From thumb drives to deep tech: Why innovation is central to Singapore’s success

31 July 2025

As Singapore celebrates its 60^th anniversary, its ability to compete in a world increasingly shaped by geopolitical fragmentation and trade disputes is under pressure. Deepening funding for the innovation economy will be crucial to continuing its remarkable success story into the coming decades.

From shipyards in the 1960s to advanced manufacturing, financing, and research facilities today, Singapore has repeatedly reinvented itself.^[1] In 2024, its digital economy accounted for an impressive 17% of GDP.^[2]

Today, the growth levers of open trade, electronics manufacturing, and the platform economy are under pressure. Trade, the city-state’s second-largest sector, is increasingly vulnerable to geoeconomics, with semiconductors and pharmaceuticals exports facing heightened scrutiny.^[3]

To maintain momentum, Singapore will need its research and development (R&D) professionals to carve out new global niches and expand growth in strategic sectors like biotech, materials engineering, semiconductor manufacturing, and AI.^[4] While Singapore has ramped up R&D funding through government schemes and budget top-ups, it still lags Korea, Japan, and China in Asia in terms of resident patent filings per capita. It means a significant portion of its innovation output risks being commercialized offshore.^[5]^,^[6]

Many researchers lack the financial runway — and often the confidence — to take their innovations beyond the lab and into commercial markets. Private credit and other forms of alternative capital, including equity-backed financing, can play a vital role in helping capital-intensive startups bridge long gestation periods and scale up without prematurely diluting ownership.

Singapore faces intensifying competition for talent and faces a declining population.^[7]^,^[8] Italy, Denmark and Portugal have leapfrogged Singapore as top destinations for global graduates.^[9] It risks losing more researchers to larger innovation ecosystems in the US or China.

Ultimately, a lack of credit availability harms the research process too. A 2024 study in China found innovation policies in cities spurred growth but also raised financing costs for R&D-intensive firms – reducing overall research quality as scientists spent more time chasing funding than building breakthroughs.^[10]

Equity-backed financing can help fill this capital gap. It provides founders with early liquidity before profitability, reducing reliance on grants, equity dilution, or premature exits and helping sustain growth.

A fertile ground for seeding ideas

Singapore is one of the best places in the world for research-led entrepreneurship.

Over the past two decades, it has doubled the number of researchers per 1,000 workers.^[11] Its R&D ecosystem — spanning government agencies like A*STAR, hospitals, academic institutions, and tech incubators — has likely helped attract more than 4,500 startups, 500 venture capital firms, and over 220 accelerators.^[12] The country has consistently invested over 2% of its GDP into research, placing it among the most research-intensive economies in the world.^[13]

It’s worth remembering that Singaporean entrepreneurs invented the first USB flash drive (Trek 2000’s ThumbDrive), local firm Creative’s ZEN MP3 players took on Apple’s iPod, and the infrared fever screening system in use globally was also developed there following the 2003 SARS outbreak.^[14]^,^[15]^,^[16] Meanwhile, Illumina, a biotech firm with a significant presence in Singapore, generates about 80% of the world’s sequencing data crucial for precision medicine everywhere.^[17]

But Singapore’s research output shouldn’t be measured by inventions alone. Its researchers excel at quietly changing how industries function.

From launching the world’s first congestion-pricing system for roads in 1998 to rethinking airport customer experience with real-time analytics and automation, Singapore’s success has long come from what others don’t see: systems design, process improvements and forward planning, executed through effective public-private partnerships.^[18]^,^[19]^,^[20]

Singapore has also embraced a new role as a “living laboratory” — a place where solutions emerge for urbanization, sustainability, and public health challenges whether it’s carbon trading services and green exports or trade tech and mini-DNA sequencers.^[21]^,^[22]

Yet, if the next wave of global deep-tech innovation is to take root here, the financial ecosystem must evolve. A broader pool of capital would give founders, researchers, and employees greater flexibility, providing alternatives to dilutive private equity or venture capital. Specialty capital providers like EquitiesFirst are part of the solution, offering flexible liquidity for accredited investors against their tradable equity positions.

In fields like AI, biotech and deep tech — where speed and talent matter more than ever — flexible capital can support the hiring of top names, acquisition of proprietary intellectual property, or acceleration of go-to-market plans.

For much of Singapore’s 60 years of existence, leaps in economic growth have occurred without much fanfare. Engineering the next wave of R&D at home will, however, be crucial for continuing Singapore’s success.

[1] https://www.nlb.gov.sg/main/article-detail?cmsuuid=00df90f2-a3ac-4e9b-b507-f338eb2f933c

[2] https://www.imda.gov.sg/-/media/imda/files/infocomm-media-landscape/research-and-statistics/sgde-report/singapore-digital-economy-report-2024.pdf

[3] https://www.reuters.com/world/asia-pacific/singapore-trade-minister-discuss-pharma-tariff-concessions-during-us-trip-july-2025-07-10/

[4] https://www.ubesg.com/post/singapore-rie2025-charting-the-path-to-a-global-innovation-powerhouse

[5] https://www.businesstimes.com.sg/singapore/economy-policy/singapore-spending-s25b-next-five-year-rd-plan

[6] https://www.wipo.int/edocs/statistics-country-profile/en/_list/l3.pdf

[7] https://www.channelnewsasia.com/singapore/singapore-fertility-rate-births-record-low-immigration-4966516

[8] https://www.scmp.com/week-asia/lifestyle-culture/article/3289782/elon-musks-going-extinct-jab-singapore-spotlights-birth-rate-challenges

[9] https://www.economist.com/graphic-detail/2024/10/22/our-footloose-index-the-most-attractive-countries-for-graduates

[10] https://cicm.econ.cuhk.edu.hk/wp-content/uploads/2024/06/I-New-Issues-and-New-Methodologies_Financing-RD.pdf

[11] https://file.go.gov.sg/rie-2025-handbook.pdf

[12] https://www.enterprisesg.gov.sg/resources/blog/deep-tech-unlocking-new-engines-of-growth-for-singapore

[13] https://www.un.org/technologybank/news/driving-transformation-technology-and-innovation-%E2%80%93-lessons-singapore

[14] https://spectrum.ieee.org/thumb-drive

[15] https://tedium.co/2022/05/11/ipod-failed-competitors-history/

[16] https://innovd.stengg.com/deploying-fast-and-intuitive-screening-with-facial-detection-thermal-scanners/

[17] https://www.science.org/content/article/100-genome-new-dna-sequencers-could-be-game-changer-biology-medicine

[18] https://www.mhi.com/group/mhims/research/sip/column_0003.html

[19] https://cmp.smu.edu.sg/ami/issues/volume-06-issue-1/vantage-point/ai-gets-real-singapores-changi-airport-part-1-learning

[20] https://www.internationalairportreview.com/news/179545/efficient-passenger-processes-at-changi-airport/

[21] https://www.businesstimes.com.sg/opinion-features/living-laboratory-future-urban-solutions

[22] https://www.edb.gov.sg/en/business-insights/insights/singapore-growth-to-slow-as-trade-tensions-rise-but-green-digital-opportunities-will-emerge-dpm-gan.html

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