There is growing global consensus that South East Asia is playing the defining role in shaping the future of the global digital economy. This realisation has prompted an urgent need for ambitious start-ups pursuing their next phase of expansion to build a regional presence. The clock is ticking, and those that move too slowly risk missing out on a period of unprecedented growth and opportunity.
A 2021 Asia Partners report forecast the emergence of more than 20 regional tech companies valued at over $1bn by the end of the decade. Its authors were also insistent that, in order to fully benefit from developments in the region and navigate its unique complexities, “home court advantage” will be key.
However, for European start-ups eager to get on court before the whistle blows, the distance they need to bridge can seem daunting. They obviously want to tap into a digital economy projected to reach $300bn by 2025, but establishing products, partnerships and funding in entirely new markets presents its own challenges.
A significant proportion making the leap are opting for Singapore as their hub of operations. The city-state serves as a poster child for the power of globalisation, boasting a business-friendly environment; established regulatory frameworks; robust physical and digital infrastructure; and an array of support services for international businesses setting up shop, smoothing the transition process for entrepreneurs and enterprises travelling east.
A golden age
They are joining an incredibly healthy scene. A World Bank report published in March of this year credited government leadership, a strong university network, global linkages, a growing emphasis on deep tech sectors, and substantial and growing investment activity as all being key contributors to creating one of the world’s most dynamic start-up ecosystems.
“This entire region has entered a golden age,” explains European regional vice-president at the Singapore Economic Development Board (EDB) Choy Yong Cong. “Accelerated by the effects of Covid-19, many consumers are adopting digital solutions and platforms for the first time – be that in e-commerce, education, finance and healthcare – a lot of which is still white space in the region.”
“Corporates [in Singapore] are looking to rapidly innovate by partnering with or investing in start-ups to improve their product suite and serve customers better,” Choy adds. “Companies stand to benefit from fewer competitors than in mature markets, a fast-growing pool of eager adopters and availability of funding. If they are able to capture the market early, they could unlock tremendous growth.”
And where opportunity lies, innovation will follow.
Launch pad for regional growth
One European enterprise that has already made a successful move to the region is cross-border payments fintech Wise, formerly known as TransferWise, a company whose mission is “money without borders”.
Companies stand to benefit from fewer competitors, a fast-growing pool of eager adopters and availability of funding. If they are able to capture the market early, they could unlock tremendous growth.
Choy Yong Cong, EDB
“Our founders wanted to solve a problem they faced in their own lives: high fees and currency markups on foreign exchange transactions,” says Venkatesh Saha, Wise Asia Pacific’s CEO and head of APAC expansion. “They quickly realised that this problem is a global one. We came to Singapore as part of our aspiration to eventually serve everyone, everywhere, who is looking for a better, cheaper and more convenient solution.”
APAC is the company’s fastest-growing market. The region has a ‘fintech-first’ focus, and a populace that is comfortable accessing digital financial services through smartphones. A study by Google and Temasek found that digital payments in South East Asia alone will hit $1.2trn by 2025.
This has helped Wise to rapidly grow its presence, already operating in eight APAC markets and with further launches imminent. It already has products and features operational in Australia, Hong Kong, Indonesia and India, Japan, Malaysia, Singapore and New Zealand.
Five years after arriving in the region, such rapid growth has already seen the Singapore headcount rise to more than 200, with plans to onboard over 90 new colleagues by the end of 2021.
“Digital payments have really taken off,” agrees Saha. “Clearly, consumers are driving the change in needing better, more convenient solutions. Also, governments have begun to invest in digital payments in a big way, both through enabling regulation for payments companies, as well as the ‘hard’ infrastructure that makes instant payments possible.”
With APAC’s digital-first philosophy, a move to the region made sense for Wise, but why choose Singapore as the launch pad?
“Singapore’s status as a global hub for digital innovation, the ease of doing business, access to a diverse talent pool and a regulator that focuses on and understands fintech, makes the city a perfect hub for our growth,” Saha explains.
A home from home
Wise, for which Singapore has become both its APAC base and an innovation hub where products are built for the global market, has enjoyed local support at every stage of this journey.
Singapore is a melting pot of talent that allows us to tap into a diverse pool of skills and perspectives to build the best products. EDB, MAS and Govtech have supported our mission of making our product faster, cheaper and more convenient for customers.
Venkatesh Saha, Wise
“Singapore is a melting pot of talent that allows us to tap into a diverse pool of skills and perspectives to build the best products,” Saha remarks. “Also, EDB has been a partner from the beginning, as have MAS [the Monetary Authority of Singapore] and Govtech [the Government Technology Agency]. Together, they have supported our mission of making our product faster, cheaper and more convenient for customers.”
“For example, when we first launched in Singapore, all of our customers needed to come to our office in person for verification,” he adds. “Having stayed and continued to build in the market, and working closely with MAS, we were eventually able to offer instant onboarding to our customers through direct integration with MyInfo, the national database managed by GovTech. We often show this globally as an example of what a best-in-class customer verification process should look like.”
Similarly, when MAS opened up Singapore’s real-time payment rails, FAST, to non-banks and financial institutions, Wise was one of the first to connect.
“This was a momentous occasion made possible after months of investment and commitment to building a resilient integration, undergoing rigorous testing and ongoing conversations with, and support from, MAS,” says Saha. “This integration allows us to own the entire payments experience from start to finish.”
It is a support structure that enables European start-ups to become more than just foreign entities in a foreign land. They can, in fact, become true local players.
“Home court advantage does not mean local versus foreign,” says Choy. “It means whether a company and its employees are open-minded enough and understand the customer journeys in their markets and sectors. A local company can do poorly if it does not do that well and, conversely, a foreign company may do well if it localises and adapts its products to fit the market.”
Unlike Europe, where a single licence can be used across multiple countries, South East Asia’s diversity extends to its regulations. Regulatory permissions vary from market to market, and it can take up to two years to secure permissions. Fortunately for Wise, Singapore – and MAS in particular – has led the way in making regulations clear, creating a standard for more countries to follow in their efforts to create ecosystems that support the fintech space.
“Even companies that were born here need to develop an understanding of other local markets if they are to succeed,” notes Choy. “Operating in Singapore gives the balance required between centralisation and localisation. Geographically, it is a hub location, but it is close to key regional markets in the region, and it attracts both locals and expat talent with experience working in the region. Furthermore, given its melting pot of demographics, it is also a good test bed for new products and services.”
As an English-speaking and highly cosmopolitan country, Singapore is safe, secure, stable and, above all, a welcoming place for European enterprises. Those enterprises also benefit from strong support from its existing tech community, like-minded entrepreneurs, a broad talent pool and government.
“Growing a company in a new region is tricky business,” acknowledges Choy, “but Singapore strives to reduce friction as much as possible, so that companies can focus on what matters – innovating new technologies and scaling their business rapidly.”
Hear leaders from EDB, Wise, Entrepreneur First and Tropic Biosciences discuss opportunities for European tech start-ups and VCs in “Tech for Good: Opportunities in South East Asia for UK and European Start-ups”, a panel that took place at London Tech Week.