Singapore, a city-state of just 5.7 million people, sits at the tip of the Malay Peninsula. It has stood as one of the world's most important financial gateways since the days of Sir Stamford Raffles and the East India Company. In much more recent times, the Lion City has transformed itself into an attractive destination for major tech companies, founders, VC [venture capital] funds, and investors alike – much like a regional version of Silicon Valley.
According to David Kuo, partner in DLA Piper's Singapore office, Singapore is "a natural choice for the technological hub of Asia, given the stability of its legal system and rule of law, strong intellectual property protection, geographical proximity to the fastest-growing economies in Asia and access to a deep talent pool".
Many – if not most – of Southeast Asia's unicorn startups call Singapore home. In 2018, five of the top 10 most-funded digital startups in Southeast Asia were based in Singapore, including the top two – ride-hailing app Grab, and NYSE-traded digital entertainment, e-commerce, and e-payments company Sea Limited. A number of Indian startups, including e-commerce giant Flipkart, have likewise set up shop in Singapore.
Yanjun Wang, group chief corporate officer and general counsel of Sea Limited, describes Singapore's business advantages as such:
"As an international hub for business, Singapore has evolved a highly sophisticated and efficient regulatory regime that promotes the long-term development of companies based here and attracts top talent from around the world. Tech companies here can benefit from having strategic operations and governance anchored in Singapore's mature ecosystem while simultaneously having a presence in the highly dynamic regional markets."
Foreign tech behemoths such as Facebook, Google, Amazon, Alibaba, ANT Financial, Tencent, Xiaomi, Go-Jek, and Baidu all have significant operations in Singapore. "Singapore is an important hub for Ant Financial's globalisation and innovation efforts," says Leiming Chen, senior vice president and general counsel of Ant Financial Services Group. "We have significantly increased our headcount in legal and compliance in the city over the past three years and will continue to enhance our team there in the coming years to support our business expansions globally."
How will Covid-19 affect Singapore's status as a tech hub?
It's too early to predict Covid-19's lasting effects on tech meccas, including both Silicon Valley and Singapore. Several high-profile startups, from home-sharing behemoth AirBnB to clothing rental pioneer Rent the Runway, are shelving IPO plans, conducting layoffs, and facing overall uncertain futures.
One Philippines-based bank saw digital banking transactions explode in March after three weeks of quarantine
Fortunately for Singapore (and much of Asia), the industries in its tech ecosystem could be poised to take advantage of the challenges of Covid-19. One unique trait of the tech landscape in Asia is the proliferation of 'superapps' and other all-everything tech companies. Do-it-all companies such as Grab, Go-Jek, SEA Group, and, of course, the Alibaba Group are diversified between a number of industries that will be vital in rebuilding the post-Covid business and leisure landscape, such as fintech, e-commerce, and online gaming. A 2019 report by the US-based project Startup Genome has named Singapore as the fourth-best global ecosystem for blockchain and the fifth-best global ecosystem for fintech; with some lauding Singapore as the eventual "fintech capital of the world".
According to Kuo, "while the current coronavirus pandemic has affected the economy in general, it has also created a unique opportunity for tech companies to prosper, given the growing need for e-commerce, telecommuting and other related services". Wang agrees, noting that "as the coronavirus crisis further accelerates the shift from offline to online, the tech sector is presented with new opportunities as well as challenges that come with potentially a much steeper growth curve".
Kuo has also observed "increased investor interest in deal activities in areas such as cloud-based platforms, data centres, and digital tool developers".
As the pandemic lingers, many expect the volume of contactless payments to markedly rise and for branchless banking services to gain in popularity. A March 30 study by a Swiss-based financial services company shows a 72% rise in fintech app usage in Europe, and it's not a stretch to anticipate similar results in other markets. One Philippines-based bank saw digital banking transactions explode in March after three weeks of quarantine.
Covid-19 could also be an opportunity for insurtech companies to innovate and show their potential. While the virus has reminded us all of the fragility of our lives and livelihoods, it has underscored the importance of various types of insurance coverage – and the necessity of insurers and companies to be able to transact digitally.
As Covid-19 thrust supply chains into chaos, blockchain could be primed for a big moment. Blockchain tech has been used in Asia to speed insurance claims payouts, track donations, and trace the supply chains of medical materials. IBM and EY are even developing their own blockchain projects to deal with pandemic-related issues.
E-commerce and food delivery
E-commerce and food delivery have reaped the benefits of a stay-at-home society. YouTrip, Singapore's first multi-currency mobile wallet, has seen a 20% growth in consumer online spending. While YouTrip was initially conceived as a travel card, many are using its prepaid MasterCard for local e-commerce purposes. Within e-commerce, the online grocery sector could experience significant Covid-related growth.
Grab CEO Anthony Tan calls Covid-19 the "single biggest crisis" in his company's history, yet Southeast Asia's most valuable unicorn is already starting to pivot into fintech and food delivery. In February, Grab raised US$856 million to facilitate its expansion into financial services – namely SME lending, mobile payments, and micro-insurance – as demand for ride-hailing services has cratered.
Rival Go-Jek – another one-stop 'superapp' offering ride-hailing, food delivery, and mobile payments services – is seeing a rise in demand for its delivery services across Southeast Asian markets.
Across Singapore, demand for food delivery services has increased by 20-30% since the circuit breaker began on April 7.
As lockdowns keep people inside, many online gaming companies are seeing a surge in new subscribers despite decreased production of new products. In March, e-commerce retailer Lazada experienced an "unusually huge rise in the sales of games" in Singapore. Sales of console games and gaming chairs rose by 200% and 130%, respectively, from February 23 to March 7 to the following two-week period.
Homegrown companies that touch one or more of the above-mentioned industries will be well-poised for global growth. "Looking longer term," notes Wang, "we believe that the next wave of growth for Singapore's tech sector will see more local companies expand beyond the country to regional and even global markets. That is the growth trajectory that our company has been on. Founded and based in Singapore, Sea has been building a global footprint for our diverse offerings in digital entertainment, e-commerce and digital financial services under Garena, Shopee and SeaMoney respectively, which cover some of the largest sectors in the consumer internet industry."
The future of Singapore's legal market
Covid-19 may have chilled many forms of transactions, including strategic M&A and VC financings, but there is still the potential for considerable long-term growth in Singapore's legal markets.
In the past few years, some of Silicon Valley's top law firms have already seized the opportunity to take advantage of Singapore's growth in the tech sector. Gunderson Dettmer opened a Singapore office in 2016, citing the island nation's status as a critical global innovation hub. In 2019, Cooley followed suit; their 16th location worldwide. Silicon Valley's first mover into Singapore was MoFo, which opened its Singapore office in 2013.
Even despite the pandemic, we continue to advise US firms' global management on their long-term strategies to open up in Singapore. Firms with an EC/VC client base have been particularly interested in opening up Singapore offices. The coronavirus may defer their expansion plans in the short to medium term, but firms are not abandoning their strategic objectives. In the current climate, firms will take a cautious tack and will likely wait to pull the trigger on an office opening until (1) they find the right partner or team to serve as a cornerstone, and (2) some semblance of a post-Covid normal is achieved. This could involve a lateral external hire, an internal transfer, or, most likely, a combination of both.
For BigLaw associates attracted to Singapore's innovation-driven tech landscape, expect smaller offices and a greater chance to make more of a meaningful impact on deals and get closer to clients than one might get in New York or Silicon Valley. Singapore has not yet achieved the prominence of the world's two largest tech hubs, but this means that each associate who joins a tech-focused practice in Singapore has greater exposure to Southeast Asia and South Asia's up-and-coming companies. Taking a role in a firm's Singapore office could open up business-side and GC-level exit opportunities that might elude an associate should they choose to stay in more traditional tech havens.
Further, with the number of firms with Silicon Valley-type practices likely to more than double over the next 10 years, there is a lot of opportunity for associates entering the market on the ground floor to have solid partnership opportunities down the road. There will likely not be enough senior legal talent in Singapore to accommodate the BigLaw expansion of tech, startup, emerging companies, PE and VC practices as new firms seek to enter the market. We are working with two tech-focused law firms about to enter Singapore, and it's challenging to find the partner-level candidates needed to open new offices.
As Prime Minister Lee Hsien Loong said in a dialogue with VC firm Sequoia Capital, "the ferment, the effervescence, the ingenuity and brilliance which has gone into the tech scene has already made a big change in the world". Singapore's culture of innovation has both nurtured homegrown unicorns and 'soonicorns', as well as attracted some of the world's largest tech giants. While Covid-19 will undoubtedly change both personal spending habits and VC trends for the foreseeable future, unexpected crises have a way of accelerating innovation. Corporate lawyers with a passion for tech should still watch this island nation between the Indian Ocean and South China Sea.
Our team at Jowers/Vargas has placed the vast majority of new-to-Singapore US-trained lawyers in the Silicon Valley-type transactional space in Singapore over the past five years. This includes the associate and partner level. Feel free to reach out to us at firstname.lastname@example.org if you would like to discuss the Singapore market.
|About the author|
Evan Jowers is based in Hong Kong SAR and is a co-founder of our Jowers Vargas. His focus is moving US associates, counsel and partners to and within Asia. He has made or helped make over 400 US lawyer placements in Asia since 2006. He has also made numerous placements in the US markets, including at the partner level.
He has been interviewed by numerous major media outlets for his insights on Asia BigLaw, such as the New York Times, LegalWeek, American Lawyer, Asia Counsel, California Lawyer, and CNBC, among many others. Jowers also created the Asia Chronicles blog featured at abovethelaw.com which, from 2008 to 2012, was regularly read by US-to-Asia associate movers.
Prior to his recruiting career, Evan was an associate at Cadwalader Wickersham & Taft's New York offices and had an in-house role at a Miami-based company.
|About the author|
Alexis Lamb is extremely knowledgeable about the BigLaw legal markets in Asia as well as in the US. Prior to recruiting, she practiced as an M&A/private equity associate in the New York office of O’Melveny & Myers and a US capital markets associate in the Hong Kong SAR office of Linklaters, focusing primarily on pan-Asia work. She successfully took her BigLaw experience to transition into a role as a trusted career adviser, counseling associates looking to make a move from the US into Asia or within the Asia markets, as she herself was placed by Evan Jowers from OMM into Linklaters.
Prior to joining Jowers Vargas, Alexis served as director of talent at Bliss Lawyers, a US-based alternative legal model, and as a senior recruiter for two New York-based recruiting agencies.