The top priority for entrepreneurs looking for the right location to launch their startup is a business-friendly environment and supportive government policies, according to a recent survey conducted by CorporateServices.com -- a firm that provides Singapore company setup and compliance services to international startups and mid-sized companies.
The survey was conducted by interviewing startup founders from five countries (UK, India, Ukraine, India, Poland, and the US). It found that entrepreneurs seek a location where government policies encourage innovation and entrepreneurship, with straightforward regulations that are fair, and easy to follow.
Other priorities, in descending order, included a supportive startup ecosystem, easy access to a skilled workforce, compliance with rule of law, attractive tax policies, protections for intellectual property, geographic location, and the overall quality of life.
Interestingly, lower taxes were ranked fifth in the order of importance by the survey respondents. While lower taxes are important, they were not the primary consideration for founders of early stage companies. This is understandable, since startups rarely make profits during their early years; hence issues that affect the venture's growth prospects (such as ease of setup and launch, access to a supporting startup ecosystem, and rule of law) were given higher importance.
But an interesting pattern emerged when the survey data was sliced by age of the respondent's startup. Among entrepreneurs whose startups were older than 4 years, the report found a growing disillusionment with their current jurisdiction. High tax rates were the primary complaint in this group. That makes sense since most startups start generating profits around the 4-year mark; hence, that's when taxes on profits and exit payouts become a consideration. For instance, US respondents expressed frustration with high taxes on capital gains and dividend income on the one hand and limited tax deductibility of business losses on the other. Both of these policies discourage entrepreneurship. A second common complaint of this group was about the compliance and regulatory burdens startups face as they grow. Regulations related to environmental issues, non-discriminatory hiring practices, and employee benefits, while laudable in their intent, can put financial pressures on startups.
The survey found that many startup founders are open to the idea of relocating to another country -- an intriguing finding that should warn countries not to take entrepreneurs for granted in today's globalised economy.
To assess global sentiment about Singapore's attractiveness as a startup location, the survey assessed Singapore on metrics considered important by entrepreneurs. On all of these measures, Singapore fared well. Located at the heart of some of the faster-growing markets of the world, Singapore has adopted policies that are very friendly to entrepreneurs. CorporateServices.com forecasts that with its educated, English-speaking workforce, extremely favourable tax regime, unrestricted capital flows, low level of corruption, and streamlined regulation, Singapore will continue to grow as a global startup hub. Add to this Singapore's high standard of living and the virtues of living in a tolerant, polyglot culture in the heart of Asia, and Singapore may be an ideal place for those looking for a new place to start and grow a new business venture.
While acknowledging that Singapore may not be for everyone, Pardeep Boparai, the CEO of CorporateServices.com, added that Singapore's constant drive to improve its world-class education system and technically skilled workforce will become important assets in the future. "As emerging technologies based on AI and ML take over routine tasks, there will be immense opportunities for those who can combine creative, technical, and problem-solving skills while serious risks for those who can not. As a result, strong human skills will be the main determinants of success in future."