Why India shouldn’t worry about startups leaving for Singapore


Murli Ravi from Unicorn VC weighs the pros and cons of Singapore and India as locations for startups to grow and thrive

Find your own path

Find your own path

Over the past few years, there’s been a trend of Indian startups moving to Singapore. To be sure, this is only true of a tiny minority of startups but the trend has become noticeable enough that Quartz felt compelled to write a piece titled How India Can Keep Startups from Moving to Singapore.

Now, there are several flavours of “moving” to Singapore:

  1. Legal presence only
  2. Some operational presence
  3. Senior management based in Singapore
  4. Majority of company’s employees based in Singapore

As mentioned, the number of Indian startups actually making a move to Singapore remains small. Of this already small number, ones that fall under the 4th category above are an even tinier minority.

Also Read: Asian entrepreneurs should go beyond their home markets: Preetam Rai

Some notable startups, not only from India, who’ve moved to Singapore from elsewhere:

  • Flipkart
  • Bubbly
  • Viki
  • Capillary Technologies
  • Plus a major VC firm now has roughly 40 of its Indian portfolio companies domiciled in Singapore. However, most of these fall under the 1st category named above, i.e., they only have a legal domicile in Singapore, with no real operations.

Is all of this a ‘problem’ for India? In aggregate, I think not. In fact, for some startups, maintaining a presence in Singapore may actually be a positive. Here are some benefits that looking outside India can bring Indian startups:

A broader regional perspective
In my several years looking at startup investments not just in India but also across SE Asia, Australia and the US, I’ve noticed that Indian startups sometimes get “sucked in” to solving only problems in their own backyards and don’t realise that other countries outside India may be just as attractive places to operate in.

Ease of achieving exits
We’ve started started to see good-sized exits coming out of India in the past few years. However, for a country of the size of India, the number of exits is still smaller than it should be and the exit valuations achieved could be higher, if not for the fact that the legal and financial environment for IPO and M&A exits in India could be more favourable.

Singapore (and some other places) in contrast is a good place to be based in when a startup has achieved exit velocity. Some startups plan ahead and domicile in Singapore from early in their development. As more and more exits start to happen, a virtuous cycle of innovation and entrepreneurship in India can get going.

Also Read: Echelon 2014: Exitround Founder on maximising technology M&A value

Access to a different set of customers
Enterprise-focused startups have often related to me sorrowfully that the typical Indian enterprise doesn’t like buying from startups and even if they do decide to go the startup route, there is a tendency to bargain for extreme discounts and favourable payment terms. For B2C customers, this is less of an issue. However, both B2B and B2C startups can benefit by at least examining the different market dynamics present in other countries, even if they ultimately decide not to expand outside India. Singapore offers one particular benefit in that a lot of major multinational corporations base their Asia headquarters in Singapore.

Spreading risk
Abrupt policy changes, corruption scandals, hot-cold investor sentiment and several other factors beyond one’s control result in heartache for entrepreneurs. Being present in more than one country while certainly adding a layer of operational complexity may help reduce one’s overall risk.

Access to complementary talent
Again this is a consequence simply of looking outside one’s own backyard. Someone who would bring a lot of value to your team may not be able to move to Bangalore but might be quite happy to be based in Singapore or another city elsewhere.

Improving operational metrics
As a consequence of some of the above factors, operational metrics like margins, days receivable, pricing structure and so on can change quite dramatically from business-as-usual levels.

Each of the above can have a pretty major impact on a startup’s path of development.

However, simply because the above benefits are available to startups in Singapore doesn’t mean that India doesn’t have complementary benefits of its own. It really isn’t one versus another.

Some other perceived benefits may not actually be true. For instance, Indian entrepreneurs sometimes assume that Singapore’s status as a global financial centre means that it’s easier to raise startup funding in Singapore than in India. Arguably, this isn’t really true. India has a far greater number of active VC firms and other sources of startup capital.

So should India worry when startups migrate to other shores? Mostly, the answer is no. If anything, this is something to be encouraged as Indian startups start to forge regional and then global identities as they grow and mature.

The views expressed here are of the author, and e27 may not necessarily subscribe to them

e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested to share your point of view, please send us an email to writers[at]e27[dot]co

Murli Ravi

Murli Ravi is a seasoned venture capital professional who has overseen investments in over 20 companies across Australia, India, Singapore and the US (both Silicon Valley and New York). He has a particular interest in cross-border firms who understand that Internet-enabled globalisation can be a massive opportunity across geographies -- as long as they appreciate each region's specific needs. Follow him at http://twitter.com/murli184

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  • http://www.cognation.net/ deancollins

    ….would have been a better article if actually said something and had more research…..

    Like what are the costs of domiciling in Singapore…what are the advantages

    What are the local talent costs in Singapore – what is the average salary comparison between the two – what are the average years of experience and education background between the two markets?

    What are the various exit strategies for upstream buyouts? what are the number and relative size of Sing/Indian acquisitions – Does domiciling in one or another legal system matter when it comes to being bought out?

    Murli, Why bother writing an article if you aren’t going to put in any effort????

  • http://e27.co/ e27

    Hi @deancollins:disqus,

    Thanks for the comment! We’ll see if we can do a follow up to this particular story. Stay tuned!

    – Brian

  • http://www.murli.net/ Murli Ravi

    Wow, Dean. Your questions are valid but why so negative? As Brian cheerily responds, these could be fodder for a follow-up piece. I hope you will do the research and write it.

    That said, a lot of the facts that this piece relies on and mentions in passing are well known to everyone who operates in this region, i.e., the average e27 reader. Some of these facts are the salary differential between Singapore and India, the number and size of acquisitions (to mention two of your points), policy changes and the legal environment for fund-raising (to mention two of mine). Unfortunately, you seem to be a US-Australia operator who’s not as well-versed in these matters.

    Note that this is an opinion piece written by a practitioner. Admittedly, I may have a blind spot as to what the lay person may or may not know about the topic, but I took the view that providing detailed explanations of things that are known to the average e27 reader would come across as talking down to my audience. Also note that I am not a journalist out to do primary research and get quotes from respondents for the sake of writing an opinion piece. And finally, anything longer and I’m sure the post would be too long.

    I look forward to reading your article soon.

  • http://www.cognation.net/ deancollins

    Murli, I don’t see the questions as being negative at all but demanding a higher value from content I read.

    Its like you proposed to tell us how to bake a cake….wrote out the ingredients but then couldn’t be bothered doing the research to actually write out the recipe…….

    As for your jab about not being local…..yes I’m from Australia….Yes I now live in the USA……however I did live in Singapore…..97 (Singtel) and did live in Malaysia …01 (ICX) but hey what do I know…..

  • http://www.cognation.net/ deancollins

    No probs….i don’t think he took it well.

    I guess my point I was trying to make (ineloquently though) is if you are going to write an article…..it should cover more than just the clickbait headlines.

    People tend to give websites “a free pass” because they are free, but I think its time to aspire for a higher plain of output from all of us involved in the tech industry.

  • Murli’s Friend

    Dean, I agree Murli’s comments were not in the right spirit. I also think his response were talking down on you with some personnel comments. Murli, if you write in public forums and some one give you feed back please take that humbly rather than telling the person to do it himself.

    I also found the article non very well researched.

  • http://www.murli.net/ Murli Ravi

    Well, sorry about that, my friend. A couple of people asked me whether I knew the “troll” (their terminology) and why this person was being so “impolite” — before I put up my comment.

    Dean, it wasn’t a jab. All I was saying was, that my piece was aimed at what I thought was the probable audience at e27. You don’t fall into the audience. Just factual, neither negative, nor positive.

    That said, I did acknowledge in my comment that I might have a blind spot. Quite civil, I thought. No? Compare that to “Why bother writing an article if you aren’t going to put in any effort????” In contrast, the comment immediately above this one is very politely expressed — thank you! :)

  • http://e27.co/ e27

    Thanks for being understanding, Dean. I’ll be bringing this up to our editorial team, to see if we can do a follow-up piece to Murli’s story.

    On another note, we are aspiring to create some of the best content out there for our readers, and thanks for your feedback regarding it. We’ll do better!

    – Brian.

  • http://e27.co/ e27

    I don’t think there was any trolling in the comments, but glad to see that everyone’s said their piece. :)

    Thanks Murli, for sharing your views on our site as well. From what we can see, it’s a hot topic, and we’d like to work with more people on to share their opinions here on e27 as well.

    – Brian.

  • Murli’s Friend

    Murli,The fact is if you put your opinion out in the public, there will be some sort of feedback unless you consider yourself to be a know all genius. Most authors I know accept both compliments as well as critiques humbly rather that give advise.

    Your comments like ” I hope you will do the research and write it.” As well as “I look forward to reading your article soon.” Did not leave a good taste.

    Having said that, as you mention most of the facts are mentioned in passing which shows the colloquial, non research driven based investment rationale and hence the usual pedestrian track record of vc in the region.

  • http://www.murli.net/ Murli Ravi

    Thank you for your advice.