Despite Singapore’s growing population and increased presence in the global market, American investors in Texas, and in other states across the nation, are leery to invest in business ventures started in the country. But why?

It’s not for lack of appeal on Singapore’s part. The city-state currently boasts a number one spot for ease of doing business and a number four spot for starting one. It offers well-educated, English-speaking workers, low taxes and easy to obtain seed money for startup businesses. But what Singapore lacks is a large domestic market which appears to be unattractive to foreign investors looking to turn a profit.

It’s important to remember that as an investor, you want to know if your investment is going to give you long-term capital gain. But even with venture capital investments coming from government funding in the majority of business start-ups in Singapore, of the 70 high tech star-ups helped by the government in the past two years, only 10 received follow-up private funding from investors both locally and abroad. This ends up being a turn off for some American investors who are failing to see where these companies will end up down the road.

“For a Singapore company to be able to achieve global success, it needs to have sufficient follow-on venture capital funding,” states a professor for National University of Singapore’s business school. Without seeing success stories, investors see no compelling reasons to help jump start businesses in Singapore.

Some experts think that the hesitancy on the part of American investors may have a lot to do with the fact that because Singapore’s business ecosystem is so young, the high risk for investors may be too much, especially considering many investors are still recovering from the recession here in the Sates.

Whatever the issue may be, experts in Singapore worry that without foreign investors, Singapore may not be able to compete in the global market as fiercely as they would like to in the years to come.

Source: Reuters News, “Failure to launch: Singapore start-ups struggle to woo investors,” A. Ananthalakshmi, Dec. 20, 2012