The Singapore government has selected six venture capital firms to each receive S$10 million (US$7.9 million) in taxpayer’s money under the Early Stage Venture Fund (ESVF) scheme. The money will be matched on a one-to-one basis with the VC firms’ own funds, which will be used for investments into Series A level startups.
In total, S$120 million (US$96 million) worth of government and private sector money will be plowed into innovative young technology companies. The six selected venture capital funds are: Jungle Ventures, Golden Gate Ventures, Walden International, SBI Ven Capital, New Asia Investments, and Monk’s Hill Ventures.
A notable new entrant is Monk’s Hill. While the firm is unfamiliar, its two managing partners are not: both have significant prior participation in the government’s investments in the technology ecosystem. Peng Tsin Ong made his fortune as a serial entrepreneur in the United States before sitting at the boards of SingTel and the National Research Foundation (NRF), a government organization running the ESVF program. Another partner is Kuo-Yi Lim, the former CEO of Infocomm Investments, the VC arm of government agency IDA.
The ESVF’s evaluation panel includes several notable executives from the public sector and government-linked corporations. They include: Steven Leonard, executive deputy chairman of IDA, Chu Swee Yeok, CEO of Economic Development Board Investments, Philip Ong, the deputy CEO of NRF, and Leong Sing Chiong, an assistant managing director the Monetary Authority of Singapore, the country’s central bank.
A bit of history
While Singapore is noted for trying to recreate Silicon Valley in Asia, a more apt comparison would be Israel. Like the Middle-Eastern nation, Singapore is betting that heavy government involvement in the startup scene will pay off in the long run by kickstarting more acquisition activity in the country and attracting even more investors. Once the virtuous cycle of starting up and exiting is established, the state can scale back its involvement.
This is the second time the government is running the ESVF in which the state becomes a limited partner in selected VC firms. The first was launched in 2008, and involved a S$50 million cash infusion from the state. Walden and New Asia (then called NanoStart Asia) were also part of that program, and their inclusion in this round indicates they have a successful portfolio.
Critics, however, felt the initiative was ahead of its time. James Chan, founder of investment and incubation firm Silicon Straits, wrote in a blog post that the government was putting the cart before the horse as there just were not enough startups ready for a Series A round then.
Since then, the government has introduced two rounds of the ongoing Technology Incubation Scheme, a similar government funding initiative targeting pre-Series A startups. Golden Gate and Jungle Ventures are a part of that.
The revival of this new ESVF program hints at the maturity of Singapore’s startup ecosystem, which has seen a raft of exits like Zopim’s sale to Silicon Valley customer support platform Zendesk and Viki’s acquisition by Japanese ecommerce giant Rakuten.
The ESVF is also the latest in a series of multi-agency government initiatives aimed at making Singapore an innovation hub. Most recently, it announced that Block 71, a physical enclave of Singapore’s tech startup sector, will double in capacity.
While there’s buzz around startups in Singapore these days, the country still has plenty of work to do. In terms of the sheer size of venture capital investments, Southeast Asia as a whole still lags behind Beijing and Silicon Valley by many factors.