How tech startups benefited from iJAM

Starting up a new tech business is never easy, with many challenges abound. One major factor is the difficulty of obtaining angel funding as investing at idea stage is deemed too risky by investors.

In support of building an exciting tech startup ecosystem, iJAM.Reload and its predecessor iJAM, 2 programs that provides pre-seed startups up to S$250k in government grants and co-investments to get their technologies develop into MVPs, has supported over 300 Singapore startups since 2007. These programs are the brainchild of Michael Yap, who have since left to pursue personal interests. Ten incubators were appointed to administer the iJAM.Reload grant.

Speaking with various investors, entrepreneurs and politicians, a question always been asked, “So how effective has this program been?” A rightful question, especially for Singapore taxpayers who funded this program and ensuring the benefits reach aspiring Singapore entrepreneurs to grow enterprises of value.

Definition of effective

9 of 10 startups are expected to fail, a statistic that we cannot deny, especially for startups at the very early angel stage. So as long as we see value creation surpassing what was invested, it is considered an effective program. In terms of exposure to entrepreneurship, we cannot deny the intangible benefits of bringing more Singapore participants into the ecosystem, who might not have been in the scene if they didn’t get funding support.

Perhaps just taking one of the poster boys who went through the iJAM program and made a successful exit might say it all. Zopim, now one of the global leading providers of live customer engagement software, made an exit of US$29.8m to Zendesk in Apr 2014. Taking just the Tier-1 S$50k grant for 300 startups, this exit alone has surpassed the Tier-1 grants of S$15m put in to date.

And this is only the start. Ruvento Ventures, an iJAM incubator, cites how Touchjet, Getpowerdot and Intellectmotion have raised a total of about US$2m in crowdfunding campaigns. They each raised a further US$700k-US$3m in follow-on funding. CoAssets, Asia’s leading real-estate crowd-funding platform, backed by Expara IDM Ventures II and listed on NSX, has recently raised a A$1.7m placement to new and existing shareholders. Intraix, which provides energy management solutions to reduce energy consumption, recently concluded a S$589k seed round with a NRF-TiS incubator, after completing iJAM and TECS. 40Tasks, which developed the app LOCO, a search engine mobile app for people on the move, has concluded a S$650k seed round with Tri5 Ventures and a known US VC fund. And there are many other stories that have yet to be told from graduate iJAM.Reload incubatees.

Incubators – The crucial success factor of iJAM.Reload

Royston Tay, co-founder of Zopim, emphasises the important point of the partnership with the right incubator through this program. “NUS Enterprise, our iJAM incubator, provided us with huge amount of support, including incubation space, local & overseas, access to their network of global advisors, access to other grants and further sources of funding.” He quietly jokes that the free flow of alcohol from time to time is a good thing to have too.

Darrell Zhang, co-founder of Intraix, concurs on having the right incubator. “Having FocusTech Ventures (FTV) as our incubator was godsend, who provided us not only with iJAM grants, but also with the early funds required for product development along with market validation capabilities. Cashflow is always the biggest concern and I was very grateful that I could call FTV and their reply was ‘Ok I will draw up a cheque for you right now’ when you needed to get bridging. FTV is also a specialist in hardware and software based solutions and they connected us to contract manufacturers, product designers and potential distribution partners, a value that was priceless.”

ZP Lee, co-founder of 40Tasks, mentions, “We lacked the funds to build our MVP and potential investors did not want to risk making any investment in us. The iJAM program act as a launchpad for us to validate our tech idea, product and viability before going to market. Using the iJAM funds, we created the first version of LOCO and managed to launch it to market. We are extremely grateful to the iJAM program – it gave us resources to do crucial development and build credibility to potential investors.”

Non-tangible benefits

Funding aside, it seems that the intangible benefits play a significant part too. “i.JAM had definitely helped to kickstart the entrepreneurship journey of many people with great dreams – including Intraix. The constraints of working with limited resources, the ability to pick oneself up after failure, the discovery of one’s purpose in life and the motivation towards pursuing end-goals – these are scenarios that sculpt a person for the better. The grit to push through during the tough times are life experiences that a traditional salaried worker will never experience,” mentions Zhang.

To Lee, “Singaporean entrepreneurs have always faced a disadvantage when it comes to credibility. Compared to the counterparts in SF, investors in Singapore are more risk adverse and are more doubtful of founders’ ability to execute their vision. With the iJAM grant, founders are able to achieve a certain level of credibility before meeting investors. In addition, the process is relatively fast compared to raising the same amount independently. Founders can shift their attention towards more crucial tasks such as building the product or going to market.”

Continuing the program

As all good things that come to an end, the iJAM.Reload program will cease in March 2016 after a successful period. Fellow incubators whom I spoke have mostly expended their quota for iJAM applications, which disappoints many entrepreneurs who were ready to build their product. It has been understood that iJAM.Reload will be morphed into a new program to serve the same purpose, but details are still sketchy, causing uneasiness among the incubators and potential applicants.

The incubators concluded that they want the program to continue, in this form or another.

Ending Thoughts