Singapore early-stage emerging tech startups see 14% rise in deal volume, but funds raised slip 8%

[SINGAPORE] Singapore’s early stage emerging-technology startups saw a 14 per cent increase in deal volume in 2024, even as funding fell 8 per cent.

There was notable growth in advanced manufacturing and sustainability thanks to a strong global demand for computing hardware and decarbonisation solutions, with 56 deals in 2024 compared to 49 in 2023. This was despite a dip in funding raised from US$402 million to US$371 million.

Deep tech ecosystem builder and investor SGInnovate detailed the findings in its Singapore Early-Stage Emerging Tech Startups 2024 report. Now in its fourth year, the report examines year-on-year developments in Singapore’s early-stage emerging tech startup ecosystem.

“Singapore’s early-stage emerging tech startup ecosystem has demonstrated resilience amid continued global market uncertainties”, said Tong Hsien-Hui, executive director, investments at SGInnovate.

He added that the strong interest in the advanced manufacturing and sustainability sectors was “expected” due to “sustained discourse” around trade, energy security and technological sovereignty.

The report found that funding activity once again favoured early-stage dealmaking, as venture capitalists likely looked for earlier opportunities with lower economic volatility risks. There was a 56 per cent jump in the intermediate funding rounds (defined as seed plus, pre-series A and series A plus), from nine rounds in 2023 to 14 in 2024.

SGInnovate posited that this was due to founders wanting to better navigate economic uncertainty or to “extend their capital runways” ahead of upcoming institutional funding rounds.

The number of emerging tech startups identified within their year of incorporation inched up from 25 to 27 year-on-year, with the number of health and biomedical science startups incorporated rising 44 per cent in contrast to the agrifood segment startup incorporations falling 88 per cent.

However, SG Innovate said that the final number of 2024 incorporations is likely to grow as more startups as there typically is a lag time between the establishment of a startup and when it appears on the register.

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Advanced manufacturing and sustainability leading the way

The advanced manufacturing space reversed a three-year downward trend with 14 deals in 2024. The sector consists of areas such as additive manufacturing, advanced materials, automation, sensors and electronics, and space tech.

The previous downtrend had been attributed to a shift in investor preferences towards digital startups. Sensors and electronics led the 2024 resurgence, attracting half of the sector’s total deal count last year.

Sustainability once again had the largest number of deals while continuing a five-year streak of startup incorporations. The decarbonisation space alone raised 70 per cent of the vertical’s total funding value in 2024, which SGInnovate speculated could also be due to the larger up-front investments required for infrastructure development.

The maturing local health and biomedical science ecosystem is also helping young companies thanks to “increasingly robust support” and more investor interest. Yet, challenges like high capital expenditure and a lack of skilled late-stage translational talent persists, likely explaining the high rate at which startups are struck off from Singapore’s register.

Agrifood also faced similar scaling barriers with high production costs and per-unit profitability. New entrants also had a smaller capital pool available due to the continuing trend of market consolidation, evidenced by a high number of funding rounds that were either undisclosed or comprised purely of existing investors.

Cybersecurity has room to grow

The newly-introduced section in the report about cybersecurity startups also noted that 68 such startups were incorporated since 2020 at an average of 13 incorporations per year. Slightly over two in five of these startups had successfully raised funds at an average duration of one year.

In 2024, there was one cybersecurity acquisition and a total of US$42.5 million was raised across 10 deals. Half of the deals were in the security operations and governance or risk and compliance sub-verticals, which SGInnovate said reflected a need for corporations to navigate the complexity of these domains.

The sector still has room to grow, with the US$1.8 million seed and US$11.3 million series A funding lagging global averages. The report also found that that most investors in local cybersecurity startups had invested in only one company, with few repeat investors.

Its investment landscape could see a shift from a more “opportunistic” approach to one centred around long-term portfolio building as the investments grow, said SGInnovate, which could lead to a more consistent pipeline of new cybersecurity startups.

Looking ahead

Private markets are likely to remain cautious in 2025 due to the ongoing economic and geopolitical instability, said SGInnovate. Major Asean economies are dealing with US tariff related pain, and while Singapore has revised its official growth forecast upwards, it has warned of uncertainty ahead.

Despite the challenges it presents, the tariff environment could have upsides.

“These conditions could catalyse innovation particularly in areas such as photonics and semiconductors, where Singapore possesses deep, well-established capabilities and expertise,” said SGInovate. “Intensifying interest and competition in these areas is likely to drive ecosystem activity, and discussions around talent and infrastructure.”

Computing advancements are also leading to increased demand from public and private sectors for reliable renewable energy solutions, which could lead to greater startup activity in that sector in Singapore.