Startup Grants & Funding Sources in Singapore
Singapore is a very attractive place for entrepreneurs to set up a business. Besides the low tax rates and the ease of doing business, another important factor that attracts entrepreneurs from around the world to the country is the multiplicity of financing sources for startups. This article will introduce you to the private and government sources of funding for startups.
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If you decide to incorporate your startup in Singapore, the government offers several attractive grants and funding schemes that help grow a business through its various early stages. In addition to the government support, there are many angel investing networks, venture capital firms, private equity firms, startup incubators and accelerator programmes that assist entrepreneurs in raising capital.
This article will discuss the funding sources available to entrepreneurs who wish to start a business in Singapore.
Government agencies in Singapore provide the following cash grants and equity financing schemes to local startups in the country; startups are eligible for these grants and schemes on the basis of qualifying criteria set by the government.
ACE Startup Grant
Action Community for Entrepreneurship (ACE) in collaboration with SPRING Singapore (an enterprise development agency of the country) is a government backed grant that supports first-time entrepreneurs who are either citizens of Singapore or Permanent residents of the country. For every S$3 raised by the entrepreneur, SPRING funds the startup $S7. The maximum amount extended by ACE is S$50,000.
The SPRING Startup Enterprise Development Scheme (SEEDS) provides equity financing for local startups that have an innovative idea or product. SPRING SEEDS, the investment arm of SPRING Singapore invests the same amount as invested in the startup by a third party investor with a maximum limit of $2 million. The equity is distributed between SPRING SEEDS and the investor in proportion to the amount invested.
Early Stage Venture Fund (ESVF) Scheme
The Early Stage Venture Fund launched in 2008, is a scheme administered by the National Research Foundation (NRF). According to this scheme, the NRF partners with venture capital firms to co-invest in Singapore startups on a 1:1 basis. The investments are made in early stage high-tech companies based in Singapore. The venture capital firms have an option to buy out NRF’s share within a period of five years. The firms have to return NRF’s capital along with interest.
Technology Enterprise Commercialization Scheme (TECS)
The Technology Enterprise Commercialization Scheme (TECS) funds startups in their Research & Development phase to develop innovative technology. Funding by TECS can be up to S$750,000. To be eligible for this scheme, startups must be registered for at least 5 years with their primary business activities being carried out in Singapore.
i.JAM (IDM Jump-start and Mentor)
i.JAM initiated by the Media Development Authority aims to promote innovation and entrepreneurship in Singapore for interactive digital media (IDM) projects. i.JAM extends support to startups that have a unique idea, product or service by extending the i.JAM Micro-funding scheme through a network of various incubators. The incubators appointed by the Interactive Digital Media Programme Office (IMPO) invest in the qualifying project of the startup.
Sector Specific Accelerator (SSA) Programme
The Sector Specific Accelerator Programme (SSA) is part of the Research, Enterprise and Innovation Plan 2015 that aids startups in the medical and clean technology sector. The programme commits up to $70 million to support these startups. Clearbridge BSA, Singapore Medtech Accelerator, Zicom MedTacc and Medtech Alliance are the four accelerators appointed that co-invest these funds along with SPRING SEEDS Capital on a 1:1 basis in the startups.
Technology Incubation Scheme (TIS)
The Technology Incubation Scheme (TIS), administered by the National Framework for Innovation and Enterprise (NFIE) invests in Singapore startups. The National Research Foundation, on the recommendation of the Technology Incubator of the scheme, can co-invest in a Singapore startup up to 85% of the total investment. The maximum amount the NRF invests in each company is S$ 500,000. The TIS Scheme has 14 Technology Incubators registered for this scheme.
Angel Investing Networks
Angel investors are high net worth individuals who invest in startups at their seed stage. These investors (known as “angels”) invest in companies despite no proven success of the company’s business model. The investors invest either individually or as a group. This funding source is advantageous to startups that do not have a final business model and require quick access to capital. In Singapore, the angel networks include the following:
Business Angel Network South East Asia (BANSEA)
BANSEA is an angel investment network that was established in 2001 in Singapore. It organises conferences, workshops, etc to promote the angel investing network in Asia. BANSEA’s mission is to facilitate investment opportunities for members in early stage startups. BANSEA is open to entrepreneurs who have a great idea and require funding to establish themselves.
Business Angel Scheme (BAS)
SPRING SEEDS supervises the Business Angel Scheme (BAS) which is an equity investment scheme for Singapore-based enterprises. SPRING SEEDS partners with angel groups to invest in innovative startups. SEEDS invests a dollar for a dollar up to a maximum amount of S$1.5 million. The business angel group and SEEDS will take an equity share in the startup in proportion to their investment.
Singapore Angel Network (SGAN)
Singapore Angel Network (SGAN) is the investment arm of Thakral Group of Companies in Singapore. SGAN invests in startups usually at the later stage of their finance requirements. This angel network does not target any specific industry and invests in various business sectors in Singapore and other countries as well.
Venture Capital Firms
Venture capital funding is often suitable for startups or late stage businesses that have a large capital requirement.
Following are the venture capital firms that invest in Singapore startups:
- Singtel Innov8: This venture capital firm is a wholly owned subsidiary of Singapore’s largest telecom company, Singtel. The firm invests in early-stage startups in Asia-Pacific, US, and Europe. The firm invests in digital media, internet applications, technology sector etc.
- KK Fund: Singapore-based KK Fund invests in seed stage startups specialising in internet and mobile companies in Southeast Asia, Hong Kong, and Taiwan.
- East Ventures: A venture capital firm based in Tokyo, East Ventures invests in startups based in Southeast Asia that focus on consumer internet and mobile products.
- Golden Gate Ventures: This global venture capital firm targets startups based in Southeast Asia that create internet products.
- Fenox Venture Capital: Based in Silicon Valley, this firm actively invests in Singapore. It invests in emerging technology startups and also assists entrepreneurs in North America who wish to expand their business globally with a base in countries such as Singapore, Thailand, and Indonesia etc.
- IMJ Investment Partners: The Singapore-based firm invests in startups in the country as well as other Southeast Asian countries. The firm invests in internet, mobile and software companies. Besides Southeast Asia, the firm invests in startups based in Japan and the United States.
- Ardent Capital: A venture capital firm that invests in seed and early stage ventures. Ardent capital invests in technology companies in Southeast Asia. The firm focuses on specific regions such as Thailand, Singapore, Malaysia etc.
- Jungle Ventures: Based in Singapore, this firm invests in the early stage of startups in Asia Pacific markets. The firm focuses on investments in technology, software, e-commerce etc and considers businesses that have the potential to grow in Asia. The firm also organises incubation programmes for Singapore startups.
- Sequoia Capital: This venture capital and private equity firm focus on financial, healthcare, energy, mobile and internet startups. The firm invests in seed, early stage, and late stage startups. Besides investing in these startups, the firm specialises in incubation programmes that help in the growth of startups.
- 500 Startups: 500 Startups is a seed fund and startup accelerator based in Silicon Valley. The firm has funded over 500 startups and invests in Southeast Asia including Singapore.
- Life.SREDA: This Singapore-based venture capital firm invests in growth stage fintech companies.
- Singapore Venture Capital & Private Equity Association (SVCA): SVCA is a Singapore-based association established to “promote the development of the venture capital and private equity industry”. The association extends support to entrepreneurs by providing its members with the opportunity to connect with venture capitalists through events that they organize. This makes it easy for startups to connect with venture capitalists.
Private Equity Firms
Private equity investment refers to an investment made by a firm to acquire ownership of a non-public business. These firms usually invest in profitable companies which are in a high-growth stage. Private equity firms in Singapore include the following:
- 3V Source One Capital: 3V Source One Capital is a private equity firm that invests in sectors such as biotech, education, media, industrial, real estate, software etc. This firm caters to businesses in Singapore and specialises in investing in growth to late-stage companies. The firm also invests in companies in Greater China and the United States.
- Venstar: Venstar, a private equity firm with its headquarters in Singapore invests in startups at their growth and expansion stage. The firm invests in startups in Singapore, Southeast Asia, and China. Few of the sectors that the firm invests in include petrochemical, pharmaceuticals, resources, and energy etc. Besides investing in startups, the firm is also involved in the management of the investee companies.
- Navis Capital Partners: Founded in 1998, Navis Capital Partners invests in Asia, Australia, and Hong Kong. It has a strong presence in South and Southeast Asia which includes Singapore, Hong Kong, Malaysia, etc. Navis invests in industries such as fast moving consumer goods, food processing, industrial products, etc.
- AIF Capital: The private equity firm having offices in Singapore, New Delhi, Hong Kong and Beijing focuses its investment in Asia, Southeast Asia, China, and India. The firm provides capital to growth companies in sectors such as healthcare and pharmaceuticals, media and advertising, power generation, financial services, etc.
- Tael Partners: Singapore-based Tael Partners is a private equity firm that invests in sectors such as shipping and logistics, natural and mining resources, utilities and infrastructure, real estate development, etc. The firm founded in 2007 has offices in Malaysia, Indonesia, Vietnam, and Thailand and is one of the largest private equity firms in Singapore.
- L Capital Asia: This private equity firm specialises in growth capital and invests mainly in consumer product brands, lifestyle retail, lifestyle food and beverages, beauty and wellness, boutique hospitality, etc. The firm, based in Singapore, invests mainly in Asia Pacific, Southeast Asia, India, Australia and New Zealand.
There are many venture capital firms, private equity firms and angel investing networks available to entrepreneurs in Singapore. In addition, the government of the country has launched many schemes and grants that facilitate the growth of startups in Singapore.
Singapore being one of the best places in the world to do business, has access to investors not only from Singapore but from other parts of the world. For instance, venture capital firms such as 500 Startups, Golden Gate Ventures, Sequoia, etc also invest in Singapore startups. Singapore has emerged as a key startup hub in Asia because of its pro-business environment, efficient legal system, and stable political system.