Last week, TiE Singapore held an event at the Singapore Cricket Club hosting some notable TiE members who were passing though the country on their way to Bali for the annual TiE retreat.
The event presented two panels addressing the differences between the US and Singaporean startup ecosystem and also the current developments in the media space. TiE Global Chairman Ashok Rao was the keynote speaker at the event.
Another key TiE figure at the event was Anil Khatod, who holds the position of General Partner and Managing Director of Argonaut Private Equity. Argonaut Private Equity is a US-based venture capital firm that has a fund of about US $5.5 billion and currently has investments in the US, China, India, Australia, Europe, Israel and South Korea.
Anil claims that the firm is sector agnostic when it comes to choosing their investments. Rather, they are very opportunistic in nature and the types of companies they invest in depends on the ecosystem of the country. For example, in Israel Argonaut can be considered a technology venture capital firm while in India their focus is more on growth stage infrastructure companies.
e27 were able to grab a quick chat with Ashok and Anil to get their thoughts on what makes the US startup ecosystem tick and how well Singapore and the rest of Asia is doing in terms of fostering its very own startup culture.
Government assistance may not be good for the ecosystem
In Singapore, the investment firms and startup funds are heavily driven by government backing as compared to the US, where there is little or no government funding at all. “I think a very strong government funding creates the feeling of a big safety net. So it discourages risk taking. It discourages the desire to shoot for the moon, to be a Mark Zuckerberg or a Bill Gates,” said Ashok.
And that is why he does not see a Zuckerberg-scale entrepreneur coming out of Singapore yet. However, he believes that India is capable of producing one. ” So many people have come up in India because they have done it in spite of the government,” he said, adding that he believes that a less supportive government may instill a stronger entrepreneurial drive in the community.
Anil shared similar sentiments. “Entrepreneurship and governments don’t go together,” Anil said, adding that government assistance is essential but only until a point. Although he values the support that the Singaporean government is pouring into the community, Anil cautions against making sure that the method employed is the correct one.
“It [government assistance] can take out a lot of obstacles but don’t be in play of telling entrepreneurs what to do and how to do it. Let entrepreneurs figure out how to be successful,” Anil said.
Cultural issues and community’s maturity shapes entrepreneur’s mentality
Two factors — the culture issues and the maturity of the startup community in the region — are believed to shape the entrepreneurial mentality. Why Asia is lacking behind the United States is due highly to cultural stances. “Going and staring your own business was risky because you don’t have a job. Not having a job was something that brought shame to the family,” Ashok said in explaining why the Asian workforce is less geared towards entrepreneurship and more towards securing a corporate job.
Ashok’s observation of Singaporeans is that they are not naturally out there starting businesses. Most of them are joining the government workforce or large corporations.
Anil’s take on the difference between ecosystems lies in the maturity of entrepreneurs across the world. “In the US, there are literally tens of thousands of startups. And therefore the environment is very robust,” Anil said, and also mentioned that the existence of major venture capital and angel investor institutions helps the community reach a higher level of maturity.
Anil also sees China and India following in the steps of the United States and beginning to bridge the gap. In India, although early stage investing is still very immature, the growth stage is doing very well. Such is what makes the US such a strong place for entrepreneurship.
The fact that there are so many people starting companies or want to start a company coupled with a very strong support from private funding institutions provide for a rich and encouraging ecosystem. According to Ashok, the United States sees a staggering $30 billion dollars in angel investments and another $30 billion in venture capital investment yearly.
“It is not just venture capitalist but angels and venture capitalists that fuel this economic engine for entrepreneurs and small businesses,” Ashok says. In this regard, the signs are not pointing favourably for Singapore, which has only 29 angel investors compared to the US, which has 300,000, according the World Bank Statistics.
So how then can investors from the US be brought to Asia or Singapore? Both Ashok and Anil believes that to attract foreign investors, Singapore or Asia must first start from within their own community by building up their own angel community. These are the people who make investments close to home and most importantly are able to provide the mentorship required to groom a strong startup community.
Singapore, as viewed by Ashok and Anil, is a wealthy country. They believe that such wealth can be poured into the local startup community in order to grow it to a level where it becomes attractive to foreign venture capitals. “So starting from within the community — that is what’s important, that’s what made the United States so successful. Where there is a very thriving angel community there, there is a very thriving mentorship program available,” advices Anil.
As such, TiE is showing interests in extending its reach into countries such as Indonesia and Thailand as part of their efforts to foster entrepreneurship, mentor aspiring entrepreneurs and creating networking opportunities in order to strengthen the community.