It’s been half a decade since Investible launched our inaugural Early-Stage Fund, and first opened the doors of our office in Singapore.
Since 2018, we have invested in 15 companies in Southeast Asia and we are now active in markets including Singapore, Malaysia, Indonesia, India, the Philippines and Vietnam.
Australia claims less than 2% of the world’s listed markets and an even smaller percentage of global private market capital. It’s an incredible hub of innovation, but in the big picture it’s only a tiny fraction of global opportunity and ambition. Investible recognised this as an opportunity early, and it has been a core differentiator in our mandate relative to most Australian venture capital funds. More firms are now waking to these facts.
There is a lot the Australian market can learn from what’s happening in Singapore. Investible is eager to maintain our presence at the forefront of this rapidly evolving investment dynamic. To shed light on our strategic thinking, here are some of my observations and strategic context on the Singapore market.
Singapore has a unique relationship to decision-making
In Singapore, Government is central to all change. Where Government leads (and inevitably allocates capital, directly or indirectly through influence of the sovereign wealth funds Temasek and GIC and their subsidiaries), business predictably and inexorably follows.
This creates unique alignment between Government and business (including the larger regional family offices who run extensive global business operations) that enables rapid and large-scale transformational change, whether this change is economic, social or (increasingly) environmental.
Ties between Singapore and Australia are growing stronger
In the context of climate, the Singapore Australia Green Economy Agreement (SAGEA), signed late last year, has provided the imprimatur for Singaporean institutions to engage directly with Australian businesses on working together to enhance cooperative frameworks, projects and trade and investment in environmental goods and services.
Australia’s Prime Minister also recently announced the SE Asia Economic Strategy to 2040, signalling a geopolitical and economic shift toward collaboration between Australia and ASEAN as a whole.
Singapore is a global destination for family offices
In the last 5-years, it is estimated that more than US$3 trillion of capital from around 1,000 family offices globally has relocated to be domiciled in Singapore.
In addition, the Government has encouraged fund managers to domicile in Singapore, subject to requirements on employing local Singaporeans in their direct and support operations. On top of Singapore’s favourable personal and company tax regime, these trends have enabled Singapore to rapidly claim a prominent position as a global destination for significant capital flows.
Investors — including family offices — are increasingly seeking to invest at earlier stage, in many cases down to Seed, and directly onto the cap table of early-stage businesses. Our experience is that the more patient the capital, the earlier stage (further up the risk curve) it is prepared to go.
Investible’s global deal sourcing and institutional-quality DD process is resonating with these parties, who understand our approach to de-risking early stage and the co-investment opportunities to scale these technologies as they mature.
An emerging green capital powerhouse
These trends are becoming increasingly more powerful when viewed through the lens of capital flows to deliver net zero. Institutional investor interest in technologies and solutions that will deliver climate mitigation, adaptation (or both) is already significant, and growing. Temasek, for example, has established a JV with Blackrock (Decarbonisation Partners) and also founded GenZero to accelerate decarbonisation solutions globally.
These organisations deeply understand the investment dynamic playing out, in that the value of later stage climate deals is already being bid up: thus while the net zero impact from these investments is still being achieved, the commensurate financial return (extremely important to the Singaporean investor mindset) is already becoming challenging.
The global dynamics of early-stage investing — including in Climate Tech — are changing quickly. The level of sophistication of the local investor market in Singapore is leading the conversation about how to not only play a meaningful in the global net zero transition, but to ensure strong investor returns are delivered along the way.
- Rod Bristow is the CEO of Sydney and Singapore-based early-stage venture capital firm Investible.