September 29, 2020

Opportunities for HealthTech Startups in Singapore & Germany

Written by Lauren Desrosiers

Especially during COVID-19, Collaboration and Partnerships are More Important Than Ever, Even More so When Expanding Internationally

German Accelerator’s virtual fireside chat, co-organized by the Singapore Embassy in Berlin and SGInnovate, explored the landscape for startups thinking about expanding to the Singapore and German markets during COVID-19 and beyond. After kicking off with an overview of internationalization from Ambassador Laurence Bay, the panel provided insights from a wide range of experiences and cross-cultural knowledge. Moderated by Marc Filerman (our Life Sciences Program CEO), the panel comprising Dr. Jack Tan (TeleMedC) and German Accelerator participant Sirko Pelzl (apoQlar) provided the startup perspective, while Harjit Gill (APACMed) was able to speak from an industry perspective, and investor and German Accelerator mentor Shoko Suzuki (Harbourfront Ventures) rounded out the conversation.

German startup apoQlar specializes in 3D holographic imaging techniques and data evaluation and is a leader in Holomedicine used in surgery, surgical planning, telemedicine, and training of assistant doctors.

TeleMedC developed an imaging device that provides point-of-care imaging and instant analytics for a wide range of eye diseases. They operate in Singapore, Australia, Europe, China, and the U.S.

As I understand it, The Embassy of Singapore in Berlin runs more like a startup than many other Embassies. Ambassador Bay, can you tell us how you are coping during COVID-19?

Ambassador Laurence Bay: As Ambassador, I run a small team of 5-6 Singaporeans who are based here in Berlin. Some days it does feel like a startup environment as we work very closely together and always have to be very nimble, especially during this COVID-19 period. We are probably the only Embassy in Berlin that hosts a networking reception for startups with the objective of connecting startups with each other, to partners in Singapore, and others within an ecosystem like German Accelerator. Just like any other startup, when COVID-19 struck, we made decisions based on a 4-step process: Analyze the situation, Adapt previous plans, Approach stakeholders/partners to see who fit with the new plans, and finally Actualize.

Can you elaborate on the programs that exist between Singapore and Germany and how they can benefit startups?

Ambassador Laurence Bay:  As the Embassy of Singapore in Berlin, we manage the economic relations between Singapore and Germany, which is very substantial. Annual trade and investments are around S$21 Billion and there are 1,900 German companies based in Singapore. The portfolio is very diverse and I find myself attending many trade fairs as they are great places to meet people. In the startup sector, we support government agencies like Enterprise Singapore and their Global Innovation Alliance partner for Germany, German Entrepreneurship Asia, which runs the Scaler8 program to help Singaporean startups find their footing in Germany.

Marc Filerman: And vice versa, so that we can continue the exchange of information and collaboration.

As startup founders in the process of expanding internationally, can you share your initial experiences of this journey and what prompted you to explore new markets?

Sirko Pelzl: I am founder and CEO of apoQlar, a pioneer of Holomedicine, which means we can take any medical images like MRI, CT, SPECT, or OCT and automatically create a hologram that you can superimpose on the patient. Even though we are a German startup, we were receiving mails from doctors from all over the world who were interested in seeing our solution. One notable doctor flew from Bangkok to meet us and this triggered us to look more closely at the Asian market. We then joined the German Accelerator program in Southeast Asia, where I was able to learn a lot about the Singaporean and Southeast Asian markets. Through this experience, I visited local customers and now have mentors based in Singapore, which is a huge help.

Harjit Gill: Adding from my own experience, I believe Singapore is a great place to test ideas and new innovative solutions. It is also a controlled environment in the sense that getting regulatory approval in Singapore will make it easier to work with the rest of the region. It is a great place to build a business, and then look to see how you will scale out.

Marc Filerman: As Singapore is centrally located, it can be a gateway to the rest of Southeast Asia. It is important for German startups to think of Singapore as a supportive environment with a sophisticated healthcare ecosystem with very capable clinicians.

Dr. Jack Tan: TeleMedC started out in the U.S. as a hardware company after developing our AI, we had our first clients in Australia. Afterwards, we came to Singapore as it is the heart of Southeast Asia and we believe in the growth in this region. There is also a hunger here for tech, which is quite palpable. We were interested in expanding to Europe, and Germany in particular as it is viewed as a leader for quality technology and known for engineering. We thought that since we already obtained CE mark, Germany would be a great way to enter the rest of Europe.

When you think of Singapore and Germany, there are different perceptions of what the cultures are like. How has your experience been traveling and working in different countries? 

Sirko: I actually think Singapore and Germany need to do even more together, since the two countries actually have strong similarities. Hospitals are quite similar structured in both countries and the challenges are comparable.

Jack: We couldn’t travel to Germany due to COVID-19, but we have been talking to many partners on the ground. There are a lot of similarities between Singapore and Germany. Culturally, the work ethics part is similar and both don’t like to be late – the meetings always start early and on-time. I think there are many other similarities between the two countries that make doing business attractive.

As we look at the growth journey of startups, funding is necessary for growth not only in the home country but certainly as startups expand internationally. As an investor with experience in both Europe and in Singapore, can you talk about your investment patterns and what trends you are seeing now? 

Shoko Suzuki: Our investment categories are not limited to Singapore or Southeast Asia, so we look at companies from U.S., Japan, China, and selected investments in Europe. When it comes to healthcare, each region has particular interesting things. Singapore is one of the smallest countries for population in Southeast Asia, yet is the largest market for medical devices. If you have a high value-added product, you should go to the U.S. or some other market. Having said that, if you have a digital health product that can be deployed to a large population in a low-touch way, then Singapore is an interesting and attractive, viable market. Depending on your target market, it will define your international expansion strategy.

What would you say to those people who believe it is difficult to get investments from abroad? As a German startup, would I have access to Singapore-based investments? 

Shoko: For early-stage companies, it is better to go to local VCs since getting venture investment is a very long road. This is because both the company and VC need to get to know each other and then work closely together to set up governance structures and significant contracts. Therefore, we have a preference to invest in a company in our region as the further away they are, the harder it is to build that relationship. Early-stage companies also want to look for the money that brings value, and not just provides a check. Local VCs can provide offerings from their homebase such as an introduction to a director in a hospital or key opinion leader (KOL) in a certain area.

As I understand it, neither apoQlar nor TeleMedC have taken any external investment. Since this is pretty atypical for companies expanding internationally, can you please take us through your funding journey? 

Jack: We are self-funded – between myself and our CEO. You know you always hear startups saying we are pretty close to closing this deal or having this contract signed – but the question is when is the right time to raise money and what kind of money are you taking? For us, we are looking at business development and leads. We are running at a reasonable burn rate and it is up to the two of us to decide when it is the right time to bring on other investors. At some stage, it helps to have a Hollywood A-lister to come on board to help push this along, especially since we have some lofty public health ambitions beyond our commercial aims. Currently, we are taking this time to talk to people, rather than actively trying to raise funds.

Sirko: When I first saw this technology, I thought to myself “this is the future” and I presented the idea to an investment fund in Germany, but received the feedback that the big corporations will do it and we should not even start. Therefore, I took the money from my other company and put it towards this startup since I wanted to be fast and positively change medicine. Currently, we have a good pipeline (of about 30 hospitals) and we are working on even more traction. I recognize this market is huge and you need investment to drive it faster, therefore we are currently looking for the right investment fit.

Investment can be very enabling, but partnerships can be equally valuable for startups. Particularly with COVID-19, collaboration across borders is extremely important. 

Harjit: The kind of partnership you have is key – it’s not just a case of money, it’s who can enable your business and what can they bring with it to help you accelerate. Within APACMed, we have a program called the Founders Series, where once or twice a month we discuss typical issues, such as regulatory approvals in Korea or Thailand. This is a hugely fragmented region, so the challenges in each market are very different. Not only do we help startups, but we are assisting governments to install proper regulatory frameworks and build up capabilities. On the other side, we have formed a partnership with MedTech Innovator, which is a platform that brings together startups from across the world. By having the top 20 medical device companies as members who are looking for innovation in this region, it is a great opportunity for us to make this bridge.

Marc Filerman: Sounds like there is support holistically for startups not only within Singapore, but also in the region. And the knowledge of local markets will be extremely valuable to startups in the beginning, even more so than money. This is aligned with German Accelerator’s mission to support high potential German startups entering international markets.

Is it true that, to enter Singapore, a startup needs customer references?

Sirko: We had customer references when we went to Singapore, but none in Asia. We got in contact fast with innovative doctors in Singapore and are impressed by their speed and mindset. At the end of the day, business is always done between people. German Accelerator introduced us to three excellent mentors who have much experience at large corporations and in Singapore. This was and is very helpful.

Typically startups must prove their value in their target market and derisk before a big corporate will get onboard. After proving the value proposition, the startup can approach the big corporate. Harjit, is this the same in your experience?

Harjit: I believe it is a mixed bag, as a number of companies understand the benefit of incubating ideas. But you can’t innovate as a company on your own anymore, you must be able to look outside and innovate with others from the ecosystem. Building this collaboration is critical these days. From a corporate perspective, it’s about two things: scouting and isolating the startup within the organization so it can stay focused, and flourish.

What can German Accelerator do for pre-seed startups based in Germany?

Marc Filerman: We are currently developing a program to help early-stage companies get attuned to what’s out there from an international perspective and general derisking perspective.

Shifting the focus to COVID-19 specifically, what are you experiencing from an investor’s and industry perspective in terms of changes?

Shoko: One surprising thing for early, seed-stage healthtech companies is that valuations have dropped by almost 80%. This makes sense from an investor’s point of view since if you are still working on an invalidated product and your runway is short you will have a harder time finding an investor. Valuations for later, more validated startups have not dropped much.

Harjit: The most obvious change is the acceleration of digital solutions. We are witnessing this across the board, specifically in healthcare, you see three key growth areas: telemedicine, remote monitoring, and training and education. As an industry, we have struggled to really never accelerate digital solutions, until now.

How have your startups been affected by COVID-19? And have you tried to pivot or stayed true to your strategy?

Sirko: For us, we immediately developed and added telemedicine and AI recognition to diagnose COVID-19 to our platform. Interestingly, overall, it has benefited our company.

Jack: During COVID-19, we have hired four more employees to add to product development. By virtue of our name, everyone comes to us for telemedicine solutions. Due to the change in the environment, we are even launching a new product for baby monitoring which is selling in a remote part of Australia. We have consolidated our products into three main streams: AI, hardware, and solutions. This is also a pretty good time to do regulatory approval, so we have our FDA approval in progress. In summary, we have been able to put a positive spin on it.

Any closing remarks from the panel?

Shoko: When you are pitching your product to investors or hospitals, make sure you give a concise summary. Oftentimes I need to remind people to please explain your product in a short and easily digestible way.

Harjit: Startups are more necessary now than ever. Leverage the support resources around you, such as German Accelerator, APACMed, or any other platform. Sometimes we are not aware of the amount of support we can get.

Sirko: For startups looking to enter the Singapore market, make sure you apply to German Accelerator’s Southeast Asia program. If you are a startup looking to visit Hamburg, just visit us, you are always welcomed in our The-Labs.Space.

Jack: It is always a long journey. Don’t look for that quick way out and cash out too quickly since you will be the loser in the end. For Singapore startups there is a track record for exiting too early, I believe that could be perhaps why Singapore has very few global brands. As a loyal Sinagporean, I want to stay the course and make it big and hopefully, one day be a global brand for Singapore.

Watch the full session here!