Five years ago, when I arrived in Singapore to run Innosight Asia-Pacific, the place wasn’t exactly a hotbed of entrepreneurship. Much has changed.

“You’re crazy.” That was the predominant sentiment I heard a little more than five years ago when I toldhbr_130x130 U.S.-based venture capitalists about my plans to move my family out to Singapore to oversee Innosight’s nascent investment and incubation arm. Since I had never done venture investing before, I was trying to get advice from as many people as I could. The conversations all went pretty much the same.

“Why Singapore? You’ll never find any interesting deals there.”

Sure, I would respond. At the time Singapore didn’t have a sizzling start-up scene. But the conditions seemed to be ripe for one to develop. Like Silicon Valley, Singapore has strong research institutions and limited enforcement of noncompete clauses, a condition that academics now suggest can be a major driver of innovation. Like Israel, Singapore is small, with limited natural resources, which means economic growth requires innovative macroeconomic approaches. Both Singapore and Israel have liberal immigration policies for skilled workers. Both also have mandatory military conscription for males (Israel also has mandatory conscription for females), and as Dan Senor and Saul Singer argue in Start-up Nation, the Israeli military has been a breeding ground of innovation.

“Yes, but Israelis and Americans are innovative by nature. Singaporeans are not,” critics would respond. “Name a Singapore start-up. I can’t think of a single one”

A fair point. If you had asked Singaporeans in 2010 to identify a successful local start-up, they might have paused for a few minutes before mentioning Creative Labs. That company was a pioneer in the audio component market, having entered the MP3 market before Apple. But it was founded in 1981 and hit its revenue peak about a decade ago before delisting from NASDAQ in 2007 and shrinking substantially.

Scott D. Anthony is the managing partner of Innosight.

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