Singapore Needs an Acqui-Hire Phenomenon

thumb_tom By Thomas Clayton, Bubbly CEO

Just a few years ago, Singapore was not a place synonymous with flourishing technology, but the region has since made huge leaps in the sector and is now considered one of the world’s hottest technology hubs. This is in large part due to successful incentives set up by the local government that have encouraged large amounts of angel investment for startups and increased presence of top tech companies. Singapore now stands as a magnet for talent and innovation.

However, the area’s ability to retain its venerated position atop the tech world is at risk. The available funds for startup investment drop significantly with the Series A and B rounds. This means that although Singapore is now littered with great entrepreneurial tech talent, many of them won’t get a dime more of funding after their initial boost. Their ideas and businesses will fail, and they will tuck themselves back into multinational corporations (MNCs) or government-linked companies (GLCs), battered and gun-shy of ever trying entrepreneurship again.

This is really bad for Singapore’s startup ecosystem. It would be terrible to see a massive reversal of the region’s momentum and the recent mini-Silicon Valley that has blossomed here. In order to prevent this from happening, I believe Singapore needs to make some major changes. Here is how I think it can save itself from a significant economic slow-down in the tech sector:

First, the local MNCs and GLCs need massive cultural overhauls to stay competitive and increase productivity. Some companies in the area have already realized this and made the appropriate changes. For example, SingTel has undergone serious restructuring to focus on the digital frontier and begun an aggressive M&A campaign as well as launching one of the leading VC funds in the region in SingTel Innov8. Other companies are still stuck in their old ways though, and “don’t know what they don’t know,” further securing their position as lethargic conglomerates that are vulnerable to the outsider spry young guns.

What these large companies need is an infusion of strong, scrappy, entrepreneurial-minded talent – basically the exact type of people who would avoid joining companies like theirs in the first place. This makes roping these individuals in a challenge, but these businesses desperately need a breath of fresh air. You simply can’t change a culture with the same people and policies.

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photo credit: greyloch via photopin cc

The best way to accomplish this transition is through the same acqui-hiring phenomenon that has become so popular in Silicon Valley over the past few years. This is when a company acquires a smaller startup for the sole purpose of retaining its talent. Valley behemoths such as Facebook, Google, Yahoo!, and Twitter are notorious for doing this. An aqui-hire not only side-steps the challenge of getting the interest of and landing top tech talent for these large companies, it also allows them to purchase pre-assembled, well-oiled teams, which saves them additional time and money on training and extra learning curves. Moreover, there are typically two to four-year retention packages in place for these teams, so turnover is minimal. It’s then up to the companies to make sure their environment remains an inspiring and innovative place to work for these forward-thinking individuals.

Another advantage of going this route is that it will fuel more interest from locals in the startup path. The more stories that Singapore has of solid exits, the more locals will be attracted to entrepreneurship. Often times, the company that gets acquired in an acqui-hire situation is in danger of closing its doors already, whether it is due to insufficient funds, a failing concept, etc. Therefore, having their company welded into a larger one generally means more retained jobs and it shows that the downside of unsuccessful startup attempts can still have a fairly positive outcome.

This will foster more individuals that haven’t lost their will to traverse unchartered territory and embolden them to pursue their ideas and build new things. It will also lead to a more risk-taking culture overall, which will in turn help boost local innovation even more.

So with the spark for an infusion of more local entrepreneurs and a transformation of culture at stagnant MNCs and GLCs, an acqui-hire movement would be a win-win for the whole economy. My hopes are that these companies themselves will recognize the significance of this issue and make the necessary business decisions, or that the government continues its string of positive incentives and establish some more to encourage MLCs and GLCs to acqui-hire.

This was also published in Tech In Asia.

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