VCs say Singapore’s the best hub for Asia investments

When Meng Weng Wong moved back to Singapore from Silicon Valley, he wasn’t sure he’d made the right choice. The Singaporean angel investor and entrepreneur was coming off stints in Silicon Valley, New York, Atlanta and Philadelphia. He was looking for a base to start his career as an angel investor.

“I asked myself: If I hadn’t been born here, would I still think Singapore’s a cool place to live?” he said. But Wong, like many others, ultimately decided that Singapore is an ideal location for a high-tech investor. The island state has increasingly become the launchpad of choice for investors of all stripes. The country has an easy business registration processes, an advantageous tax regime and is located at the center of a burgeoning Southeast Asia startup boom.

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Batara Eto is a co-founder of Mixi, Japan’s largest social networking site with more than 20 million users. He uses Singapore as a hub for regional investments despite the fact that he’s only investing in Indonesian companies at present. He launched East Ventures in Singapore and has already invested in at least three Indonesian startups in recent months, including Urbanesia, a city listings guide for Jakarta; Scraplr, a productivity app-maker and Tokopedia, a marketplace site. East won’t disclose investment amounts, but they are believed to be seed rounds. Eto believes that East will see an exit in two years during a regional tech boom.

Other investors are just as bullish as Eto. Social Slingshot Fund, started by a former chief executive of Myspace.com parent company Intermix, Brad Greenspan, made its first three investments in Singapore startups in August. The investments were part of a government scheme called the Technology Incubator Scheme, where the government pays for 85% of the investment and the fund pays for the rest.

“We foresee being able to generate solid returns in three to five years once we start seeing acquisitions take place,” said  Social Slingshot Fund portfolio manager Kimberley Ong. “Realistically, we expect to see acquisitions in the $20-30 million range. We’d also entertain earlier exits in smaller values by getting bought out by a VC in the company’s next round of funding or even through management buyouts.”

Investors in Asia have also found Singapore to be a more foreigner-friendly environment than some other Asian hubs. Noted angel investor Joi Ito chose Singapore for his fund, Neoteny Labs, precisely for that reason. “I realized that Singapore made the perfect hub to bring my European, Arab, Israeli, Japanese, Chinese, Indian, and American contacts together,” he said. “The Singapore government is super-supportive and receptive of immigrants unlike most Arab countries or Japan.”

Neoteny Labs Singapore has been busy. It invested in two Singapore startups in August as part of the same government-funding scheme that Social Slingshot Fund belongs to.

Another investor, Saeed Amidi of Plug and Play, the Silicon Valley incubator that has been home to Google and PayPal, echos Ito’s assessment of Singapore. “Singapore is organized, it’s pro-business, and it has an incredibly talented and honest population that needs to become a little bit more entrepreneurial,” he said. “It is possibly the best place in the Far East to launch startup projects for the region.”

Walden International, the US-based venture fund with more than $1 billion under management, has had a Singapore presence since 1988, making it one of the oldest international funds in the country. It has leveraged Singapore’s position at the center of Southeast Asia’s tech boom effectively over the years.

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“Singapore is a magnet for foreign talent,” said Kris Leong, a partner at Walden. “Many Walden investees conduct R&D and product development in Singapore and have sales offices in the region.”

One of the most visible signs of the region’s bubbling startup activity is the slew of pitching events, conferences and workshops held in the Republic. Hardly a week goes by, it seems, without an event of some kind, whether it’s franchises from abroad like Seedcamp, investor confabs like Techventure or grassroots efforts like Geekcamp.

In September, 1,500 tech and mobile luminaries will converge in Singapore for Accelerate 2010, an event sponsored by regional telco SingTel. The event will unfold against the spectacular backdrop of the glittering new Marina Bay Sands resort in the distance while Formula One cars race through Singapore’s streets at night.

“The exits are going to come thick and fast in the next few years,” said investor Wong. “Now’s the time for angel investors to build an early stage portfolio, and I’m expecting to see some choice buys at Accelerate.”

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*This story is sponsored by iDA Singapore.

[Photo Credit: Formula1]