Singapore has long been recognized as a leading global finance hub and is now poised to emerge as a major technology center for Asia, often likened to “Silicon Valley.”

Reports indicate that major companies including Tencent, ByteDance, and Alibaba are developing regional headquarters within the city-state. ByteDance, specifically, anticipates creating numerous employment opportunities over the coming three years. These firms will be joining a substantial group of international technology leaders – such as Google, Facebook, Amazon, Stripe, Salesforce, and Grab – who already maintain headquarters or substantial operations, including engineering and research & development facilities, in Singapore.

This increased concentration of technology companies will likely intensify competition for skilled professionals among startups. However, Singapore-based investors suggest that a diverse collection of large tech firms benefits the overall ecosystem by increasing available resources, such as mentorship programs and initial funding possibilities. Furthermore, the long-term presence of these global tech giants, alongside locally developed unicorns like Grab, Sea (previously Garena), and Trax, could lead to expanded exit options for startups.

Although the trade tensions between the United States and China may have encouraged companies like Tencent and ByteDance to relocate more of their operations to Singapore, this is not the sole motivating factor, according to Jessica Liu, a partner at AppWorks who manages the venture firm and accelerator’s Southeast Asia initiatives.

These companies already held investments in businesses throughout Southeast Asia and were actively exploring those markets, with a particular focus on Indonesia. She explained to Extra Crunch, “The trade disputes of the last couple of years and other challenges encountered in the United States are likely contributing factors. Strategically, they also need to identify a significant market offering substantial, sustained growth potential, and Southeast Asia appears to be that target region.”

Government policy pays off

The appeal of Singapore to technology firms extends beyond its advantageous location near key expanding markets. The regulatory environment is also a significant factor. Liu explained that the Singaporean government has successfully established favorable policies and tax structures, encouraging both startups and major technology corporations to establish and register their businesses within the nation, positioning it as a logical selection for regional headquarters.

Much of Singapore’s current attractiveness to tech companies is attributable to governmental programs that have been implemented for over a decade, according to Kuo-Yi Lim, co-founder and managing partner at early-stage investment firm Monk’s Hill Ventures.

Prior to his role at Monk’s Hill Ventures, Lim held the position of chief executive officer of Infocomm Investments from 2010 to 2013. Infocomm Investments operates with the support of the Infocomm Development Authority (IDA) of Singapore, a governmental body dedicated to the advancement of the IT sector in Singapore.

“A key objective was to attract leading technology companies to establish a presence in Singapore, with a particular emphasis on product development alongside marketing and sales activities,” Lim stated. “This has consistently been a central component of the government’s strategy for expanding the technology industry.”

In recent years, companies such as Google and Facebook have established significant operations in Singapore, alongside rapidly expanding startups like Twilio, which entered the market following investment from Infocomm.

“This strategy has been in effect for nearly a decade, and even longer, and we are now witnessing the positive results, exemplified by ByteDance, as well as Tencent, among others,” Lim noted. “Generally, the impact has been very beneficial, fostering a more dynamic ecosystem, attracting a wider range of skilled professionals across various disciplines, and increasing the diversity of companies operating in different sectors.”

Additional elements contribute to Singapore’s appeal to tech companies, including its widespread use of English, the availability of numerous international schools, and its existing concentration of multinational corporations.

The timing of these developments was also important.

“From 2010 to 2020, Southeast Asia experienced substantial changes, particularly with the rise of mobile technology, making it more beneficial for companies to create local operations,” Lim said. “These factors aligned favorably during that period.”

The Singaporean government continues to introduce new initiatives designed to attract tech companies and entrepreneurs. A recent example is the launch of the Singapore Blockchain Innovation Programme (SBIP), which aims to assist companies in bringing blockchain technology to market.

Competing for the same talent pool

This situation indicates that the available pool of technology professionals in Singapore, with a population of 5.6 million, is experiencing particularly strong demand. Liu noted that relocating employee teams to Singapore can be a significant expense, leading many organizations to establish smaller engineering teams in locations like Vietnam, India, and Taiwan, particularly for front-end development roles.

When establishing operations in Singapore, multinational corporations frequently utilize internal employee transfers. Simultaneously, the government is actively working to attract skilled tech workers from other nations through visa programs such as Tech.Pass.

Many international technology firms initially transfer personnel from their home countries when establishing a presence in Singapore. However, as their operations expand, a growing number of these companies – including Google – are increasingly focused on recruiting local talent for their product development teams.

Lim explained that this trend intensifies competition for engineers who are new to the workforce or possess a few years of experience. He further stated that compensation for engineers within this category has risen considerably over the last five years and is expected to continue on an upward trajectory.

“It’s unlikely that we can overcome the inherent limitation of a finite talent pool. I believe there will always be a necessity to recruit individuals from outside of Singapore, simply because our nation is not large enough to meet all demands,” he observed.

“The competitive landscape is becoming increasingly global, as even local startups are actively seeking talent from across the region, as well as from countries like Australia, India, and China, and beyond,” he continued. “This environment encourages startups to thoughtfully and strategically compete for skilled professionals. Startups will need to demonstrate their appeal as an employer in innovative and compelling ways, differentiating themselves from larger corporations.”

Conversely, Shiyan Koh, a managing partner at pre-seed and seed stage firm Hustle Fund, pointed out that startups and established technology companies are not always vying for the same candidates.

“While increased competition for talent is evident, I primarily see this competition occurring at different levels. A startup in the pre-seed phase is not realistically competing with companies like Facebook or ByteDance. Matching their compensation packages is not a viable strategy,” she said. “The competition is more nuanced and operates within distinct tiers.”

However, Koh added that the success of the government’s initiatives to attract more talent to Singapore would ultimately benefit the entire technology ecosystem.

“The government aims to establish Singapore as a destination of choice for professionals seeking opportunities,” she stated.

“A greater number of companies contributes to this goal by increasing the willingness of individuals to accept positions in Singapore, knowing that alternative employment options are available. This creates a sense of security – ‘If this opportunity doesn’t work out, I can find another job.’ – which is particularly important when considering relocating one’s life and family. This fluidity is a key characteristic of places like Silicon Valley.”

Nurturing a startup community

When large international technology firms such as Google, Facebook, or Stripe establish a presence in Singapore, they typically cultivate relationships with the local startup environment as well.

“I believe they are very well integrated,” stated Lim. “The era of multinational corporations simply establishing a Singaporean office, employing sales staff, and conducting brief visits is over. They now spend considerably more time here, with much of their activity focused on customer acquisition, necessitating engagement with local networks and strategic partnerships.”

“They are deeply involved, not operating in isolation,” he further explained.

This close connection facilitates the exchange of knowledge, with insights moving from established companies to startups at various development phases, as well as to individuals aspiring to become founders.

“I believe this occurs across all levels,” said Koh. “A performance marketer who has only overseen a $10,000 budget will naturally seek to learn from those who have managed $50,000, $100,000, or even millions. This applies throughout the entire system. Therefore, having a greater number of experienced individuals will be beneficial for the ecosystem as a whole.”

For certain international tech companies currently expanding within Singapore, their local offices provide increased proximity to significant investments they have already made. For instance, Tencent holds a substantial investment in Sea (previously known as Garena), and Facebook recently invested in Gojek. Other prominent collaborations include Alibaba’s majority ownership of Lazada.

These major organizations also contribute valuable resources to Singapore’s technology ecosystem. Google’s Next Billion Users, a product development initiative, is located in Singapore, as is a branch of Launchpad, its accelerator program. Facebook, Shopify, and Amazon Web Services also offer a range of startup programs. Koh explained that this is primarily to expand the user base for their services, but it also provides potential founders with opportunities to connect with a global network and gain insights into scaling their businesses.

Individuals with experience at leading technology companies, similar to former employees of FAANG companies in the United States or BAT in China, also influence Singapore’s startup ecosystem.

Many of these individuals go on to establish their own companies. For example, Prithvi Rai, formerly the head of global security and later holding the same role at Uber during its global expansion, including the Asia Pacific region, founded Singapore-based cybersecurity startup Borneo in 2019. Another example is Beam, an e-scooter startup based in Singapore and operating in South Korea, Malaysia, Taiwan, New Zealand, and Australia. It was founded in 2018 by Alan Jiang, who previously launched Uber’s operations in Vietnam, Malaysia, and China, and served as country manager for Indonesia before becoming head of Southeast Asia at Ofo.

Startups founded by individuals like these benefit from founders who “have access to senior leadership, possess a broad perspective gained from operating in diverse regions and countries, and often have first-hand experience launching operations in new markets, giving them considerable practical knowledge,” according to Liu of AppWorks.

From angel funding to exits

The significant presence of leading technology firms also fosters a more extensive network of angel investors and experienced advisors.

“I firmly believe a strong community has developed over the past few years,” Liu explained. “This is a natural progression, as startup founders who previously held project management roles within large tech companies likely maintained close working relationships with their supervisors and managers. From the standpoint of angel investing, these individuals possess a deeper understanding of the founder’s capabilities, leading to increased confidence in providing initial funding or the necessary capital to begin operations.”

Looking ahead, the topic of company exits becomes important. Locally developed unicorns, including Grab, Gojek, Sea, Trax, Tokopedia and Traveloka, have already completed numerous acquisitions. The current focus is whether major international technology companies, such as Tencent, ByteDance, or Facebook, will also actively seek out potential mergers and acquisitions.

Liu anticipates a rise in M&A activity, as larger companies with established local operations gain more direct insight into the performance of emerging startups.

The fintech industry is particularly ripe for acquisitions, as navigating varying national regulations can be streamlined through mergers and acquisitions, offering a rapid path to expansion throughout Southeast Asia, she noted. Telemedicine and health technology also present promising opportunities.

Conversely, Koh suggests that exits involving international tech companies may take more time to materialize, potentially occurring within a “10-year timeframe.” However, she believes the Singaporean tech ecosystem will continue to mature at an accelerated pace.

“I’ve spoken with professionals in the tech industry who graduated roughly a decade ago, and they’ve commented that there were limited technology opportunities available at the time, leading them to pursue careers at firms like Goldman Sachs,” she said. “Today, a computer science graduate from Stanford would not typically consider a role in the IT department of Goldman Sachs. Therefore, the presence and active investment of companies like ByteDance is highly beneficial, as it provides local talent with exposure to large-scale operations and inspires them to create their own ventures.”