For many Israeli start-ups, getting a piece of the Chinese market is a much sought-after dream. But, asks Nasser Ismail of the Singapore Stock Exchange, why stop at China? “If you go to China, then China is where you will do business, and that’s fine. But Singapore helps you get not only to China, but to many other countries in Asia. China’s fine, but there are lots more opportunities in the rest of Asia too.”
Ismail, along with other top Singaporean investors and business officials, were in Israel to attend the annual company showcase of the Trendlines Group, which runs incubators for early-stage Israeli start-ups in the medical device and agriculture technology sectors. Displaying their wares before an audience of some 500 investors from Israel and around the world were Trendlines portfolio companies such as EdenShield, which is developing pesticides based on herbs and other natural ingredients, MiRobot, which is developing automated milking systems for farms, Steak TzarTzar, which is developing a grasshopper-based meat substitute, and others.
But Singapore was much on the minds of the Trendlines folks – not least because the company, which guides start-ups towards exits, had an exit itself last November, when it went public on the the Catalist of the Singapore Exchange Securities Trading Limited (SGX-ST). According to the company, it received “strong interest from investors,” raising $25 million in its initial public offering, “and indications of interests from investors significantly exceeded the number of shares offered.”
A gateway to Asian markets
The reasons for that interest, said Ismail, who was speaking on a panel discussing whether Israeli companies should consider Singapore as a place to set up shop in the Far East, is because the two countries have a great deal in common. “I know Israelis think their country is small, but we’re even smaller. We have to make sure we attract top technology and world-class companies to ensure that our population is able to live a first-world lifestyle.
“But in order to do that, we have to be very export-oriented,” Ismail said. “No company is going to come to Singapore just to develop products to sell to our five and a half million people.” Like Israel, the country offers incentives to companies that develop for the export market, and it welcomes companies from abroad that can help Singapore achieve that goal.
“Forty percent of the companies listed on the SGX are based outside of Singapore, and most of them do their significant business in the rest of Asia and other parts of the world. Many of the investors in securities traded on the SGX are from out of the country as well.”
In that sense, Singapore is an ideal gateway for Israeli firms that want to crack the Asian market – including the Chinese one. Dwarfed by almost every other country in Asia, both in terms of size and population, Singapore has to diversify if it wants to be a player, said Gerald Ong, CEO of Singaporean firm PrimePartners Finance. “Many Israelis believe that Shanghai or Hong Kong are the best ways to get attention in the Chinese market, and they’re right – if they are in the real estate, banking, construction, energy, or any of the traditional businesses that investors in those places understand and invest in. For those not in those categories, though, the going may be much harder. In Singapore we pay a lot more attention to those other categories.”
For Israeli start-ups – especially the cutting-edge medical and agricultural tech that Trendlines hosts in its incubators – that is an important point, said Ong. “There’s a big demand in Asia for the kind of technology Israel produces, but without the right focus, it’s easy to get lost in the shuffle.” Because it’s a smaller market, Singaporean financiers and business executives tend to be much more flexible than their counterparts in other Asian countries – making the country a better choice for Israeli tech start-ups in non-traditional businesses.
Getting a foothold
To help Israeli companies find a footing in Singapore, there’s SIIRD – the Singapore-Israel Industrial Research & Development Foundation. A joint effort between the Israeli and Singaporean governments (the Singapore Economic Development Board and the Economy Ministry’s Office of the Chief Scientist), SIIRD offers funding of up to $1 million for joint R&D projects between companies based in either country, arranges R&D matchmaking opportunities between companies, and helps commercialize that R&D.
According to Shirley Refuah, Senior Manager of SIIRD, “over the last couple of years the SIIRD Foundation has sponsored a growing number of projects between Israeli companies and research institutes from Singapore. Singaporean companies are also great partners because they provide intellectual, human and industrial capital to the Israeli companies they work with.”
Indeed, there is a lot to like in Singapore for Israeli firms, said D. Todd Dollinger, co-chairman and CEO (along with Steve Rhodes) of the Trendlines Group. “For us, today is a celebration of our listing n Singapore and bringing Israel to the attention of investors there. I am sure that our IPO will the first of many to come.”