In recent times, when young entrepreneurs get down to business, many have shown an inclination towards starting impact-driven startups. The facts speak for themselves. According to a 2020 British Council survey, 40% of social startups in Singapore have leadership teams with a majority of members aged 35 and below[1].
For these startups, there is hardly a better place to set up than in Singapore. The nation recently overtook China as the top-ranked ecosystem for startups in the Asia-Pacific region, and currently ranks 7th out of the 100 countries featured in StartupBlink's Startup Ecosystem Index 2022[2]. The overall scoring system used to rank these countries consists of three subscores, measuring quality, quantity, and business environment. With its favourable tax legislation and ease of doing business, alongside its growing number of accelerator programmes, Singapore was able to jump ranks in the past few years, most recently landing at a total score of 13% higher than China[2]. StartupBlink - a startup ecosystem map and research centre - also mentioned that Singapore had the greatest growth among the top 10 countries last year[3].
The startups of today
The growth of Singapore’s startup scene is something of a new phenomenon[4]. While startups have been around for a long time, it wasn’t until a mere decade ago that a series of targeted government initiatives led to an explosion of the scene, catapulting Singapore past its other Southeast Asian contenders and into the ranks of global giants[4].
Case in point? Singapore is now home to 10 unicorns, three of which have been offered an IPO (Nanofilm, Razer and Sea), and two of which have been acquired by Chinese powerhouses. The remaining five are Trax, Acronis, JustCo, PatSnap, and Grab – ASEAN’s largest unicorn to date[5].
However, there has been a rise in a different kind of startup recently, that of the impact-driven one, with an estimated 2,660 enterprises in Singapore, as of 2021[1]. It is a sentiment echoed by So Sang Shin, Director, Digital Innovation at Temasek and mentor at HyperX, who recently, in the “Rise of Startups with A Purpose” podcast, remarked that “we are starting to see startups trying to actually make an impact, whether it be in sustainability or some form of ESG (Environmental, Social and Governance) coming up.”
Impact-driven startups
Impact-driven startups are enterprises seeking to positively impact society, the community, and the environment through a product or service. Their aim is to offer a solution for an existing problem and eliminate or minimise any socially or environmentally negative impact.
However, an impact-driven startup is not the same as a philanthropic organisation or charity. Rather, it too aims to be financially profitable like traditional businesses but differs in its business models, which are designed to help address social problems and environmental issues, and generate sustainable positive social change.
A rising tide of change
According to Valerian Fauvel, co-founder of Jumanji Studio - a startup studio that builds solutions to accelerate the world’s transition towards a sustainable future - there has been an exciting trend of “people realising the needs and the issues around, entrepreneurs wanting to put their energy and their skills to solving those issues.” Sang Shin agrees with this point, observing that “there is now a ‘sustainability native’ or ‘impact native’ type of generation who is more concerned about making a change in their local community.”
Proving these viewpoints are a few SUSS alumni - Amanda, Sean and Xavier - who were each interviewed about their own startups, and who all inadvertently share a common motivation to effect change and create social good. In their opinions, choosing the startup scene gave them a more conducive environment to tackle global problems, compared to the corporate world.
To this, we break down some of the common observations of why entrepreneurs seek to invest their time and energy into impact-driven startups:
Passion to make a difference
In some cases, people choose to start impact-driven startups because they discovered an issue within the community, and made the attempt to find a solution for these social and environmental issues. Take Rayner Loi for example, a finance student from SUSS who noticed the issue of food wastage and how many families in Singapore were struggling to put food on the table. He then made it his mission to aid society in cutting down on food wastage[6].
Experiencing social issues first-hand
Some social entrepreneurs start their business because they experienced a social issue and realised they were not alone. SDI academy was started because Sazzad Hossain had difficulty fitting in when he and his family first moved to Singapore. Realising that many migrant workers faced the same issue, he started a business to offer English lessons so that these workers could assimilate into the Singaporean community[7].
Business with a purpose
The line is no longer drawn between for-profit and not-for-profit organisations. Termed “social enterprises” or “social ventures’, impact-driven organisations can also aim to be financially profitable, hitting what is dubbed as the “triple bottom line” which defines success in terms of the economic, social as well as environmental impact they create[8]. In essence, people who want to do good now, don’t necessarily have to do it at the expense of earning a profit.
Not all a bed of roses
Taking the impact-driven startup path, however, is not one without obstacles and potential setbacks. In fact, many thorny challenges lie along the way. Our guests on the “Rise of Startups with A Purpose” podcast provide some key insights:
It’s not just about the idea
Kenneth Yap, Venture Builder Lead, SUSS, shares that very often, the original idea of the startup doesn’t always pan out to the end outcome. In fact, pivoting is the very nature of a startup. Therefore one has to be adept at shifting approaches towards customers, solving problems and achieving goals. In this vein, it is less about having a great idea, and more about having the right attitudes towards society and social problems, the right resourcefulness and drive, and being able to manage their own expectations.
It’s not for everyone
Sang Shin cautions that while many see the impact-driven startup as a glamorous pursuit, it’s not for everyone. It is for the individual who has fully committed and devoted their lives towards a determined purpose. Money is simply not enough of a motivator in this instance, and without a purpose, there lacks an anchor to steer the organisation through the challenges of impacting true social change.
Maintaining financial stability
While Valerian admits that the “impact” scene is certainly becoming more exciting, he also feels that funding remains an issue. There is still a common perception that there is not enough money in this space to give proper return on capital, therefore stunting potential for impact-driven startup growth.
Resources abound
Despite the challenges, there exists a varied host of resources in Singapore for impact-driven startups to tap into, and with more in the works. Some of these readily-available resources are:
The Singapore Centre for Social Enterprise, raiSE was set up to develop the social enterprise sector in Singapore. They provide advisory services, programmes, training, and resources for aspiring social entrepreneurs as well as existing social enterprises. By doing so, they aim to raise awareness and support for social entrepreneurship in Singapore.
This is a grant from raiSE that provides financial support for impact-driven startups to launch or expand their operations. The dedicated grant funding supports social enterprises and their solutions for community issues.
An immersive training programme designed to nurture and help budding entrepreneurs launch a successful impact-driven venture. Kenneth, who leads this programme mentions that the aim of the programme is to equip them with the base skills and the fundamentals of what it means to be a startup entrepreneur.
Hope for the future
It’s been a long time coming for Valerian, who has been in the social enterprise scene for 13 years and counting, but even then, he believes we are barely scratching the surface. The ecosystem in Singapore is vibrant and growing, there is a new generation of social entrepreneurs who will bring with them a new perspective of doing things, and therefore the only way this scene is going is upwards.
Meanwhile, for those looking to explore if the impact-driven startup is for them, Valerian distils down four values one needs to have. Firstly, is being ambitious for the planet. Secondly is to always keep a positive attitude. Thirdly is to be open - open to making mistakes, open to trying new things, open to listening to others. And lastly, and most importantly, is perseverance.
This article is an adaptation of the “Rise of Startups with a Purpose” podcast. The podcast features Kenneth Yap, SUSS Venture Builder Lead, So Sang Shing, Director of Digital Innovation at Temasek, and Valerian Fauvel, Co-founder of Jumanji Studio, who discuss the rise of impact-driven startups and the challenges these startups could face. Listen to the podcast here.
[1] britishcouncil.org - Global Social Enterprise: The state of social enterprise in Singapore
[2] startupblink.com - The Global Startup Ecosystem Index Report 2022
[3] SINGAPORE BUSINESS REVIEW (JUN 2022) SG overtakes China as top startup ecosystem in Asia-Pacific
[4] TECH IN ASIA (JUN 2016) How Singapore’s startup ecosystem has grown up in the last 5 years
[5] TECHCRUNCH (AUG 2021) A close look at Singapore’s thriving startup ecosystem
[6] CNA (MAY 2019) From finance undergrad to food waste warrior, with a made-in-Singapore invention
[7] SINGAPORE GLOBAL NETWORK (DEC 2021) A founder at 19, he is breaking barriers to opportunity and inclusion for migrant workers
[8] CNA (AUG 2017) Commentary: The power of Singapore's social entrepreneurs in a profit-driven world