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Hey Entrepreneurs, the iJAM Deal Looks Pretty Sweet Actually

Willis Wee
Willis Wee
10:08 am on Mar 13, 2013

Update: I made amendment to reflect that some of the terms are flexible and dependent on individual incubators.


raspberry-ijam

There’s so much buzz about Singapore’s National Research Foundation (NRF) Technology Incubation Scheme (pdf file), also called TIS in short.

To give you some context, the TIS basically allows co-funding of up to 85 percent of total investment for each company (or a maximum of $500,000 per investment). The incubator will provide the rest of the investment. Though not everyone is a fan of the government-backed TIS. Common complains from series A investors are:

  • Valuation is way too high
  • Some unfriendly terms (yes, this is a bit vague for now but I’m digging into this)

But there are alternatives. Recently, I got to understand a little more about the revamped iJAM. Michiel Wind of Crystal Horse Investment told me that iJAM has “ improved markedly” as compared to its previous version. He added:

The reload phase of 100K+100K helps tremendously since funding at that stage is hard to find in Singapore. Incubator is also now responsible for payments towards incubatees, subsequently incubator claims money from MDA, which might take time but that is not an issue.

In other words, the new iJAM is way more startup friendly. Now first, let’s see how it works.

iJAM sandwich

It works in two tiers. The first tier provides a total of S$60,000 to early stage companies. S$10,000 comes from the incubator (for eight percent equity, dependent on individual incubator) and S$50,000 from the Media Development Authority (MDA). Note that the incubator may or may not put in the first S$10,000. Regardless, it isn’t a requirement for MDA to release the S$50,000 grant. You can apply armed with just a business plan and with no registered company. That’s perfectly fine. The application goes through the incubators to whom you apply.

There’s a list over here with the contact details of every incubator. They include Exapara, Ruvento, QuestAccelerator, Fatfish, FocusTech, Crystal Horse Investment, Angels Gate, and more. After the incubator says yes, the application goes through a panel of experts before MDA finalizes the grant. The entire process will take anywhere from two to three months.

Once granted, the applicant startup will be able to receive the first S$15,000 from the incubator immediately. MDA will then transfer the money to the incubator so founders can be relieved from all the money transfer waiting bullshit. This is a huge plus because in the past the startup may need to wait up to four months before they actually receive the money. Some key points to note for iJAM tier one:

  • The grant is broken up into milestones. After the first S$15,000. The startup will receive three subsequent rounds of S$15,000 dependent on if they hit the milestone (also dependent on agreement between individual incubator and startup)
  • Milestones are set by entrepreneurs and agreed by the incubator and MDA. It’s usually flexible though
  • Each founder is only able to draw S$1,000 per month as salary
  • At least one founder needs to be a Singapore citizen or permanent resident (PR)
  • Folks who are recipients of ACE Startup Grant may not apply

Reloading the jam

jam-on-a-spoon

If you prove your worth, then your incubator will recommend you for iJAM Reload. The Reload program provides startups with about S$200,000 funding. S$100,000 comes from the incubator and another S$100,000 comes from the MDA. The money from the incubator is usually negotiable and are usually co-invested with several other MDA-approved incubators.

At the end of iJam reload, Michiel revealed, that Crystal Horse Investment (other incubators may have different practice) will hold around 26 percent share in a startup with a total of S$260,000 invested – yes, MDA doesn’t hold anything. That will give the startup a decent post-money valuation of S$1 million which is an acceptable valuation for follow-up funding. Of course, the valuation could increase if the incubators decide to pour in more money. Some key points to note for iJAM Reload:

  • Preference for having a strong technical lead within team
  • Each founder is able to draw S$2,000 per month as salary

The iJAM program is pretty sweet because it certainly provides enough for proof of concept and the initial growth phase. It is also structured in a way that it forces startups to stay hungry (because of the low salary), bootstrap, and to spend resources wisely.

The S$1 million post-money valuation after Reload is also decent enough for follow-up investments in Southeast Asia. Most of us aren’t rock star founders. So please, don’t be a fucktard asking for ridiculous valuations, and don’t compare what you have with Silicon Valley. I do think that iJAM provides quite a decent offer.

Since iJAM started in 2007, a MDA representative recently told me, it has funded more than 250 startups, while the revamped iJAM Reload scheme has funded more than 50 startups since its inception in May 2012. You can click here to find out more about iJAM.

(Also read: Raising a Small Round Forces You to Bootstrap)

(Image credit: Jam 1, Jam 2)

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Have Your Say
  • Lin

    So in total gov spent $50 mil plus on startups. So much money. Omg

  • Mike N.

    Lin, the saddest part is 99% of that money vanishes into nothing. I have seen the quality of the SG government funded startups. 99.99% are terrible (and I mean A-W-F-U-L). We all know why SPRING YES! and iJam got scrapped/revamped in the first place LOL. Oh well, that’s government for you. (Tip: don’t bother with such govt funding and waste time writing “business plans”. Get traction and get paying users!)

  • canistal

    Sounds like a low hanging fruit for funding. Yeah. Wonder what happen to companies who got funded. They doing well?

  • Chun

    @Lin it takes time to build a ecosystem. Give the government some time since there are hardly overnight successes. We can judge and assess in 5-10 years..

    @Canistal, I don’t think there is easy 50k funding. There is just not such a thing as easy money. Also the incubators I know all filter very hard before submitting any application!

  • http://ch-investments.com.sg/wp/ Michiel Wind

    Just to add to the discussion: the incubators actually put in lots of money (10K in Tier 1, 100K in Tier 2, in total more than the NRF/TIS incubators who only put in 89K) and lots of effort (filtering, mentoring, administration, etc). They would be crazy to do this when they know the incubatees are hopeless (like Mike N’s absurd claim that 99.99% are terrible).

    We invested in 3 Tier 2 companies so far, one is very much profitable, one is raising a follow-up funding and should be profitable before the end of the year, one has pivotted, too early to tell but we are confident they can pull it off.

    Our 6 Tier 2 companies, too early to tell (many are just a few months old), but again, many show lots of promise.

    Singapore will get hundreds of IDM (Interactive Digital Media) start-up companies, sure, quite a few will fail, but quite a lot will do well, a dozen or two will do very well, and hopefully some will even have a global impact

  • James

    whatever it is it’s the entrepreneurs who need to be stronger, take the money create roi.

  • David

    I agree with Mike. Having gone through process, it takes way too long and incubators seem to just want to cater to government requirements for getting money to statups. Also pivots and changes in direction are frowned upon (really weird). i agree the ecosystem has a long ways to go but the process is truly pretty long and drawn and often times myopic in it’s scope.