Block 71's start-up family has to separate

PHOTO: Block 71's start-up family has to separate

The Ayer Rajah Industrial Estate - the heart of the Singapore start-up community - will undergo a shake-up.

The three-year leases for 58 tech start-ups at Block 71, as it is called, expire in March and the tenants, who have businesses in the interactive digital media space, will likely have to find new homes elsewhere in Singapore.

The Media Development Authority (MDA), which manages the Block 71 scheme to promote interactive digital media, wants the building to house a new group of start-ups.

But some fear that if the existing firms leave, the newbies will not be able to tap the expertise and experience of these more "grown-up" operators.

Existing firms will also lose the community they have built, in which they can tap their neighbours for programming, investing or other types of advice.

Mr Rishi Kumar, co-founder of chapati maker Zimplistic, said that Block 71 has become like a family.

"When you have problems you rely on your family, which is the equivalent to a start-up ecosystem. I believe the softer elements of camaraderie, peer inspiration, empathy and helping hands that people in the 'family' extend to each other (to be) the real value of the ecosystem," he said.

If he has to move out, he "will miss being able to catch up with my peers and learn from their experiences".

In 2010, MDA leased five of the seven storeys of Block 71 from the Jurong Town Corporation (JTC) in a bid to create a start-up community and boost the interactive digital media industry.

JTC has also rented out space in the other two levels to tech start-ups. It has 27 tenants, of which eight are tech incubators.

Block 71, which has more than 100 tech start-ups altogether, is the flag bearer for Singapore's start-up effort and has become a must-stop destination for any visiting tech investor and entrepreneur.

It has a vibrant community where entrepreneurs, investors and programmers rub shoulders.

Many networking, pitching and other events are held there each week.

Observers note that if the current tenants who have created this vibrant community move to other parts of the island, they will take with them their experience of building new companies, which will not benefit the newbies coming in.

Tenants enjoy low rents of as little as $1.60 per sq foot, according to some, although MDA declined to reveal its rates.

Tenant and entrepreneur Darius Cheung said: "Rental is one of the most expensive costs in Singapore. Most start-ups take five to seven years to mature and be financially independent.

"For a three-year-old start-up to pay commercial rent, it would definitely prematurely increase its burden of building a company," he said.

Mr Cheung, who founded his third start-up, homie.co, a local apartment and room search portal, added: "What MDA is trying to do is like forcing a heart transplant onto the start-up ecosystem at Block 71 when it is still growing up."

Tenants received notice of the lease expiration last week but they can stay until September next year as MDA has extended their tenures by six months. MDA also held a dialogue with tenants last week. Mr Vincent Lau, co-founder of social commerce platform Paywhere, said MDA told tenants that it was not breaking up the start-up community.

"Although they have given us the letters, things may still change. They understand that having start-ups at different stages will help entrepreneurs become more successful," he added.

In a statement to The Straits Times, MDA said existing tenants have to make way for new start- ups so that these can enjoy the low rents as well as access to mentorship and expertise. It wants to ensure a healthy renewal of start-ups at Block 71, it added.

MDA assistant chief executive Yeo Chun Cheng told ST: "Our utmost priority is to keep and grow the vibrant ecosystem at Block 71, which would include the introduction of a continuous stream of new start-ups to ensure healthy renewal."

It is willing to consider extending the leases of some tenants, on a case-by-case basis.

He added that MDA will consider the 13 incubators - out of the 58 tenants - if they choose to apply for another three-year lease.

Incubators are the core of the network, Mr Yeo said, because each supports many start-ups.

For example, the top two incubators - NUS Enterprise and Games Solution Centre - have 48 start-ups at their centres.

Among the suggestions MDA will look into is the possibility of including a neighbouring block, Block 79, as space for start-ups.

chngkeg@sph.com.sg


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