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Fostering deep tech ventures to achieve environmental sustainability | Q&A with XNode Singapore

Written by Khamila Mulia Published on   6 mins read

The Singapore Deep-Tech Alliance, a program powered by Xnode, A*STAR, and NHIC, is looking to develop and grow Singaporean deep tech startups.

Southeast Asia’s tech ecosystem is currently dominated by consumer tech companies such as Grab and Tokopedia. In contrast, the deep tech ecosystem is still nascent, encompassing technologies like the internet of things, biotech, robotics, and blockchain.

Deep tech is a broad term, but what makes startups operating in this sector different from others is that they have usually developed their own technologies and registered new patents before taking their products to market.

For instance, Singapore’s biotech firm RWDC Industries developed an alternative material called Solon to replace petroleum-derived single-use plastic. And Temasek-backed geothermal company Eavor is developing a system called Eavor-Loop, which uses the Earth’s natural heat as a radiator or heat exchanger.

However, the deep tech ecosystem has various challenges hampering its growth. Creating new technology requires intense research and experimentation. In other words, a lot of time and money. Yet, startups in this segment struggle to raise investment, especially from investors who aren’t knowledgeable about the technology they are creating.

More support is needed to develop a more mature deep tech ecosystem, and Singapore, thanks to various programs created by the government and private organizations, is becoming a regional leader in deep tech innovation. One example is the Singapore Deep-Tech Alliance (SDTA), an initiative powered by Shanghai-founded accelerator XNode, A*StartCentral, an open innovation platform by the Agency for Science, Technology and Research (A*STAR), and the National Health Innovation Centre Singapore (NHIC).

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Xnode is rooted in China’s advanced manufacturing ecosystem, according to Clara Chen, general manager of XNode Singapore and founding partner of SDTA. “We have been working with governments around the world like Australia, Italy, and South Korea to help startups from those countries enter China and access our ecosystem of large corporations, investors, government agencies, and more,” Chen told KrASIA.

In 2019, the accelerator expanded in Singapore to set up the China-Singapore innovation launchpad. “Since then, we have supported 30 Singapore-based startups foraying into China, and we’ll also be supporting Chinese tech companies to enter Southeast Asia with Singapore as a landing pad,” Chen added.

In March, SDTA debuted its venture builder, named SDTA22. The nine-month program aims to nurture local talent to build deep tech ventures that can drive environmental sustainability and contribute to developing Singapore’s Industry 4.0. SDTA is looking to match applicants with patented technologies provided by the alliance’s partners in five sectors: semiconductors, energy, automotive, medtech, and hardware.

KrASIA recently spoke to Clara Chen to find out more about the potential of deep tech in Singapore and SDTA’s program.

Clara Chen, general manager of XNode Singapore and founding partner of SDTA. Courtesy of XNode.

KrASIA (Kr): What kind of founders are you looking for? What are the main criteria to join the venture builder?

Clara Chen (CC): We already have technologies that come from research institutions like A*STAR and NHIC, so we’re looking for founders that match these technologies. We group them in teams to form ventures and take them to the market. Founders must be focused, resilient, and self-starters, which are fundamentals for becoming entrepreneurs. More importantly, they must have an insatiable passion for building companies using complex and advanced technologies to solve real problems. For those who apply and wish to make money within three years, this program is not for them. For deep tech, they need to commit to being in it for the long haul. We’re also looking for individuals with domain expertise in science, business operations, or go-to-market strategy.

Kr: What happens during the nine-month program? Will you continue to provide support to participants after the program ends?

CC: Building a deep tech company is a difficult and complicated process. Its cycle evolution is different from typical B2B and B2C companies. Deep tech revolves around intellectual property (IP) commercialization, and founders are required to approach it differently than other digital companies. SDTA has brought together a team of experts to develop a highly structured program towards tangible progress, where participants will end up creating actual tech companies.

At the beginning of the program, the alliance will bring in 20 selected participants that will be grouped into three teams. The program is broken up into three phases, each lasting for three months. Every phase is structured with deliverables based on technology application research, product development, market research, team development, and partnership acquisition. There will be guidance from a network of advisors who will provide technical and business experts. The program ends with a demo day, and we’ll continue to support founders after that. We’ll also leverage our landing pads in China and partner networks in other countries to help these Singapore-based founders go international.

Kr: If a participant already has an existing technology, could they combine it with technology provided by SDTA partners? And in that case, who will own the patent?

CC: Each team will be provided with one technology to work with, and of course, if they bring their own technology, or they want to develop their existing technology in different use cases, the foreground IP will always belong to the creator of that tech.

Kr: How do you help founders raise funding? What is the equity sharing scheme like?

CC: We have a very founder-friendly structure where the founders will walk away with 80% of the company’s equity at the end of the program. We also get support from various partners in the alliance. We can tap into different grants, like getting funding from A*STAR or Enterprise Singapore, for instance. So there are various resources to help founders raise seed funding later on.

Kr: What’s your view on the potential of deep tech in Singapore?

CC: Singapore is a breeding ground for sustainable innovation. In the last 30 years, we’ve built a diverse R&D ecosystem that constantly creates high-quality innovation. The government takes a centralized approach for commercializing research, with the ability to take the concept from the lab all the way to the market. That’s our strength. I think it has also been proven by many large tech companies that Singapore is a safe, business-friendly city-state. We’re not as impacted by the fluid nature of geopolitical developments compared to other countries.

Kr: Can you provide practical examples related to deep tech potential in Singapore?

CC: Since the pandemic began last year, we have seen healthcare providers, diagnostic testing companies, and the biopharma industry launch new technology to tackle COVID-19 related problems. This highlights the kind of innovation that can be created with the right resources. For example, companies like MirXes and DXD Hub used A*STAR technology to develop COVID-19 testing kits within weeks of the outbreak in Singapore, which were then distributed to all the hospitals here.

Kr: What makes it difficult for deep tech startups to grow?

CC: Unlike America or China, we have very limited tech talents, so we need more talents with the right skills and desires. Another challenge is the lack of investment. Due to its intense research and experimentation, building a new technology requires twice the capital and time, and because of that, traditional VCs are less interested in deep tech startups. Taking deep technologies to market needs a lot more capital and a greater degree of risk, but the return may be greater as well. For Singapore, the government is the biggest investor.

Kr: How does SDTA solve these issues?

CC: The alliance brings together stakeholders, including investors and corporate partners, to support new startups. Corporations have a better chance to create a new large-scale business because they have bigger assets, a huge customer base, proprietary data, industry knowledge, and of course, capital. So if we combine this with a startup and a VC mindset, it will be a lethal combination that’s going to reduce the relative risk of failure. This is what we’re trying to address with SDTA.

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