Following Part 1 of the interview, Lim Shu Ning, Director in PwC Singapore’s Venture Hub specializing in Blockchain analyzed the key challenges for startups to become a “Unicorn” in Singapore and shared with us how PwC Singapore’s Venture Hub partners with local regulators and accelerators to foster FinTech innovation in Singapore.
The World of Unicorns
What do you consider as the biggest challenges to overcome to become the next “unicorn” in Singapore?
In the last few years, we do see an unprecedented rise in the number of start-ups globally and also in Asia. Singapore is at the centre of all this action thanks to its location and strong support from the government, with PwC’s APEC CEO survey 2018 finding city-state emerging as the country with the right conditions to produce the next unicorn. However, with more opportunities opening up, the level of competition in Singapore and the region is growing too.
Some notable challenges include :
1) Lack of talent with the right skills – we note that companies are struggling to find the right people with the right talent and the right skillset. And this is particularly evident here in Singapore due to the country’s relatively smaller population.
2) Costs of expansion strategy – one of the key success factors for “Unicorns” is scalability and ability to find the right markets to expand into. Expansion into new markets could be costly and would require making choices in selecting the right strategic connections/partners as well as in-depth knowledge of these markets.
3) Ability to constantly innovate – becoming a unicorn does not happen overnight. After several years, if a company is unable to keep up with changes in technology, regulations and to continuously be on top of their competition it is unlikely that they will be the next unicorn.
Compared to other jurisdictions, what do you think is lacking in Singapore compared to countries such as China and the US where most of the unicorns exist?
We believe that Singapore has strong Unicorn potential outside of China and the US, ahead of Hong Kong and Japan due to its macroeconomic strength, strong public sector support, political stability and market growth potential.
Compared to China and the US, one of the challenges we note is that due to its small size, domestic demand in Singapore is vastly lower than that in China and the U.S.. The ability to tap into huge domestic markets will allow the company to scale up quickly as compared to scaling up across multiple markets, which will take a longer time.
In general, Asian/Singaporean investors are more conservative than their western counterparts and look for companies with a track record for generating revenue. There appears to be a lack of fund flows to companies with ideas but no clear track record, even if the solutions are exceptionally innovative and potentially ground-breaking, due to the risk appetite of investors in the region.
In addition, Singapore CEOs are seen to be actively prioritizing future investments and business improvements over the next two years to raise their game in the digital space. Business leaders also face challenges hiring due to the limited talent pool.
Where does PwC Singapore’s Venture Hub stand in terms of partnerships with local regulators in Singapore?
We at PwC Singapore’s Venture Hub regularly work with ecosystem partnerships to broaden our network and champion necessary change in the industry. Some of the key partners we work with are the regulators such as the MAS (Monetary Authority of Singapore), IMDA (Infocomm Media Development Authority), SGX (Singapore Exchange), Enterprise Singapore. We work with them on several levels including co-organising of educational events, providing general advice for startups, and serving as mentors for companies.
We do see increased efforts in recent years by the local authorities and government agencies to increase support for innovation and talent development to foster the right environment and ecosystem for businesses. PwC Singapore’s Venture Hub will continue to support the regulators and provide our feedback/opinions in consultation papers or new regulations.
In addition to the regulators, we also partner a number of accelerators to support this fast-growing industry.
According to the APEC CEO survey in 2018 by PwC, artificial intelligence seems to an untapped industry. What are the reasons for the lack of innovation in this area? What has PwC been doing to boost innovation?
On the contrary, we do not think there is a lack of innovation in artificial intelligence. In fact, we observe a number of entrepreneurs who are building startups focusing on deep tech including AI, that tackle globally relevant challenges.
However, what we observe is that actual use cases of artificial intelligence may be currently muted due to various regulatory and ethical considerations. While there aren’t necessarily “correct” answers at the moment, we believe that regulations and laws will continue to evolve in order to keep up with new issues that AI brings about.
Apart from PwC Singapore’s commitment of close to S$10 million over the next two years to develop the digital skills of our over 3,500 employees; PwC has assembled new teams including the Digital Innovation Office and Experience Centre both based in Singapore. These teams aim to solve problems for our clients using technology and innovation as well as to help traditional companies with their digital implementation to improve their current processes.
What are some goals that PwC Venture Hub Singapore aims to reach in the next 5 years in terms of producing more unicorns and supporting local startups?
PwC Singapore’s Venture Hub aims to enhance the ecosystem by working with entrepreneurs and investors, creating transformational value for our clients.
We will continue to support the growth and enhance the startup ecosystem. We can expect that over the next 5 years, we will embed ourselves more deeply into the ecosystem, connecting investors, entrepreneurs, incubators and accelerators, locally and globally with the wider PwC network.