According to the new Singapore Early-Stage Emerging Tech Startups 2023 landscape report released by SGInnovate, in 2023, Singapore’s early-stage emerging tech startup ecosystem experienced a significant surge in funding, reaching pre-2021 levels, driven primarily by increased investment in the Agrifood and Sustainability sectors.

Total funding for these startups rose to US$402 million, marking a 59 per cent year-on-year increase from US$253 million in 2022. This growth was further underscored by a 1.5x rise in seed-stage deals, signalling a broader shift towards early-stage investment activities and indicating a growing appetite for emerging tech ventures within the ecosystem as it matures.

However, despite the robust funding landscape, the number of emerging tech startups incorporated in 2023 across the four domains declined compared to the previous year. Only 25 startups were incorporated in 2023, compared to 35 in 2022. This dip reflects ongoing macroeconomic uncertainties that may have led to deferred incorporations.

Nevertheless, it is anticipated that the number of incorporations for 2023 may be higher once all data is accounted for. Yet, the observed trend suggests a cautious approach among startups amidst prevailing economic uncertainties.

“The growth we have observed in Seed-stage emerging tech funding is a positive sign that may help spur the incorporation of startups in future. Beyond funding, a key area where young emerging tech startups could benefit from support is in commercialisation, where dedicated guidance on developing products that can be commercialised will help accelerate time to market,” says Kellie Chan, Assistant Director – Investments, SGInnovate, in an email to e27.

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“The incorporation of new emerging tech startups is not immune to the influence of macroeconomic conditions. As such, the persistence of current uncertainties will naturally lead entrepreneurs to exercise caution about launching new ventures due to market conditions and funding access concerns. Global political shifts in 2024 may also see changes in governmental priorities and policymaking, which could spark renewed interest in certain sectors—leading to growth in startup activity and funding in those areas.”

Funding and incorporations in agrifood and sustainability

According to the report, the Advanced Manufacturing sector has faced a consistent decline in new company incorporations since 2020 despite the sector’s robust research output. Challenges such as commercialisation hurdles and talent availability issues highlight emerging gaps in support for startups in this domain.

In contrast, the Agrifood and Sustainability sectors have demonstrated strong performance in funding and incorporations in 2023, likely propelled by public and private sector initiatives. Agrifood startups secured 13 deals, while Sustainability startups closed 16, indicating a positive trajectory.

Sustainability is the only vertical to witness year-on-year increases in funding events and funding amounts since 2021, with average Seed round sizes nearly quadrupling between 2022 and 2023.

Although the Agrifood sector has seen a slight year-on-year dip in incorporations, the industry has consistently generated new companies over the long term. Notably, most of these startups have focused on alternative proteins or related technologies, underscoring the vibrancy of Singapore’s alternative foods space.

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Despite seven undisclosed funding rounds suggesting higher overall funding in 2023, the amount raised in the Agrifood sector is likely greater than the reported total of US$9.92 million. This data reflects a promising outlook for the Agrifood and Sustainability sectors, showcasing their resilience and growth potential within the Singaporean startup ecosystem.

In the end, the report stated that 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,” said Hsien-Hui Tong, Executive Director – Investments, SGInnovate, in a press statement.

“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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