Deep tech startups are fast gaining recognition as the answer to some of the world’s largest problems. Defined as cutting-edge technologies founded on scientific discoveries or engineering innovations, deep tech encompasses transformational technologies such as artificial intelligence (AI), robotics, blockchain and medtech. As deep tech continues to gain momentum in Singapore and the region, here are 5 tips for startups gathered from industry leaders at the 2018 Singapore Week of Innovation and Technology (SWITCH).
1. Assemble your dream team
Make sure you have a good founding team, said Mr Doug Parker, Chief Operating Officer of nuTonomy, a startup that launched the world’s first public trial for driverless taxis in Singapore. Although nuTonomy is based in Boston, two-thirds of its employees work in Singapore. Mr Parker credits this to his startup’s ability to find talent from the research labs here.
A senior management team with a strong patent portfolio will also help to boost investors’ confidence in the startup, noted Dr Basil Lui, Senior Vice President of EDB Investments. Intellectual property is one of the most valuable assets for a startup, and a strong patent portfolio demonstrates a good track record, quality and commitment.
2. Be patient, especially with regards to funding
Raising funds for deep tech takes longer and is more difficult as compared to consumer startups such as Uber and Snapchat. This is because of their perceived higher risks, longer development timelines and larger funding needs. As such, investors often struggle to understand and evaluate the value of the product.
One way to overcome this is by engaging investors early. This will give startups more time to find interested investors, and to give investors enough time to assess the technology. In the case of nuTonomy, they found that speaking at events was an effective way to promote their software and garner the attention of interested investors.
Deep tech startups also need to be patient to see returns. Though they face a risk of not achieving immediate revenue or growth at the start, they measure their successes in terms of technological progress, proof of concept and market acceptance of the technology, said Mr Paul Santos, Managing Partner of Wavemaker Partners. The hope is that eventually, their perseverance and patience will pay off in the form of a unique scientific breakthrough and an exclusive, high-valued product.
3. Target specific problems in the industry
If deep tech startups can identify specific problems in the industry early, their path to commercialisation will be faster, Mr Santos said. For instance, AI startup Silent Eight started out providing generic enterprise search capabilities, but only gained traction after focusing on combating money laundering. Likewise, Structo, a 3D-printing solutions startup based in Singapore, only found success after zooming into digital dentistry.
4. Keep your finger on the pulse
Knowing what’s trending in deep tech helps to attract investors. Using smart phones as an example, Dr Lui observed that companies seem to have hit a design threshold, and the next generation of smart phones don’t differ much from present day offerings. To differentiate themselves from their competitors, startups can work on improving the performance of phones instead, in terms of memory, system checks and batteries. Mobility, such as driverless vehicles, is another booming industry — it is worth over a trillion dollars, and dovetails into Singapore’s Smart Nation initiative.
5. Use Singapore’s resources
As part of the Startup SG Equity scheme, the government has set aside S$170 million for co-investment into Singapore-based tech startups, with up to S$4 million per deep tech startup. The EntrePass work pass scheme under the Startup SG Talent pillar has also been enhanced to make it easier for foreign entrepreneurs to establish innovative businesses in Singapore – this includes extending the validity period of each EntrePass from one to two years after the first renewal, and removing the requirement for startup applicants to have S$50,000 paid-up capital.
According to Mr Vishal Harnal, General Partner of 500 Startups, many startups in the region are therefore using Singapore as a base to take advantage of the available grants and resources for research and development. As a result, a number of these startups have commercial trials taking place even at early stages and are raising their first round of investor funding later than expected.
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