There have been frequent panel discussions and dialogues about instilling a sense of entrepreneurship spirit and the spirit of daring to fail on both the startup and national levels.
But are we truly walking what we preach?
Despite a recent report that Singapore has retained its place as second best on a World Bank ranking for the ease of doing business, let me tell you why I stand by that statement.
First, ease of doing business does not equate to ease of starting a business. Ease of starting a business also does not mean the environment required for doing so is there. It can simply be the process is quick and efficient, not necessary the proper ingredients for so are there, high labour and rental cost aside. Then again, it also depends on how you define what does the Silicon Valley of Asia mean.
Also Read: Whats Silicon Valleys secret sauce : what Asian entrepreneurs can learn in terms of culture
The silicon chip is an integral component of the semiconductor industry and is used in just about everything that’s computerized and Silicon Valley probably got its name due to a large number of innovators and manufacturers in the region specializing in silicon-based businesses during its earlier days.
I’m also sure you would agree the following are critical to the startup ecosystem: a hotbed of startup activities, great talents, key partnerships, and more importantly, funding.
For the 3rd year running or perhaps even longer (I only researched 3), seed-stage deals have been dropping reflecting the low-risk tolerance here.
Taken from Wikipedia itself, “Silicon Valley has a social and business ethos that supports innovation and entrepreneurship”. From Dictionary.com, an entrepreneur is “a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.”
With all the talks within the ecosystem, about embracing failures – taking risks, do we truly put our money where the mouth is? Or is it simply the case of “Yeah, take the risk. You, not us.”
Just in Q1 2018, Grab received a US$2.5 billion fundraise among the city state’s record US$2.68 billion in VC investment. However, a whopping 93.28 per cent of it is going to just one company.
There used to be frequent debates on many Startup and Entrepreneurship Facebook groups and pages on if the seed stage is dead. Nowadays, I rarely see them. Perhaps the debate has been settled once and for all, or everyone just silently resigned to fate. Perhaps the seed stage is not dead, but it might as well be.
For the 3rd year running or perhaps even longer, seed-stage deals have been dropping. If the mindsets of key private players of the ecosystem do not change while schools are advocating entrepreneurship, how can we have a holistic ecosystem where we cannot even have the chance to truly take chances? Should we motivate our next generation to equip themselves with updated skills in STEMS, AI, coding so that they can become great employees or that one day, they can become the next Facebook or Tesla and there be an environment for so?
Also Read: What Singapore can learn from Silicon Valley
While I had to turn down a couple of angels as they wanted the majority of my startup’s equity, others might have better luck than me. I could also be talking to unsuitable angels that might not be representative of the “education” and mindset of most angels here.
A friend who works at one of the angel networks here told me she was surprised by how much the angels here require to see before opening their chequebooks when the average investment amount is lower than where she came, another country in Asia despite their PPP and GDP are much lower.
Even feedbacks among founders could be inaccurate as it depends on who we hang around with. During a talk at an entrepreneur hub where there were 2 founders from the USA and Australia respectively, I raised my hand and asked them about their opinion of the fundraising scene here, I could already guess the answer, to which both replied that VCs here give lower valuation, take longer to come back, required more tractions. The only reason why they chose to fundraise and have a headquarter here is that their target market is this region.
A VC once commented that founders should not have “me too” idea and that he looks at founders with skin in the game. Okay, first part sounds reasonable, but how do you measure “skin in the game?” I asked. He replied determination, grit and perseverance.
Okay sure, but How do you measure that? I made dozens of pitches to VCs and angels, and never once did they ask anything besides the solution, the business plan, etc that would determine mine. He answered one way of looking at it was how much have we invested.
As a matter of fact, this question comes up rather often – but how and what has that got to do with anything? A founder that invested 500k vs another that invested 5k?
“How much” is subjective. 500k or even 5 million could be nothing if your father is a regional automotive giant vs me of humble background with my dad also in the automotive industry but working as a driver.
For over a year, I slogged and took the financial risk of doing this full time. While I am very fortunate to have the blessing of my girlfriend whom I have been with the last couple of years, I have to painfully and selfishly shelve aside our hope of applying for a flat now in our late 30s so as to allow me to concentrate on this endeavour.
All this while, not giving up and moving on to attempt to start this startup right after a year of research, interviewing dozens of other users and similar platforms aboard, when just not too long ago, for many months not receive any salaries despite supposedly being a paid director and suffered financial ruins – I persevered.
Never once a VC or angel tried to assess if I have grit. If the angels here behave like VCs and VCs like PEs, who will give founders a chance? The irony? I want to start a reward crowdfunding platform as I wanted to encourage more to take up the path of entrepreneurship and help them to be able to raise the funds to do so.
How Silicon Valley became Silicon Valley could also probably be due to the America Dream and that it is the land of opportunity. I noticed most young entrepreneurs usually have parents that are entrepreneurs themselves. In the UK, only 4 per cent of doctors came from working-class families. Social mobility through entrepreneurship aside, while I envy as they have more access to resources, I also want to believe in a meritocracy – that anyone can succeed with the right idea and hard work.
It’s important to be hopeful, but when for the 3rd year running or perhaps even longer, where seed-stage deals have been dropping, and the ecosystem is shutting the door of opportunity more and more often, when should we really speak up and urge for more to be done? Isn’t being an entrepreneur being all about changing the status quo?
Also, what does this bode for the long-term health of the ecosystem?
In the US, the odds of becoming a unicorn is 1 out of 1092. If we do not have enough ideas getting invested to compete and survive, the odds of us producing a unicorn are going to get lesser. It takes a village to rear a child, but what happens when the village only focus on the big boys and neglects the toddlers?
Sure, with our favourable tax and business climate, we can become an attractive startup hub. But with established business coming over to be headquartered here and becoming later a unicorn, and with key players here remaining conservative and risk-averse to the seed stage, is that really encouraging entrepreneurship? Or do we promote entrepreneurship like how we import foreign table tennis players?
Singaporean boldly invests in property and the stock market. However, we must also continue to support and invest in our entrepreneurs, else, when we call ourselves the Silicon Valley of Asia, are we referring to the shell or spirit?
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Image Credit: Nik Shuliahin
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