Media and IDM entrepreneurship in Singapore

Submitted by douglas on Mon, 04/05/2009 - 2:04am

In 2009, Singapore is one of the best places in the world for a media or interactive and digital media (IDM) entrepreneur to start or grow their business.  Despite its small size,

Singapore offers tremendous opportunities for entrepreneurs in general and for media entrepreneurs specifically.

Opportunities in Singapore for early and growth stage companies

  • Public policies promoting entrepreneurship and venture capital – Many initiatives have been made in areas such as education, facilities, regulations and financing to turn Singapore into a technopreneurship and venture capital hub in
    Asia.
  • Public policies supporting the venture capital industry.  The private equity/venture capital industry in
    Singapore has grown substantially over the past 2 decades. Funds under management grew from about US$20 million in 1983 to more than US$10 billion in 2006, managed by 160 VC firms
    [i].
  • A business friendly environment. 
    Singapore ranks #11 in the world for starting a business and #1 in the world for doing business, due to its positive regulatory business environment.
    [ii]  A new business can be established within six days (the average for the region is 46 days, and 16.6 for OECD countries) for less than 1% of average per capita income (the average for the region is 42.8%, and 5.3% for OECD countries)[iii]  Singapore is ranked #2 in the world as a Network Ready Country[iv], #1 in the world in Labor Force[v], #1 in Asia and #4 in the world in Investment Incentives[vi] and #2 in the world in Investment Potential[vii].
  • Strong IP protection regime and corporate governance.  Singapore has been voted the most IP-protective country in
    Asia, with the best corporate governance and the least corruption for the last two years
    [viii]. IP protection is especially important for IDM start-ups, where content may form an important part of their competitive advantage.
  • Strategic location.  Singaporean start-ups are uniquely positioned to address one of the world’s largest and fastest-growing markets, consisting of countries within a 7-hour flight-time radius from Singapore - including China, Indonesia, Korea, and
    Japan.

Opportunities in Singapore for media entrepreneurs 

Beyond these advantages for entrepreneurs in general, Singapore is especially attractive for media entrepreneurs.  The outlook for the media sector in

Singapore looks to be highly favorable for the next 5-10 years due to:
  • Support for the development of the media industry by The Media Development Authority (MDA)
  • A vibrant and growing private sector in Interactive and Digital Media (IDM)
  • A strong educational and University focus on media and digital media including The Interactive and Digital Media Network at the National University of Singapore (NUS). 
  • Extensive public sector research and development in interactive and digitial media, including the
    Singapore’s government’s National Research Foundation (NRF) investments in Interactive and Digital Media

The Media Entrepreneur’s Guide to Singapore

Despite the significant progress that has been made to date, the enterprise ecosystem for Singapore media entrepreneurs still has some gaps.  There are three sources of external financing for companies:  equity, debt financing and public-sector funding programs.  Privately held media companies in

Singapore, especially early-stage companies have significant but unique challenges in acquiring funding from each of these sources.  These challenges sparked the creation of the Media Entrepreneur’s Guide to Singapore (MEGS), a book just published by my company, Expara.  You can download an electronic version of the book by registering at www.megsg.com (registration is free).

MEGS Cover

Challenges facing media entrepreneurs in Singapore

There are several challenges facing

Singapore media entrepreneurs which this book addresses:
  1. Difficulty in finding investors focused on the media sector
  2. Difficulty in finding the right public sector funding programs
  3. Lack of general knowledge of the venture financing and fund raising process

Although there is a wide range of funding alternatives available for media entrepreneurs in

Singapore, it remains difficult for many companies to find investors for each stage of their company development.  The venture investment industry in Singapore, including angel investors and venture capitalists, is still a relatively young industry itself.  Almost all venture capitalists and many angel investors specialize in particular company stages of development and industry verticals.  Traditionally most VCs and many angel investors have focused on the IT, software, and biotech markets.  Media investments have averaged only around 9% of VC and private equity portfolios.  Finding investors who are willing to invest in a media company at a particular stage in its development can therefore be a daunting task for media entrepreneurs, especially first-time founders.  

Most of this searching is currently done through generalized investor information sources without a focus on media and through informal channels, with mixed results.  Funding issues can be time-sensitive for companies; failing to acquire required funding in time can cause serious or fatal financial problems for the company.  On the other side of the coin, investors who are looking for media-related deals often find a lack of deal-flow.  It appears that there is lack of efficiency in the information market for both media entrepreneurs and investors. 

In addition to difficulties in finding private-sector investors, media entrepreneurs may have difficulty navigating the various public-sector support programs for which they might qualify and therefore may not be able to identify the appropriate or optimal programs for which to apply.  Each program will have a different focus, benefits and costs for entrepreneurs.  Selecting the right option is critical both for the entrepreneurs applying for funding and for the agencies administering the programs, as applications to the wrong programs are a drain on resources at both ends.

Media entrepreneurs’ search for investment may also be hampered by a lack of understanding of the fund raising process itself, or of some of the key skills required for successful fundraising.  These include understanding what investors look for in a business plan, the financial aspects of fundraising, and how to present effectively to investors once they have found them.  These gaps in their knowledge can stop their fund-raising process just as surely as not being able to find investors.  The Media Entrepreneur's Guide to Singapore helps to address each of these gaps.

Raising funding in a crisis

In addition to the usual challenges facing media entrepreneurs, 2009 brings the additional challenge of raising funding and growing your company during a global financial crisis.   Reductions in demand, tightened credit markets, and potential investors who have suffered significant financial losses will all create additional obstacles on the road to entrepreneurial success (which is a difficult road even in the best of times).  However, like all crises, the current financial crisis can also create opportunities for new companies.  Market and industry disruptions tend to create favorable conditions for new companies; investments in new Asian companies at this point may look relatively better than investments in the US (although this could change quickly) , and media companies tend to do well on a relative basis in tough times.  Lower valuations are a double-edged sword – they can hurt entrepreneurs, but they can also make investments more attractive to investors who do have cash to invest. 




[i]

Singapore Venture Capital Association

[ii] World Bank – Doing Business 2007

[iii] World Bank – Doing Business 2007

[iv] Global Information Technology Report 2005/06, World Economic Forum

[v] BERI's 2005 Labour Force Ranking

[vi] IMD World Competitiveness Yearbook 2005

[vii] BERI Report August 2005

[viii] Political and Economic Risk Consultancy, June 2006

Category: 
Entrepreneurship
Venture Capital

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