Update: headline was changed at NRF’s request.
We’ve heard recent rumblings that changes would be in store for the Technology Incubation Scheme (TIS), a government program run by the National Research Foundation that funds incubators that in turn seed startups.
One, there were suggestions that the quantum per investment would be lowered, from SGD 500k (USD 392k) of government money down to SGD 350k (274k).
Two, rumors floated about that local shareholdership of startups would become mandatory should they want to receive investments under the TIS scheme.
NRF CEO Professor Low Teck Seng debunked both rumors. On lowering the quantum amount, Prof Low, in an interview with SGE, said that nothing like that would happen anytime soon. The agency would also not impose any kind of requirement on ownership on startups.
However, in line with the government’s goal of providing high value jobs for Singaporeans, he did acknowledge that companies would need to prove that they have done their utmost to seek out local talent. But at the same time, he concedes that if incubatees cannot locate the right people in Singapore, NRF would not prevent them from looking elsewhere.
The NRF is also finding ways to attract top-tier venture capitalists to invest in Singapore.
“If you look in the Valley, there are very few successful VCs. Many are not making money. Our intent is to see if we can pick the best partners.”
Prof Low added that the NRF will look into increasing quantum amounts for firms in cleantech, biotech, and other technology sectors that have high capital requirements when starting up. The ceiling for these startups will be SGD 850k of state money.
Contributions to ‘ICT startups’ will remain unchanged however, said Prof Low, since their capital requirements are less.
His thinking echoes what James Chan of Silicon Straits has heard from other government officials. He disagrees with their assessment.
“They’re only partially correct; software startups typically require less capital than most biomedical startups to get out of the door, but are now on par with hardware startups. This is because platforms such as Kickstarter are providing bootstrapping hardware entrepreneurs with a non-dilutive source of working capital,” he wrote on his blog.
“Also, let us not forget that Singapore isn’t exactly the cheapest place to hire top-tier software engineering talent willing to give their best at high-risk startups.”
James further said that Viki was able to scale so quickly, attract quality talent, and achieve a reported USD 200M exit precisely because it did not pursue the “usual Singapore entrepreneur’s path”, which entails moving up the acronym-filled ladder of government funding from iJam to SPRING TECS POC, NRF TIS, and finally NRF ESVF.
So while Prof Low is concerned that more government handouts could inflate startup valuations, these valuations could very well be justified by better talent, products, and traction.
The risk, of course, is that startups would price themselves out of potential acquirers’ range, but if the Viki acquisition is any indication, startups in Singapore could be bought out at high prices as long as their products are tested and proven.
Nonetheless, while government policy may be set in stone, Prof Low has assured incubators that the NRF would provide some flexibility should a particular startup deserve it.
Down the line, he hopes the government will play a scaled-back role in the startup ecosystem, just as the Israeli government did when the startup scene kicked into high gear with acquisition after acquisition.
“But we do not see it in the near future. It’s not on my horizon to do that. We want to see more vibrancy whilst we continue to incentivize startups and investors,” he said.
The first evaluation for TIS wills occur in 2015, seven years after it was started.
But that did not stop him from offering a report card: Walden International, Clearbridge Accelerator, and BioVeda Capital are some of the firms that have “allowed us to raise a glass of champagne or two”.