Why many Indians are moving to South East Asia to launch their ventures
For Navin Suri, who was heading Bank of New York Mellon’s asset management business in Hong Kong, Singapore was the obvious choice when it came to setting up.
He said he had always heard about the “ease of doing business” in Singapore, but even he was taken aback when it took him less than 30 minutes to set up his data technology company in 2014.
From getting his registration number to signed MoUs, it all got done between 10.40 and 11.10 pm SGT. “I even got a prompt from the government with suggestions as to how I could set up a website,” says Suri, co-founder of Percipient.
South East Asia is also a fantastic gateway for startups looking to go global. Chandrima Das, founder of Bento, says they were working towards an international clientele and hence their decision to be based in Singapore and focus on the Asean market to start with. “Today my focus on the Asian market has paid out. We are actively targeting and working with clients in Hong Kong, Thailand, Malaysia, Indonesia and other countries. For instance, we work today with Siam Commercial Bank, which has a 11 million customer base, a base we have acquired despite, or because of being based in Singapore. If you look at just Singapore the entire population base is 5.6 million,” she says.
Das says being regulated in Singapore also helps immensely. “Because not only are the Singaporean authorities fast and efficient, they are also highly stringent when it comes to security checks and audits. After we got our fund management license from Singapore, we knew it would be much easier for us to enter Thailand and Indonesia,” she says.
Another major attraction is the tax rate. “It’s half of that in India. South East Asia helps you retain more of your earnings and price your products more competitively,” says Shailesh Tiwari, CEO of GameChange Solutions, which looks to drive employee productivity and engagement with gaming and interactive work models.
He also noted that often the government throws its weight behind a startup. Something that Percipient’s Suri experienced first hand, when he got to share the stage with PM Narendra Modi and Monetary Authority of Singapore (MAS) officials at the fintech festival in Singapore in November 2018. “We are creating the exchange Apix, which will connect 100 banks in the next 3 years, with USbased Virtusa. Such government interest really helps young companies like us survive,” says Suri. The fintech festival saw more than 40,000 participants of whom more than 10% were Indians, say organisers.
Indian startups are increasingly occupying centrestage. Ankiti Bose’s fashion startup Zilingo raised more than $226 million in its last round of funding, valuing it at $970 million. Another $30 million bump up in valuation and it will become one of the rare unicorns with a female founder.
Governments in South East Asia are now offering a range of mentorship, seed funding, introduction to investors, faster regulatory clearances and a hands-on approach to solve any and all problems. From funding their laptops (if they are a small startup) to providing salary subsidies for experienced hires (aged 60 and above), the business-friendly atmosphere is omni-present.
Industry sources say 1 in 7 startups in South East Asia are started by Indians or Indian-origin CEOs. “In our Singapore Fintech Association, 3 of 10 board members are Indians, the others are Chinese or Malays. Seeing the exponential growth of our cluster of 350 startups, the Monetary Authority of Singapore actually organised an event in Mumbai and Delhi this February to further highlight opportunities for those wanting to set base here. Our fintech chaupal WhatsApp group alone has some 350 small and large startups, from Instarem, which raised more than $60 million to players like Active. AI, which raised about $10 million,” says Varun Mittal, board member, Singapore Fintech Association and founder of HelloPay, which was sold to Alibaba Financial. “There are also VC funds like Jungle Ventures and 500 Startups that are focused primarily on Indians setting shop in South East Asia,” he says.
Founders also point to government involvement even for early-stage startups with different grants and schemes. One of these is Spring’s Startup Enterprise Development Scheme (SEEDS), which has a co-financing option, that is, investing the same amount as a third party investor or fund, up to $1.47 million. Another is IDM Jump-start and Mentor (i.JAM), which has supported more than 250 startups, including those of Indian CEOs. This grant of $37,000 lets startups do concept testing and market validation before seeking external investment. Singapore also has its own set of active accelerators and incubators including Startupbootcamp FinTech, Fatfish, Rockstart and NTUC U Startup.
Among the beneficiaries of Singapore government grants is payments platform Instarem, which last month closed its series C funding of $41. Co-founder Prajit Nanu, despite living in Mumbai since childhood, chose Singapore to set up the venture. “There were so many government grants available to us. In 2015, we secured one grant for product innovation and got a 40% rebate on all the laptops we got for our staff. More importantly, Enterprise Singapore arranged so many meetings, it served as an induction to their ecosystem,” he says.
Instarem got a direct issue license for credit cards in Singapore. “In India, there is no such equivalent and the regulation is in a grey area. Also any license we apply for in India, we have no idea if it will take 2 or 12 months for clearance. There are other differences. Only now a few Indian banks have opened up their APIs. In Singapore, open APIs have become mandatory and are regulated. It’s the same with data localisation issues,” Nanu says Startups also receive guidance on regulatory issues, says Varun Mittal of Singapore Fintech Association. “If there are possible roadblocks or noncompliance issues ahead, fintechs are warned before hand. And helped. Which is why from just a dozen Indian fintech startups in 2010-11, now there are more than 350 recognisable fintech startups, and probably hundreds more in the fashion, e-commerce, and retail spaces,” says Mittal.
A lot of larger homegrown Indian fintechs are also relocating to Singapore to expand in South East Asia for the ease of doing business, tech-friendly market, lower tax rate (17-22% compared to India’s 30%), ease of hiring expat Indian talent and regulatory clarity. “We work in the area of cloud data storage and we took an early decision in 2012 to move base to Singapore for an international audience. Given India’s emerging laws and RBI’s often changing stance, we would have been out of business had we focused only on India,” say the founder of an Indian fintech firm that relocated to Singapore.
Source: ET Tech