Singapore’s Exit Problem: Why Its Startups List Everywhere Else

Singapore built a startup ecosystem and forgot to build the exit. Companies incorporate here, raise here and headquarter here, and then list somewhere else, which means the jurisdiction captures the formation and loses the capital markets activity. This case study is part of the founders, families and startup ecosystem pillar of the Singapore Company Stories hub.

Why do Singapore companies list abroad?

Deeper liquidity, higher valuations for technology companies, a larger analyst base familiar with the sector, index inclusion prospects and the presence of specialist investors all favour the United States for growth companies.

Valuation is the decisive factor. A loss-making growth company with strong revenue expansion is valued on a framework that American markets apply routinely and Asian markets apply reluctantly, which produces a material difference in proceeds.

The result is that the region’s largest technology companies, discussed in the Sea and Grab comparison, both listed in New York despite being headquartered a few kilometres apart in Singapore.

What is the domestic exchange good at?

The Singapore exchange has genuine depth in real estate investment trusts, yield instruments, derivatives and commodity contracts, and hosts a substantial fixed income and structured products business.

Its trust market is the deepest in Asia outside Japan, as described in the S-REIT case study, and it functions as a specialist venue rather than a general one.

The difficulty is that a market weighted toward yield instruments performs poorly when interest rates rise and attracts limited retail and international interest during technology-led bull markets, which is a structural rather than cyclical problem.

What is the equity market development programme?

The authorities committed a substantial pool of public capital to be placed with fund managers investing in Singapore-listed equities, with a focus on small and mid-capitalisation companies, aiming to improve liquidity and research coverage.

The theory is that liquidity begets liquidity: better trading volumes attract analysts, analysts attract investors, and investors make listing more attractive, breaking a cycle where thin trading deters everyone.

The counterargument is that public capital can improve liquidity temporarily but cannot create the underlying investor demand that a listing venue needs, and that the deeper problem is the absence of companies investors want to buy.

How do exits actually happen for Singapore startups?

The dominant routes are trade sales to strategic acquirers, secondary sales of founder and early investor shares to later-stage funds, and occasionally acquisition by regional or global platform companies.

Secondaries have become particularly important, allowing founders and employees to realise partial value without a full exit, which reduces pressure to sell or list prematurely.

Trade sale outcomes are typically smaller than headline venture returns require, which is why the venture model in the region has produced fewer fund-returning outcomes than the number of companies would suggest.

What would actually fix the listing problem?

The structural fixes discussed include listing framework reform, dual-class share acceptance, research coverage support, index methodology changes, and encouraging domestic institutional investors to allocate more to local equities.

The most effective long-run measure may be simply producing more companies worth listing, which returns the question to the ecosystem discussed in the startup policy case study.

The realistic assessment is that a small market cannot compete with New York for global growth listings and should optimise for what it can win: regional companies for whom an Asian listing offers investor proximity, and the specialist products where it already leads. That focus-on-strengths conclusion recurs throughout the Singapore Company Stories hub.

Why did dual-class shares matter?

Dual-class share structures allow founders to retain voting control while raising capital, and their acceptance is a prerequisite for attracting technology listings, since most founders will not list without them.

Singapore permitted dual-class listings under conditions, though uptake has been limited, suggesting the structure was necessary but not sufficient to attract growth companies.

Investor protection concerns are legitimate, since shareholders in dual-class companies cannot change management regardless of performance, which is a genuine cost of the structure.

What is the secondary market like?

Secondary transactions, where existing shareholders sell to new investors outside a fundraising round, have become an important liquidity mechanism for founders, early employees and early-stage funds.

Dedicated secondary funds and platforms have developed regionally, and later-stage rounds frequently include a secondary component allowing partial founder liquidity.

Access is uneven. Founders and large early investors participate readily; junior employees holding options usually cannot, which is a persistent fairness issue in the venture model.

How does this affect venture fund returns?

Venture funds require a small number of very large outcomes to return the fund, and a market where exits are predominantly modest trade sales struggles to produce them.

Regional funds have adapted with smaller fund sizes, earlier-stage focus and greater use of secondaries, which produces more realistic return expectations than importing a Silicon Valley model.

The structural improvement would be more large exits, which requires more companies reaching genuine scale, which returns to the ecosystem question rather than the market structure one.

What happened to the SPAC framework?

Singapore introduced a framework for special purpose acquisition companies, allowing blank-cheque vehicles to list and subsequently merge with operating businesses.

Uptake was limited and the global SPAC market deteriorated sharply after 2021, which removed the window during which the framework might have attracted significant activity.

The episode illustrates a general problem for smaller exchanges: introducing a product after the global cycle has peaked captures the risks without the benefits.

How do trade sales typically work?

Acquirers include regional platform companies, global strategics entering Southeast Asia, private equity funds and occasionally listed corporates seeking capability.

Valuations in trade sales reflect strategic fit and synergy rather than growth multiples, which is why they typically fall short of the last private round for companies that raised at peak valuations.

That gap between last round and exit price is where liquidation preferences bite, and founders frequently discover that a headline exit produces far less for common shareholders than expected.

What should the market focus on?

The realistic strategy is to deepen the segments where the exchange already leads, attract regional companies for whom Asian investor proximity matters, and improve liquidity and coverage for existing small and mid-cap listings.

Competing head-on for global technology listings against far deeper markets has not worked and is unlikely to, regardless of framework reform.

That focus-on-strengths conclusion is the same one reached in semiconductors, shipping and financial services across this hub, and it is the most consistent strategic lesson Singapore offers.

Why does listing location matter to a country?

A listing venue generates activity across investment banking, legal, accounting, research, asset management and market infrastructure, and it keeps company engagement with the domestic financial sector.

It also provides a visible route for domestic investors to participate in the growth of companies based in their own country, which has political as well as economic significance.

Losing listings does not mean losing the companies, but it does mean losing the capital markets ecosystem that would otherwise develop around them.

What can founders do about liquidity?

Practical options include structured secondary sales at funding rounds, employee tender offers, extending option exercise windows and being realistic with employees about likely outcomes.

Extending exercise windows matters more than founders realise, since employees who leave typically cannot afford to exercise within ninety days and lose the equity they earned.

Transparency about the capital structure, including liquidation preferences, is the single most valuable thing a founder can offer employees, and it costs nothing.

What is the realistic assessment?

The exchange has real strengths and a real structural gap, and public capital can improve liquidity but cannot manufacture the growth companies that would attract investors.

The most plausible path is that a broader base of profitable regional mid-sized companies eventually finds an Asian listing attractive, particularly those whose investors and customers are regional.

That will take years and it depends on the ecosystem producing companies of that profile, which is the same dependency running through every part of this pillar.

How do employee share schemes work here?

Companies typically use share option or restricted share unit schemes, with tax treatment depending on scheme structure and timing, and specific schemes available for qualifying startups.

Employees should understand vesting, exercise price, exercise window on departure and where they sit in the capital structure relative to preferred shareholders.

The most common misunderstanding is treating a valuation multiplied by share count as expected value, which ignores liquidation preferences that can consume most of an exit.

What role do sovereign and institutional investors play?

State-linked investment vehicles participate across venture, growth and public equity, providing capital that would otherwise be scarce and lending credibility to rounds.

That participation is valuable and carries a risk of crowding out private judgement if it becomes the dominant source of capital rather than a complement to it.

The co-investment design deliberately guards against this by requiring private lead investors, which preserves market-based selection.

What are the alternatives to a public listing?

Alternatives include trade sale, private equity recapitalisation allowing partial founder liquidity, structured secondaries, and simply operating profitably without an exit event.

The last of these is underrated. A profitable company distributing cash to shareholders is a legitimate outcome, and it is the normal outcome for most businesses in every economy.

Venture funding creates an expectation of exit that not every good business needs, and founders should decide early whether that expectation fits what they are building.

How does the exchange compare regionally?

Hong Kong, Tokyo and increasingly the Indian exchanges offer deeper liquidity and larger domestic investor bases, while several Southeast Asian exchanges serve their own domestic companies well.

Singapore’s exchange is unusual in being internationally oriented without a large domestic corporate base to list, which is the structural consequence of a small economy.

That orientation is also its opportunity: a venue serving regional companies that want an Asian listing without listing in a single national market has a genuine niche, provided liquidity supports it.

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