"Silent warrior" in the global deep tech race

Despite facing common challenges in the global startup market, Singapore has established itself as a hub for creativity and innovation, especially in the field of deep tech.

On October 1, the northeastern Chinese city of Tianjin launched its first driverless public bus service for a 20-kilometer route, connecting 10 stops from residential areas, schools, government offices and tourist attractions.

However, these cars are not developed by a domestic company but by a little-known Singaporean startup - Moovit, a subsidiary of the Singapore government's famous Agency for Science, Technology and Research (A*STAR) and the first foreign autonomous vehicle (AV) supplier to be licensed in China.

Deep technology (also known as core technology - Deep tech) is developed based on basic scientific research, often at the molecular, atomic or even quantum level, with the potential to revolutionize many industries and societies, solving complex problems that traditional technologies cannot solve.

“China is the biggest and most important market for AV providers in Asia,” said Moovit CEO Derrick Loh, though he added that competition is “extremely fierce” with major tech companies like Baidu, Pony AI and WeRide testing and developing fleets across different cities.

Moovit is one of a growing number of deep tech companies in the city that have become an increasingly important part of the startup investment scene over the past two years. Often referred to as “deep tech,” these startups are born from scientific research in areas with potentially big social impact, such as AVs, semiconductors, robotics and pharmaceuticals.

According to statistics, deep tech investment in Singapore increased by 31% in 2023 compared to the previous year, up from 17% in 2022 to 25% in 2023 in terms of total technology investment, higher than the global average of 20%. The majority of investors are local or American, but there are also some from Taiwan, Japan, France and Malaysia.

Từ sản xuất chip đến robot, việc phát triển nhiều dự án tiên tiến hơn đang trở thành ưu tiên quốc gia ở Singapore. (Minh họa của Nikkei)

From chipmaking to robotics, developing more cutting-edge projects is becoming a national priority in Singapore. (Illustration by Nikkei)

The recent surge in deep tech investment has helped Singapore jump up the global startup ecosystem rankings by Startup Genome, a US-based research firm, from 18th in 2022 to 7th in 2024, the highest position in Asia.

The deep tech sector, which has been under-invested in due to its more complex technology and expertise, is gaining importance amid the US-China trade war and supply chain shifts, investors say. Governments are embracing its potential, most notably with the development of highly effective mRNA vaccines against COVID-19.

Over the past decade, Singapore has developed into one of Asia’s largest startup clusters, home to around 4,500 young businesses and more than 400 venture capital (VC) firms, and 40,000 researchers, scientists, and engineers. Singapore’s strong talent base, convenient location, government support, and tax incentives have all contributed to its growth.

“We see Singapore’s ecosystem as a transit hub,” said Edmond Wong, partner at iGlobe Partners, recalling how the country has evolved into an aviation and transportation hub.

Deep tech startups have struggled to raise capital in recent years, even when the overall market is buoyant. “Our initial fundraising was very bad,” said Pham Quang Cuong, CEO of Eureka Robotics, which he spun out of his research at Singapore’s Nanyang Technological University (NTU) in 2018.

Cuong said he spoke to more than 100 local investors to no avail. He eventually turned to foreign investors such as University of Tokyo Edge Capital (UTEC), one of Japan’s leading deep tech venture capitalists. Today, the startup counts some of Japan’s largest manufacturers, such as Toyota Motor, among its clients.

Kiran Mysore, principal at UTEC, said the situation is gradually changing, partly because the VC network is struggling. “Deep tech companies are pursuing green issues,” he said. “Changes in interest rates or the way the economy thinks are not going to affect the big societal problems these companies are solving.”

According to NTUitive, NTU’s innovation and enterprise arm, the university has spun out more than 70 startups over the past decade. The total value of its portfolio companies, based on the most recent funding round, rose to S$1.27 billion ($960 million) as of March, up 94 times from just S$13.5 million in 2013. The university, which has spun out about 10 startups a year, is now looking to double that number in the coming years.

While Singapore has a strong image as a financial hub, the country is no stranger to manufacturing, accounting for about 20% of its domestic product mix. In particular, Singapore has been an integral part of the product supply chain for decades and now accounts for about 10% of all chips produced worldwide.

Last year, Singapore’s largest deep tech investment was a $139 million round raised by local semiconductor company Silicon Box, part of a $200 million funding round. In March, the company — which focuses on advanced packaging — announced plans to set up a €3.2 billion ($3.45 billion) chip factory in Italy, after opening a $2 billion foundry in Singapore last year.

On October 21, Singapore Deputy Prime Minister Heng Swee Keat, who chairs the National Research Foundation under the Prime Minister’s Office, announced that A*STAR will join forces to accelerate the commercialization of deep tech. This latest partnership is in line with the Singapore government’s largest research and development budget in history, committing to invest 1% of GDP by 2025, totaling about S$25 billion.

“Deep tech has the potential to transform industries and address common global challenges such as climate change and public health,” Mr Heng said in a social media post after attending the opening of a new office for Xora Innovation, Temasek’s deep tech arm set up in 2019. “But it is a difficult area that requires different players in research, innovation and business to work together.”

The Singapore government has revamped its efforts, looking beyond attracting large corporations and their research facilities, said Irene Cheong, assistant executive director at A*STAR's innovation and enterprise division. "What's a little different is the focus on creating business ventures," she said.

On October 3, A*STAR partnered with Flagship Pioneering, the US biotech investor behind COVID-19 vaccine maker Moderna. With a target of a combined investment of up to S$100 million over five years, A*STAR’s research institutes will help Flagship’s portfolio companies jointly develop some of the latest biotechnologies such as cell and gene therapies overseas.

Yukihiro Maru, CEO at UntroD, a Japanese deep tech venture capital firm with a presence in Singapore, said the Southeast Asian country is entering a new phase as a high-tech startup cluster.

“Singapore has become a successful global financial and IT hub. But without a high-tech manufacturing base, we will not see it develop into an ecosystem like Silicon Valley,” he said. “Finance alone cannot do this.”

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