Singapore’s early-stage emerging tech startups saw an uptick in funding in 2023, with total funding climbing to $402 million in 2023, up 59 percent from $253 million in 2022, SGInnovate said Tuesday.

The government-owned innovation platform said in a report that following more muted funding conditions in 2022, investments into Singapore’s early-stage emerging tech startups have risen to pre-2021 levels, led by growth in the agrifood and sustainability sectors.

Complementing the increase, the number of Seed-stage deals have risen by 1.5 times between 2022 (20) and 2023 (30) across the four domains.

These are likely due to a wider shift towards early-stage dealmaking, and indicate a greater appetite for emerging tech investments as the ecosystem continues to mature.

Meanwhile, the number of emerging tech startups incorporated in 2023 across the same four domains has declined, with the current number observed standing at 25, in contrast to the 35 incorporated in 2022.

While the final figure is likely higher as more incorporations from 2023 are uncovered, it is still expected to represent an overall dip compared to 2022; a reflection of the ongoing macroeconomic uncertainties which could lead to deferred incorporations.

Among the verticals that have witnessed a consistent decline in number of new company incorporations is Advanced Manufacturing, which has seen incorporations drop steadily since 2020.

Despite a consistent output of high-quality research in this area, ongoing challenges in areas such as commercialization and availability of specialized talent point to emerging gaps in the support and resources available to new startups in this space.

In 2023, the agrifood and sustainability spaces performed strongly in terms of funding and incorporations, likely in tandem with public and private sector initiatives.

Funding events have grown year-on-year for both sectors, with agrifood startups securing 13 deals in 2023 (versus eight in 2022) and sustainability startups closing 16 deals in 2023 (versus 12 in 2022).

Sustainability is the only vertical to see a year-on-year increase in both funding events and funding amounts since 2021.

This sector was the most active in terms of the number of startups incorporated last year, while average seed round sizes have also grown by nearly 4x between 2022 and 2023.

Meanwhile, the agrifood sector’s total deal count included seven undisclosed funding rounds, indicating that the full amount raised in 2023 is possibly higher than the current total of $9.92 million.

Though the industry has seen a year-on-year dip in incorporations, longer-term data reveals that the agrifood industry continues to produce a steady stream of new companies (2017 to 2021: 57, 2019 to 2023: 80).

Among the industry’s crop of 80 startups incorporated over the past five years, the majority (39 percent) have been companies involved in alternative proteins or related enabling technologies, highlighting the vibrance of Singapore’s alternative foods space.

“The trends we are seeing are an indication of the maturity and growing dynamism of Singapore’s emerging tech landscape, with more specialist investors coming in to support specific verticals,” said Hsien-Hui Tong, Executive Director of Investments at SGInnovate.

In terms of startup visibility, report findings show that it can take up to three years to uncover the majority of emerging tech startups incorporated in a given year, suggesting a higher level of ecosystem activity than initially discovered.

For instance, updated data in the current report has identified 93 emerging tech startup incorporations in 2021.

This prolonged discovery period may be attributed to a range of factors, such as founders’ preference to increase company visibility only after raising their first institutional funding round, or upon completing development of their minimum viable product.

In the realm of strike offs, the report found that approximately 9 percent of the emerging tech startups incorporated between 2019 and 2023 have ceased operations, with many expected to face the most acute risk of strike off from around their third-year post-incorporation – consistent with the additional 18 to 24 months of runway that a round of funding provides.

Among the various verticals studied, startups in the health and biomedical sciences and advanced manufacturing verticals accounted for around 47 percent (15) and 28 percent (9) of all strike offs respectively, emphasizing the ongoing challenges faced by both sectors.

On the outlook, SGInnovate said 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,” noted Tong.

According to him, 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 decarbonization, including battery recycling and sustainable materials production.

The findings are presented in the Singapore Early-Stage Emerging Tech Startups 2023 landscape report released by SGInnovate.

SGInnovate launches national-level talent development strategy