Singapore bets right on ‘gazelles’: StripeJune 1, 2018
A TOP executive at one of the world’s most valuable payments technology startups has lauded Singapore for being ahead of the curve in “realising economic transformation through high-growth startups” – what she proclaims is a little-known but important concept globally.
Claire Johnson, chief operating officer at Stripe, said that Singapore is one of few countries to have grasped that while small businesses are the backbone of every economy, it is only a very specific type of small business that is really driving growth, jobs and economic transformation: high-growth startups, also known as gazelles.
In an exclusive interview with The Business Times, she said: “What is exciting in Singapore is the investment in creating the right environment for these high-growth startups. It’s pretty impressive that four unicorns have been created here.”
She was referring, of course, to Grab, a ride-hailing turned consumer platform that is valued at over US$6 billion today; Razer, a gaming and e-payments company with a market cap of about HK$23 billion (S$3.7 billion); Sea, an e-commerce and gaming firm with a US$4.38 billion market cap; and Lazada, an online marketplace whose valuation is US$3.15 billion as of 2017.
Unicorns, which are typically gazelles, are billion-dollar private companies. Gazelles, according to Ms Johnson, are fast-growing startups that are “a source of rethinking how we have traditionally done things” and have demonstrated “an ability to scale”.
“And what scale looks like, is deeper penetration of your market – so more consumers are using you, month over month, year over year – and usually an expansion into international markets.”
Examples of gazelles that have created new business models and expanded globally are Chope, a restaurant reservation platform; Homage, a caregivers marketplace; TradeGecko, an inventory management firm; and Honestbee, a food and grocery delivery player, said Ms Johnson. These companies are, notably, all clients of Stripe.
Ms Johnson also noted that employment by startups in Singapore more than doubled between 2004 and 2015 to some 350,000 jobs, accounting for about 9 per cent of total employment. “Quite a lot of these (jobs) are with nice-sized, growth-stage companies.”
She added that Singapore has created an environment where “you can even have such a business”.
And it is thanks to “qualities” such as access to markets and capital, talent, sound infrastructure, a good education system and regulatory environment, as well as initiatives such as Smart Nation, Block71 and SMEs Go Digital.
“What’s also impressive about Singapore is that 60 per cent of startups are already (selling internationally) and accessing that consumer demand in additional markets,” said Ms Johnson. She was quoting findings from a recent survey on startups by Stripe, which also found that 43 per cent of startups here cited strong government support as one of the key reasons that Singapore’s startup ecosystem is thriving.
This environment has made Singapore startups more confident about the future: more than half of the startups polled in Stripe’s survey said that Singapore’s startup ecosystem will continue to expand rapidly, making it one of the world’s top three startup hubs by 2020.
To better support gazelles, the government could create a regulatory system that has “the right business protection” but is “not so complex and difficult to comply with, such that a new startup can’t do it”, said Ms Johnson.
“Frankly, I think people forget that the interests here are aligned. Governments want job creation, they want new businesses to be successful.”
When asked about the role of other players (non-gazelles) in the economy, she said: “Small businesses – the local businesses we go to around our homes – provide a ton of value to the lives we lead. I’m excited about the combination of small businesses and tech players (gazelles), to help them be better.”
An example, she said, is Gesoo, an on-demand Chinese food delivery service in Los Angeles, that has helped many Chinese restaurants “get online”. Ms Johnson told BT: “This is a super valuable thing. That, to me, is the backbone of the economy: the combination of the small business that we love and the tech partner that’s making it better.”
She added that large companies, too, have a role in transforming the economy by teaming up with gazelles to modernise the exchange of goods and services.
“In terms of large companies, my favorite companies are absolutely those that are reinventing themselves. There are many examples of that, including even the government.”
She shared that the Singapore government, for instance, has engaged Stripe to support a number of e-government services. “It sounds a little obvious but a lot of governments around the world have not devised the ability to pay for things like renewing your driver’s license or taxes online.”
Large companies still have ways to go in engaging high-growth startups, which allows them to be more agile in leveraging new technologies and creating new business models, said Ms Johnson. “What large businesses have are a lot of resources and capabilities. If they deploy them differently, they can have a very nice advantage.”