Unicorns are increasingly running the streets of East Asia. In fact, policymakers in Singapore and Hong Kong wave the flag of their first unicorns with pride and Taiwan is on track to have its own unicorn. I am not talking the mythical animals adorning children’s storybooks. In the world of start-ups and venture capital, since 2013 a “unicorn” is understood to be a privately-owned (technology) start-up that achieves valuations in excess of $1 billion. A unicorn is also a validation that a start-up ecosystem is succeeding, and a key performance indicator used by governments.
From myth to reality: unicorns in Singapore, Hong Kong and (soon) Taiwan
Singapore has unicorns inhabiting its island, with Garena, Lazada, and Razer all comfortably achieving $1 billion valuations. But the ever-active and promoting Singaporean state isn’t stopping there. On Monday, October 2nd, the Singaporean parliament approved the “variable capital companies” (VCC) bill in an effort to further project the Lion City’s position as leading destination for asset management firms, particularly venture capital funds, to domicile and operate. In explaining the power of the new VCC structure, the Bill will provide a mechanism for overseas funds to be constituted as Singaporean. The Business Times asserts that one of the benefits to Singapore is that it “enhances Singapore’s position as a full-service international fund management centre”. This is a time-tested strategy in the Lion City.
GoGoVan, a logistics company, excited Hong Kong start-up enthusiasts in September 2017 as it achieved unicorn status. Finally, Hong Kong – and its government – had something to show for the rising support of start-ups and innovation (and within two years of the promotion of the Innovation & Technology Commission to Bureau level status).
For Taiwan, in May 2018 an electric scooter company called “Gogoro” was being picked as the likely candidate. This unicorn excitement came as the Taiwanese government announced in early 2018 that it promised to incubate its first unicorn by 2020 (Japan made a similar promise, through its J-Start-up program which launched in June 2018, that it would help build 20 unicorns by 2023).
These unabashed efforts to build unicorns is not a new phenomenon. In The Venture Capital State: The Silicon Valley Model in East Asia, I detail how each country purposefully, but differently than one another, helped catapult its local VC market to world-class size and operations. They don’t copy the real or imagined Silicon Valley model either. Even the “core elements” of the American legal and tax environment within which Silicon Valley VC emerged were not deployed in each case. Here’s a visual of the unique “yellow brick roads to Oz” – or, policies implemented with the aim of building a local VC market akin to Silicon Valley:
Why variation amidst convergence?
Though each country had the same aim – of building a local VC market that could support the growth of its local unicorn population – they all took different paths. The phenomenon reminds me of the Seinfeld-inspired play “I love you, you’re perfect, now change”. Each country’s policymakers fell in love with the idea of building Silicon Valley-like venture capital markets. This, they concluded, was part of the recipe for creating innovative firms, as well as ensuring vibrant financial markets. But after falling in love with the model, they changed it.
The Venture Capital State systematically explores why and how this change occurred as it has in these East Asian nations. And crucially, it explains that this adaption has been essential to success in East Asia, as elsewhere. It’s not about copying Silicon Valley in order to build local unicorns. It’s about local competitive advantage and approaches that reflect distinct environments.
About the author of this blog post: Robyn Klingler-Vidra is a lecturer in Political Economy at King’s College London, and the author of The Venture Capital State: The Silicon Valley Model in East Asia