customer bases — which is exactly what deep technology, B2B and fintech require and is orthogonal to what consumer internet requires.

A base is not a market. Businesses that need a market should be assessed on the market they actually serve. Businesses that need talent, capital and certainty are where a base's genuine advantage lies — and the 2024 composition shift is capital finding that out.

What an allocator could act on

Separate domicile from operations before reading any figure. Look at revenue geography and employee location rather than registration. A company with a small Singapore team and a large Indonesian operation is an Indonesian company with a Singapore holding structure. This is the single most useful correction for Southeast Asian venture data and most providers do not make it.

Attribute fund deployment to destination, not domicile. A Singapore-domiciled fund investing across the region is a regional fund, and its deployment belongs to the markets it invests in.

Assess co-investment programmes on the objective being pursued. Ecosystem development and commercial returns are different objectives that are routinely conflated in how programmes are evaluated. The evidence that would settle it is exit outcomes for co-invested companies relative to non-co-invested ones, and that comparison is rarely published — which is itself informative.

Discount funding figures inflated by matched capital when comparing markets. A market with substantial co-investment is not comparable to an unsupported one on funding totals, and the difference is not a measure of ecosystem strength.

Expect infrastructure positions to hold when activity falls. The base function persisted through the regional funding contraction because its costs are modest relative to what it provides, switching costs are high, its value is countercyclical, and no competitor had closed the gap. That asymmetry — activity falls, position holds — is the clearest test of whether something is genuine infrastructure.

Match the business type to the location's actual advantages. A consumer business needs a market; a deep technology business needs inputs. Assessing either against the wrong requirement produces a confident wrong answer, and the 2024 shift suggests the market was correcting for exactly that.

What 2024 established for Singapore

• Domicile and operations must be separated to read the figures, and most providers do not separate them.
• The domestic ecosystem's advantages are real and specific — deep technology, B2B, fintech, trade — and none requires a large domestic consumer market.
• The composition shift toward deep tech and B2B reflects capital allocating toward genuine advantages.
• Co-investment programmes develop ecosystems more reliably than they produce returns, and the two objectives are frequently conflated.
• The base function held through a funding contraction, which is the clearest evidence yet of its durability.