Startup in israel and singapore outlook, stimulating factors, evaluation and recommendation for vietnam

BỘ NGOẠI GIAO

HỌC VIỆN NGOẠI GIAO
KHOA KINH TẾ QUỐC TẾ

KHÓA LUẬN TỐT NGHIỆP


BỘ NGOẠI GIAO

HỌC VIỆN NGOẠI GIAO
KHOA KINH TẾ QUỐC TẾ
--------------------

KHÓA LUẬN TỐT NGHIỆP
STARTUP IN ISRAEL AND SINGAPORE:
OUTLOOK, STIMULATING FACTORS,
EVALUATION AND RECOMMENDATION
FOR VIETNAM

Giáo viên hướng dẫn : PGS. TS. Đặng Hoàng Linh


ACKNOWLEDGEMENT
After four years of pursuing a bachelor degree majoring in International
Economics at the Diplomatic Academy of Vietnam, I have chosen to base my
research dissertation on the topic: “Startup in Israel and Singapore: Outlook,
stimulating factors, evaluation and recommendation for Vietnam.”
I would like to thank all of the professors and lecturers in the Faculty of
International Economics, especially Dr. Ngô Duy Ngọ and Dr. Nguyễn Văn
Lịch, who have guided me through the four years of my university journey. It is

their expertise on international economics as well as foreign affairs that have
inspired and encouraged me to finish university with good results. Therefore,
this graduation thesis is not only an accomplishment achieved after years of
obtaining valuable knowledge from all of my mentors, but it is also an indication
of my gratitude towards them.
I would like to give my special thanks to Associate Professor, Dr. Đặng
Hoàng Linh for directly guiding me during this journey. Thank you for your
time, dedication as well as careful attention to details and persistent support and
guidance throughout the process. All of your feedback and discussions have
truly enlightened and inspired me. This thesis would never take form or be
finished if it was not for your help. Therefore, I would like to dedicate this
research to you, as the biggest token of gratitude for all of your hard works and
commitments.
Lastly, I would like to thank every lecturer in the Diplomatic Academy of
Vietnam, the Student Affairs Department as well as my classmates who have
supported me on all fronts during study and research process. All of their
dedications and contributions have helped me tremendously from the very first
day until now.
Even at my best attempts, I believe this dissertation remains inevitably
defective. Thereby, I hope readers, whether it be lectures, colleagues, family,
and friends or people concerned, would continue to help me complete the
research.
Once again, I would like to express my sincere gratitude to everyone that
has helped me as well as all of the readers.


TABLE OF CONTENT
INTRODUCTION
CHAPTER 1: THEORETIC BASIS.................................................................1
1.1 Theoretic definition of startup.....................................................................1

1.2 Regulated definition......................................................................................5
1.3 Stages of startups...........................................................................................6
1.4 Funding for startups.....................................................................................8
CHAPTER 2: THE STARTUP OUTLOOK AND POLICIES IN ISRAEL
AND SINGAPORE...........................................................................................13
2.1 Israel.............................................................................................................13
2.1.1 Startup outlook in Israel.............................................................................13
2.1.2 Stimulating factors.....................................................................................19
2.1.2.1 Government policies...............................................................................19
2.1.2.2 Favorable conditions created by the private sector.................................25
2.1.3 Evaluation...................................................................................................29
2.2 Singapore......................................................................................................33
2.1.1 Startup outlook in Singapore......................................................................33
2.1.2 Stimulating factors.....................................................................................38
2.1.3.1 Government policies...............................................................................38
2.1.3.2 Favorable conditions created by the private sector.................................45
2.1.3 Evaluation...................................................................................................48
CHAPTER 3: RECOMMENDATION FOR VIETNAM..............................53
3.1 The current situation in Vietnam..............................................................53
3.1.1 Vietnam’s outlook......................................................................................53
3.1.2 Startup outlook...........................................................................................55
3.1.3 Stimulating factors.....................................................................................58
3.1.3.1 Government policies...............................................................................58
3.1.3.2 Actions of the private sector....................................................................63
3.1.4 Existing problems.......................................................................................67


3.2 Recommendation for Vietnam...................................................................71
FINAL CONCLUSION
REFERENCE

INTRODUCTION
There are approximately 305 million out of 472 million entrepreneurs in
the world that are labeled “startups”. 1 This is a significant sign indicating the
fact that the world has been swamped with startup companies. Thus, startups
have become the focal point of global economic development and each and
every country is striving to build a more dynamic startup ecosystem for their
own. Among these, there is Israel and Singapore, said to be the two of the best
fast-growing startup hubs in the world. Knowing that Vietnam is
unexceptionally participating in the startup race raged globally, it is important to
understand the critical components to the success of leading nations in this field.
Accordingly, this thesis aims at enhancing its audience’s knowledge of startups
in general as well as specific contributing factors to the success seen in Israel
and Singapore. In addition, the results and lessons helpful for policy-makers in
Vietnam so as to further stimulate the startup environment in the country.
There are three main chapters in this thesis. In chapter 1, we will zoom in
on theoretic bases of “startup” as well as other related concepts so as to clarify
the general idea of the main subject that is to be mentioned in the thesis. In
chapter 2, the thesis will attempt to study the cases of Israel and Singapore, two
of the strongest representatives of startup creators in the world, to understand the
core reasons behind the success of these nations, whether it be stimulating
measures from the public or the private sector. In chapter 3, the center point will
be the close examination of Vietnam in regards to its general economic outlook
and startup scene, as well as directed measures to further nourish the startup
ecosystem. Possible suggestions will be deduced from given factual information,
either from exemplified countries or from problems existed within the nation, so
as to enhance and improve the startup environment in Vietnam.
1

InnMind (2016), How many
/>

startups

are

there

in

the

world?

(infographic) ,


The span of the research will be mainly placed in the last five years when
startups became more popular worldwide. However, earlier data may be
provided so as to offer a comprehensive look at the general term as well as the
startup scenes in the three examined countries: Israel, Singapore, and Vietnam.


CHAPTER 1: THEORETIC BASIS
1.1 Theoretic definition of startup
Thanks to the booming economy, the internet, and the media, “startup”
has become an increasingly ubiquitous term in the past years. However, there
has not a single flawless definition to be recognized universally for this overused term. In this sector, we are looking back at how the word was first used,
what it meant during each period and see it from different aspects and angles in
order to understand the term more specifically.
The origin of the phrase rooted back four decades, when the term simply
meant “building a new company”. The term was first found in Forbes (1976):

“The unfashionable business of investing in startups in the electronic data
processing field”. It was again included in an article in Business Week (1977):
“An incubator for startup companies, especially in the fast-growth, hightechnology fields”. Although the phrase appeared without much context or
further indication of its meaning, nor was anyone sure if it was invented purely
to avoid repetition of words, these early references to the word under the same
topic, technology, has virtually made “startup” a signature phrase when
depicting technology-driven businesses.2
“Startup” was put into use more in the late 1990s when the phrase was
used frequently to describe companies in the dot-com bubble. Also known as
“the dot-com boom”, this is a speculation bubble occurred in the late 1990s,
early 2000s and was given the significant title thanks to the wide-spread usage
of internet. Essentially, several new Internet-based businesses were established
to capture the new-found market. These “dot-com” companies, submerged in
large speculative investments, were said to be the first batch of recognized
startups.3
The usage of “startup” reached a peak around 2002, shortly after the
internet bubble and apparently died out from then until 2008. By this time, the
2

Quora (2011), What is the origin of the term "s tartup", and when did this word start to appear? ,
/>3

Growly (2017), What is a startup? The historical background , />

term was used to reference the second generation of internet-based enterprises,
with Facebook being the most outstanding one. Since the end of the 2008 global
financial crisis until now, startup once again finds itself to become a common
term, nonetheless, mostly branded to technology firms.
This brings the question, what is the true definition of “startup”? There
are many aspects to define a startup on, in which there are two traditional

streams. While some define “startup” as a phase, others see it as the financial
status of the company. We will look into both of these points of view, as well as
considering other aspects of startups.
On one hand, “startup” can be defined as the very first stage in the
business process. While the American Heritage Dictionary and MerriamWebster do not consider startups anything more than a freshly operated
business, the business dictionary stated startup is the early stage in the life cycle
of an enterprise in which “the entrepreneur moves from the idea stage to
securing financing, laying down the basic structure of the business, and
initiating operations or trading”. This explanation would usually be accompanied
other signs to indicate a “graduation” from the startup phase, such as an
acquisition by a bigger company, having more than one office, gaining over $20
million in revenues, having over 80 employees, being led by a board with over
five members, and, selling shares and so on. Basically, when companies show
signs of scaling and become more profitable, they are no longer considered
startups. 4
However, there exists a point of confusion in this theory. Taking into
account the “undergraduate” conditions, doesn’t it mean many companies can be
a startup for years, while others only take months to be called otherwise. Also,
the definition fails to address why startups can’t be profitable, as any sign of
scaling could take away the title. The lack of details attached to this definition is
part of why Uber and Airbnb, founded a decade ago, are still miscalled. In
regards to the additional conditions, many startup founders disapproved of the

4

BusinessDictionary
/>
(2018),

Startup,

idea that a startup is outlined by metrics, as it takes any form, stage, and size.
Therefore, although the definition gives us a general picture of startup, it
remains flaw-some.
On the other hand, “startup” may also be defined based on its financial
status, most of which see the small self-fund as the main criteria. Startup
businesses are said to have “low bootstrapping costs”, meaning that it operates
on self-investment that are low in value and without utilizing external capitals.
Investopedia (2017), a well-known economic-and-business-driven website, also
identify startup based on its monetary state during the first stage of its
operations. “These companies are often initially bankrolled by their
entrepreneurial founders as they attempt to capitalize on developing a product or
service for which they believe there is a demand. Due to limited revenue or high
costs, most of these small-scale operations are not sustainable in the long term
without additional funding from venture capitalists”. 5
Another financial theory bases startup on the “50-100-500 rule”.
Accordingly, these are specific guidelines that once a company surpass them,
they are no longer considered startups. Specifically, startups are companies
which earn less than $50 million in annual revenue run rate, employ less than
100 staffs and being valued under $500 million. Exceeding these numbers, they
are just regular companies hunting for or actively avoiding an IPO. Under this
theory, there is also an in-between state, post-startup, and pre-public, in which
firms are called “unicorns”. The theory states unicorns are private tech company
founded after 2010. Despite being valued over one billion or more on paper,
they have yet to issue an IPO. If startups are considered children, then unicorns
are adolescences and after the IPO, companies mature into an adult. Based on
this financial model, companies such as Xiaomi, Uber, and Airbnb, all of which
worth over $30 billion, are no longer startups. They are fast-growing, highly
valued unicorns, regardless of the public misconception. However, this is

against the common perception of considering unicorns as successful startups. 6
There also exists another point of view which zooms in on the uniqueness
of startups. While startups can be jokingly described as a company “working to
5

Investopedia (2018), Startup, />6

TechCrunch
(2014),
What
the
hell
is
a
startup
/>
anyway? ,


solve a problem where the solution is not obvious and success is not
guaranteed”, it is indeed referring to an innovative and rather risky business to
solve current pain points existing among customers. This idea is also shared by
Eric Ries, which depicted a startup as “a human institution designed to deliver a
new product or service under conditions of extreme uncertainty.” 7 8
However, one thing that is rarely highlighted in these definitions but are
seen in multiple examples of startups is their abilities to grow. Among
advocators of this explanation, there is Silicon Valley’s most well-known
entrepreneurial educators, Steve Blank. He described startup as “a temporary
organization designed to search for a repeatable and scalable business model”.
Paul Graham, an investor also agrees that a startup signifies “a company

designed to scale very quickly” and indicate that it is the development beyond
the borders that separate startups from regular small businesses. Though haven’t
been proven wrong, purely defining startup on this aspect appears to be
incomplete.9
Since considering startup on separate aspects is insufficient, the most
comprehensive definition of “startup” should be a combination of all of the
above, accompanied with its purpose and development process. Thereby, a
startup firstly should be identified as a business which is newly formed. Second,
it aims at a rapid growth by “developing or offering an innovative product,
process or service” that addresses a particular market gap. Third, regarding size,
startup usually starts with a small budget, the same as the majority of
entrepreneurs, but it should be built with a “scalable business model”. Details
regarding the specific development which involves validation and research for
target markets will be discuss in a later section. Again, this is not the single most
accurate definition of “startup” but rather a blend of the most general features all
startups share. However, it is definitely one of the more completed explanations
of the term.10
7

Ries (2018), The lean startup methodology , />8

Forbes (2013), What is a startup?, />what-is-a-startup/#207f8da44044
9

Paul Graham (2012), Want to start a startup?, />10

Tech Target (2018), Startup company, />

Aside from attempting to define what defines startup correctly, it is also
important to understand what is purely a misapprehension. Since the early days,

startups have usually been associated with technology-related firms. The
prevalent use of the term after the dot-com bubble in the late 1990s, in which a
great number of Internet-based companies were established, and the popularity
of commercial technology, primarily smartphones, tablets, and laptop in the
2010s, has further strengthened this unproven concept. Voluminous technicalbased companies were not only the quickest and most successful businesses but
also had the most visible victories. Hence, the misconception that startup only
belongs in the technology realm has persisted for so long. It is true that the
technology industry has produced numerous startups thanks to its innovative
nature, and because investors constantly seek for ground-breaking advances to
benefit their investments in a technology-driven society, increasing capital for
this field encourages more tech startups to launch. Regardless, defining startup
using its technical foundation has been proven wrong. Startups are made easier
to kick-start by technology, as it helps to mitigate the initial capital and
unnecessary costs during the foundation process. Technology has a
“democratizing effect”, which enable a larger audience to start business, but it
does not cover or contain “startup” by any mean. Startup companies can be
found in every other sector, just not in the same size, number, and variety as the
technology sector. This is a fact that all analysists have seen eye to eye on.11 12 13
In conclusion, startup remains a vague term that has yet to be well
defined, and there are more approaches to the term that has yet to be discovered.
Thereby, no definition has been specified as the only correct description for
“startup” universally. Therefore, despite many theories exist to explain the term,
the concept remains confusing and ambiguous. In this thesis, we would rely on
the combined definition to identify the main subject of the thesis.
1.2 Regulated definition

11

Technopedia (2018), Startup, />12

Growly (2017), What is a startup? The historical background , />13

The Crimson (2011), In and around language: What's
/>
up

with

"s tartup"? ,


As mentioned above, “startup” is a common word found in books, the
media, daily conversations and even in public speeches made by state leaders in
high-level summits all around the world. The startup phenomenon is openly
welcomed and supported by all governments, as it benefits the economy in many
ways. However, almost no country in the world has taken the time and effort to
define this positive wave of emerging business. The term “startup” has not been
officially addressed anywhere else in the world, not even Israel or Singapore the prime startup nations mentioned as poster children in this thesis, aside from
India.
In order to facilitate the emerging startup ecosystem in the nation, India’s
authority came up with the “Startup India” initiative along with tax benefits only
startup firms are able to claim. Following this spirit, India’s Ministry of
Commerce and Industry released an official statement mentioning the three
criteria that would identify new-found companies as startups. The rule regulated:
“An entity will be identified as a startup.
1. Till up to five years from the date of incorporation.
2. If its turnover does not exceed 25 crores in the last five financial years.
3. It is working towards innovation, development, deployment, and
commercialisation of new products, processes, or services driven by
technology or intellectual property.”

In further explanation for the last criterion, the authority elaborated it can
either be a brand-new product, service or process that has not been served to the
public or “a significantly improved existing product or service or process, that
will create or add value for customers or workflow”.
An additional note states that any unit bears the resemblance to all
aforementioned characteristics but are formed by “splitting up or reconstruction
of a business already in existence” will not be considered a ‘startup’. 14
This definition, despite giving clear details, is nowhere near the complete
version. Some parts of it are even inaccurate if compared to all other theories
listed in the previous section, especially the technology-based aspect. However,
this is the only official document in the world that has recognized startup as a

14

Ministry
of
Commerce
and
Industry
/>
(2016),

Notification,


specific business unit. Instead of seeing this as a reference, it should be
understood as the particular way India’s government is trying to shape its own
startup ecosystem – towards a more technology-driven one – and how startups in
this sense are based on India’s economy alone. Therefore, in this thesis, we
would not rely on this definition, instead remain with the definition given in the

first part.
1.3 Stages of startups
Regardless of the different definitions, startup units usually follow along
certain phrases.
First is the concept stage, in which the concept of a new product, usually
ignited by the founder, marks the beginning of a startup. In the early stage, much
of the work revolves around refining original ideas, building a minimal viable
product, setting up tests and trials, and obtaining helpful results from those.
Based on the test results, startups will make appropriate adjustments to the idea
and repeat the same steps over and over again. The end goal is to “validate a
scalable product in a way that allows putting together a convincing pitch deck
and demo to get investment”. This idea is shared by Eric Ries, as he calls this
the “feedback loop”. The consistent and revolving process of building an idea
into an evaluable product, measuring results through tests, and learning to
improve it, is the core activity of the early stage. Only when startups find a
product that has shown remarkable potential, sufficient to produce a persuasive
presentation and secure investments, will they move on to the next steps.15
For this stage, the main focus is to develop the product and scale the
company, not making a profit. Therefore, the early startup period is usually
marked with the monetary imbalance. As much finance is spent on developing,
testing and perfecting their ideas, expenditures tend to always exceed revenues.
As a result, startups in the early stage usually find themselves “unable to pay all
employees, including founders, a competitive salary”. On the contrary,
companies that are able to obtain money from either revenues or additional

15

Quora (2015), What is the proper definition of a startup? , />

investments to offer a compensation at market value to its employees are usually

not considered early-stage startups.16 17
After the early stage comes the growth stage. By this stage, startups start
experiencing an improvement in the revenue, though slow but steady, and it is
attracting new customers progressively. However, the increased sales and
customers come along with more competition and internal management issues.
Therefore, the company is likely to grow in size and labor, especially ones
working in the accounting department and the management system, will be
employed to deal with emerging problems.
For the establishment phase, a startup has been successfully transformed
into a thriving company with steady revenue, a solid grounding in the market
and a loyal customer base. The focus in this phase would be on improving
productivity in order to be able to compete in an established market. More
disciplined business culture, extra automation, and outsourcing are popular
means of improving productivity that is usually applied by startups during this
phase.
Rapid growth in cash flow is usually the symptom of startups entering the
expansion stage. In this phase, startups would seek to gain a larger market share,
step into new markets and distribution channels, all in the hope of generating
more profits. When the increasing competition eventually pushes revenue to
decline, it is time for startups to mature and contemplate possible exits.
At this point, startups face the dilemma of having to choose between
whether to continue expansion phase or to make an exit. In most cases, they
would opt for an exit. Years of hard work put into the company would be
carefully calculated and evaluated by third parties to put out the company’s real
value to the current market. Hence, startup leaders are expected to carefully
examine business operations, management, and competitive barriers prior to the
evaluation so as to maximize the company’s worth to the acquiring parties. By

16

Tech Target (2018), Startup company, />17

McGowan (2017), From early to acquired: What are the stages of a startup?,
/>

the time startups have been merged, acquired or establish its initial public
offerings, a startup ends its entire life cycle.18 19
Conclusively, for startups, the most important and significant part is the
early stage, because it is crucial in defining a small business a “startup”. Other
than that, the rest of the cycle is fairly similar to a typical entrepreneur business
cycle. However, it should be noted that not all startups follow this chronological
order exactly. In fact, it is not rare for potential startups to experience rapid
scaling and reach an exit immediately after the growth stage. Therefore,
although true in most cases, this is not the timeline that all startups are
compelled to follow.20
1.4 Funding for startups
For the majority of founders, bootstrapping is the primary financial option
for startups. Bootstrapping is a situation in which either founders use their own
financial assets, owned or borrowed, or use revenues generate upon the unit’s
operation, to fund the operation of the new-found company. Because of these
features, bootstrapping only provides a small amount of capital, which further
emphasize the stated fact of monetary imbalance issue and financial risks during
the early stage.
Most of the time, bootstrapping is not an option because it is the only
choice for startups. As most of the early stage is made up of ideas, testing and
learnings, raising funds for this and out of this, although not impossible, is
generally out of the question. Bootstrapping, however, carries a large financial
risk since founders are required to manage their income and outcome while
focusing on research, which usually to result in a significant imbalance. In
addition, without large sums of money from externals, some startups might not

be able to develop as rapidly as possible, as they are occupied with the mass
loads of work both technically and financially issues. Another shortcoming of
this economic method could the damage to credibility. Not being invested in by
18

Just
In
Time
(2017),
The
7
stages
of
business
/>
life

cycle ,

19

Entrepreneur (2016), The five stages of your business lifecycle: Which phase are you in?
/>20

Your Story (2016), The 5 stages of startup development , />

outsiders, whether unintentional or unable, can make startups appear to be too
inexperienced and infeasible to attract speculations, hence hurting the company's
reliability. In contrast, being sponsored by well-respected investors can gain the
market’s trust and hence benefit a startup in the long run. On the bright side,

since their ownership is not shared with outsider investors, founders are able to
maintain control over all decisions. This allows business owners to experiment
with their brand more and continue the feedback loop until they are satisfied
with the outcomes of their venture.21
If startups show significant potential but are yet to be eligible for the first
official financial round, the seed round, they might obtain pre-seed funding from
friends, family, business angels, and institutions such as accelerators and
incubators. Pre-seed investments are typically less than $1 million and are
mainly granted by the same investors who are preparing startups for their
investments in the seed round.22
When reaching the growth stage, startup owners are offered a wider
variety of options, including borrowing specialized loans and obtaining venture
capitals through angel investors and crowdfunding. A line should be drawn
clearly between these two sources of input: debt, the capital that requires
repayment, and equity, the capital that is sold in exchange for the company’s
share.
For debt capital, a small business loan could be obtained from a variety of
banks or credit unions, including “government-sponsored small business
administration loans from local banks and grants from nonprofit organizations
and state governments”. Banks and other economic bodies typically offer a
number of specialized options available for small businesses, including microloans with low interest in short-term designed specifically for startups. However,
this source of capital is not as popular as the latter. 23

21

Investopedia (2018), Bootstrap, />22

The SAAS Growth (2017), From pre-seed to series C: Startup funding rounds explained ,
/>23

Fundable
(2013),
Funding
your
/>
startup,


For equity capital, if a startup is able to showcase its potential, they may
attain investments, in exchange for a share of the company’s ownership. For
new startups with little operating history, raising venture capital funding is
becoming increasingly popular. Capital provided at this stage brings with it the
investor’s the hope of gaining massive returns from their later success. The
biggest difference between the two primary types of investors, angel investors,
and venture capital firms, is their resource input and intention. Angel investors
are mostly individuals utilizing their own wealth, accumulated through diverse
sources, to provide a small amount with favorable terms and help startups
through the difficulties in the first stages of their business. Venture capital firms
pool money from several investors and strategically decides where the fund
goes, which explains why they consider the profit aspect more seriously, hence
looking for ways to influence the board and its company. Despite the
differences, venture capitalists, in general, are exposed to major economic losses
as they could risk losing all of their investments if a startup fails. This is why
chances to obtain investments from these sources in the early days are slim, and
only when companies are able to showcase their innovative ideas accompanied
by a capable management team can they persuade outsiders to take risks for
them.24 25 26 27
Investments during this period are granted in the form of financial rounds.
Normally, the first financial round is the seed round, in which angel investors
contribute around $150,000 while venture capitalists contribute up to $1.5

million, averagely. After that, startups can raise Series A financial round when
their revenue begins growing, primarily from venture capital funds. At the
median rate of $10.5 million, only a few super angels invest at this point. While
next two funding series are raised during the expansion phase, Series B grants
are often set at around $30 million, whereas large-scale expansion from Series
C, usually involves entering new markets, financial grants are $50 million on
24

Investopedia
(2018),
/>
Venture

capital,

25

Investopedia (2018), Angel investor, />26

Investopedia
(2018),
/>
Venture

27

The Business Angel (2018), Difference between angel Investors & venture capital
/>
capitalist,

average. From then on, since there is no limit to the number of financial rounds,
startups can raise as many rounds as they wish before reaching the later stages.28
If the company survives and success, in later stages, startup founders,
investors and other leaders within startups can regain their investments by either
selling their startups to bigger and more established companies or going public.
Hence, mergers and acquisitions and initial public offerings are two principal
exit strategies.
For the first option, startups can be merged or acquired. Since a merger is
defined as an occurrence in which “2 separate entities (usually of comparable
size) combine forces to create a new, joint organization”, and startups are
relatively small in size and weak in finance, they are unlikely to become “equal
partners” with their investors. Hence, they are predominantly acquired. An
acquisition is “the purchase of one entity by another (usually, a smaller firm by a
larger one)”, in which a new economic entity is not the result, but rather make
the acquired company “consumed and ceases to exist”, as its assets then belong
to the acquiring company. The payment offered to acquire startups will
compensate and benefit founders and any party that has invested in the company
prior to the acquisition.29
For the second option, companies can issue their initial public offerings
(IPO). An initial public offering is the first stock sale issued by an enterprise to
the public. Preceding this, the company is regarded as private, with only a
relatively small group of people considered as shareholders. On the contrary, the
public comprises of “any individual or institutional investor” that is interested in
buying shares from the company. Only after the initial public offering are the
company’s stocks available for sale on the stock market, and the public is able to
have access to them. Once recognized as a public company, startup owners
ought to trade a portion of their shares to the public in exchange for valuable
resources that will be used for further development of the enterprise.30
28

The SAAS Growth (2017), From pre-seed to series C: Startup funding rounds explained ,
/>29

Investopedia
(2018),
Mergers
/>
and

30

Investopedia (2018), IPO, />
acquisitions ,


In conclusion, funding for startups at different stages vary, and the grant
may either come from personal assets or from outside investors. Typical startups
go from bootstrapping to being invested by angel investors, venture capital
funds or accelerators and incubations, and lastly be acquired or go public. It
should be noted that like startup stages, not all startups follow these exact
financial stages. However, the number of special cases is insignificant, therefore
this roadmap remains factual.


CHAPTER 2: THE STARTUP OUTLOOK AND POLICIES IN ISRAEL
AND SINGAPORE
2.1 Israel
2.1.1 Startup outlook in Israel
Israel is a small country located in the Middle East area. Following the

law of nature, a nation that constantly struggles with wars and conflicts with
neighboring countries since its formation only 70 years ago should be far behind
the rest of the world on all fronts. Yet, Israel is the living proof of the opposite.
Home to only over 8.8 million people, this country has produced an astonishing
number of startup companies and stimulate a strong venture flow that even more
peaceful and stable countries like Japan, Japan, China, India, Korea, Canada,
and the UK yearn for. Israel is also home to three of the best technology
inventions, including the USB flash drive, the first Intel PC processor and
Google’s Suggest function. Moreover, the country is 3 rd to only the United
States and China with the number of companies listed the NASDAQ.
Repeatedly mentioned as one of the world’s most vibrant hubs, Israel has been
given the title “the startup nation”. 31
Data recorded by IVC and Reversexit (2015) showed that 10,185 startups
were founded in Israel between 1999 and 2004. This means 637 startups are
established annually on average. Despite many of them were shut down due to
multiple reasons, a staggering 52.5% of them, equal to 5347 companies, are still
running today. It has also been reported that 2.6% of all startups in Israel
generate an annual revenue of over $100 million, and a countless number have
become unicorns with billion-dollar businesses, namely WeWork, Waze,
ironSource, Infinidat, OrCam Technologies, ForeScout, Houzz, Gusto, and so
on.32 33 34
31

Havard Business Review (2015), How Israeli startups can scale , />32

IVC Research Center (2014), Israeli startup success report 1999-2014 , />33

World Economic Forum (2017), Israel is a tech titan. These 5 charts explain its startup
success,
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