SGInnovate launched a little over six months ago as a “reboot” of the former investment arm of the former Infocomm Development Authority of Singapore. It’s invested in 14 companies since its launch, but it’s not your typical startup incubator. Founding CEO Steve Leonard talks to Disruptive.Asia about SGInnovate’s mission, where it fits in Singapore’s Smart Nation vision, and the importance of making sure investments in advanced tech serve the Bigger Picture.
Disruptive.Asia: First things first: what does SGInnovate actually do?
Steve Leonard: What we’re seeking to do is easy to describe and difficult to achieve – and that’s to help ambitious men and women build globally relevant technology-intensive products based on their research IP. We’re not helping start-ups – we’re encouraging the scientist-entrepreneur that thinks about something he or she has been working on during their PhD or post-Doc. We’re not trying to say, “Entrepreneurship is cool, everyone start a company.” We’re not at this time working with people doing things that are easily copied, like a restaurant table reservation system for iOS. You have to do something substantially different and disruptive.
How does SGInnovate approach that differently from the usual incubator model?
We say “no” to a lot of people. The SGInnovate space on Carpenter Street is not a co-working space. The only people there are people we specifically ask to be in there. We want to work with this very small kernel of individuals that have something which most people would not be able to do.
What gave you the idea to do this?
There was a gap there. We’re trying to be sensitive to the market, and the more people we meet, the more we say, that’s amazing. I met a prof at NTU who said, “I’ve been working on this thing in my spare time about improving image recognition, and I think I have a chip that would be a better, smarter, faster version than what Intel paid $15 billion to buy MobilEye for.” We ended up meeting more of these kinds of individuals just during our journey around town over the last couple of years. So we went to our senior people and said, “There’s a lot of capability out there that doesn’t know how to form or where to go, we’d like to set an entity in motion that allows those questions to be answered.” And the government said, “Okay.”
It must help that the government is pushing its Smart Nation vision.
Yes. Smart Nation was originally envisioned to be an intersection of academics, entrepreneurs, investors, corporates and government working to some common goals together, because you need all of those parts to contemplate, say, the future of healthcare. So SGInnovate in a sense becomes the pointy end of the stick that says we’ll try to help bring some of those people down to the ground, give them S$100k or whatever the number needs to be to try and mock up their first prototype when no other investors want to get involved because that’s tricky stuff. You and I could maybe start a company tonight if what we wanted to do was relatively low barrier to entry – like restaurant booking. But if you want to do something that involves industrial water purification using electro-coagulation, fewer people are going to go after that.
What kinds of technologies is SGInnovate focusing on?
It’s a wide net. We’re trying to let the market define the areas we think we can be working on. So when we notice that a significant number of people are coming out with medtech-related devices and analytics, then we want to spend more time on that, even though we didn’t originally intend to. We don’t go after things we know are way outside our capability range, so if someone comes in and wants to work on gene-editing, we can’t do that. We can facilitate higher-level discussion about it, and stage events around precision medtech. But when it comes to helping someone build a company and putting money into it, then we go back to areas we feel we’re reasonably useful – such as energy, because that’s heavy analytics. We’re not trying to produce energy, we’re looking at how to make better use of finite energy, so we work with people looking to make better use of Industrial IoT, or working with autonomous vehicles as a form of robotics.
So where we see some clustering or natural aggregation, that’s what we’ll spend time on. There’s a lot of convergence there anyway – for example, if you look at robotics and AI, I can take the image recognition from the guy who wants to improve robotics for social care and use that in a vehicle, because the image recognition requirements for both is not that terribly different.
What’s SGInnovate’s budget like, and where does the funding come from?
It comes from the government, but the government is never the sole investor in anything we put money into. Somebody will have already invested in the research, and we come in when we see something interesting. We’ll usually come in with S$50k to S$100k, and then there are VCs who will come in put in another S$25-50k, etc. We’re usually 10% of a round, and we wouldn’t seek to be more than that. We want to be a positive beacon, but some people in government get nervous about the signaling effect where people start thinking that we’re investing in this or that because we know something they don’t and it’s a sure thing. So we have to be transparent and tell people we have no idea if this is going to work or not, but we think it’s worth pursuing, so it’s up to you if you want to put money into it. We mainly want to be part of that first $100k to get them going, because that’s where the chasm is greatest. Once it gets off the ground, we don’t see the need to keep putting money in it.
Does focusing on the small cheques give you greater freedom to fail and move on?
We’re believers in optionality. We may think the person is cool and we like how they think, so maybe the first idea doesn’t pan out but their next iteration might, because you learn a lot from failing. It’s not like we just close our eyes and spray money – the people we work with have gone through a fairly rigorous filtering program.
What’s the big challenge in setting up something like SGInnovate?
Mindset. The main difference between a kid in San Francisco and a kid in Singapore is that the kid in San Francisco thinks he can change the world. In Singapore we tend not to think of ourselves as world-changers, we see ourselves more as an academic setting – let’s have the best researchers, the best profs, the most highly ranked universities – which is all fine, but then what? Most of the profs in Singapore are really great at what they do, but the idea of going to build something from that wouldn’t necessarily be the first thing they think about.
So mindset, and the idea that if you do something new, some part of it won’t work out perfectly the first time, and thinking that’s a bad thing. We want to find a way to mitigate that risk, and then once we’re reasonably sure it will work out fairly well, then we don’t mind doing it.
How much at odds is that mindset with the Smart Nation vision?
Well, it’s not intellectually incongruous to say we know some of the things we need to do but at the end of the day there are still life’s annoyances and frictions. That’s the tension, always, in a Smart Nation discussion – do we want to focus on fixing, say, parking coupons, and buses needing improved Wi-Fi speeds, or do we focus on having a different healthcare model where you don’t go to the doctor except for emergency treatment only, and everything else is done in the comfort of your own home? I’m a fan of the idea that it’s better to think about the big things, and the little things are just going to continue to be annoying. Little things are important, but only inasmuch as they contribute to the bigger picture.
When you look at NASA’s space program, for example, there were lots of little things that had to be solved – like how to make a docking coupler work – but all of them were about “in order to” – I have to solve this in order to do this. So if you want to get rid of parking coupons in a Smart Nation, the question should be, “Okay, in pursuit of what?” It’s not that it’s not a good thing to improve, but I’d rather focus on how to improve transportation so I don’t have to use parking coupons at all because I’m not parking my car in the first place. Do I really want a parking ramp at an HDB that’s 90% empty during the day, or one at the office that’s jammed? Let’s tear down the parking ramps and release the land for something else, and figure out a depot system where you have a million cars buzzing around as transportation – I’d do that in a heartbeat if I had confidence that when it was raining and I need to pick up my kids from school I would have no problem getting that vehicle. I have a car for that now. But if the system could guarantee that a vehicle would be available at that moment when I needed it, I’d sell my car.
But to be fair, citizens in Singapore, like citizens everywhere, will look at that and say, “That’s all very well, but what are you doing for me today?” That’s the inevitable tension.