Quora
Quora
12:00 pm on Dec 13, 2012

This question originally appeared on Quora, and the answer that follows was provided by Thomas Wong, a local Singaporean.

Thomas Wong, Local Singaporean

I drafted up a few quick diagrams to explain the funding scene in Singapore. It’s not complete, but might be helpful to some. There are three main sources to look into when starting out. Of course I am presuming you are not planning to fund it entirely on your own.

  1. Friends and family
  2. Private funding
  3. Government funding

singapore funding

Friends & Family

I’ve seen mixed advice on this aspect, and I agree that you’d mostly only get one shot at this. But I’ve seen enough businesses that exist on support from supportive family and friends, a famous one would be Sir Richard Branson. It’s great to get started and get you off the ground, but you’d want to get familiar with raising funds from cold contacts/investors as soon as you can.

Private Funding

This is a pretty unmapped territory as there are a plethora of options. There are some networks like BANSEA, which pool together a mix of private investors and government linked ones as a collective of seed investors. There are also MNCs with funds dedicated to identify interesting startups to invest in, [like] Google Ventures, Gree Ventures, Intel capital, and even Singtel’s Innov8.

Recently, the entire Hackathon trend has been ported from the US to Singapore, where people who want to begin on their startup journey can participate in these thirty to ninety day events. They form a team, pick an idea, and patch together a product that they then pitch to investors at the end of the process on “demo day.”

There are private funds and investors, Innosight, DFJ, and some invest considerable amounts even at seed level. I personally know two companies who raised a million dollars from individual investors, without a technology or traction in place when they pitched. Basically, it’s a jungle out there, you’ll need to talk to people, do your own research, and keep your ears on the ground to identify which funds to approach.

A good way if you have the connections, though, is to identify these funds from a higher level on the value chain. If you have friends in finance, fund managers, fund of funds, wealth managers, they might be able to give you a quick take and even introductions to the people running these funds. Most of these guys work with or fund these angel investors, venture capital, or seed investors.

Government Funding

The Singapore government has been working hard to lift entrepreneurial activity here for a while, and they have put in place number of schemes to facilitate that, each focusing on various industries and stages in a company’s growth. I’ll cover three of the more popular ones for fresh startups.

Essentially there are three schemes I’ve come across that a fresh technology startup in Singapore would normally look into.

  • There is the ACE program administered by SPRING Singapore; they match about $50,000 to about $21,500 you raise on your own. (Thank you, Brian, for pointing out the original inaccuracy https://www.techinasia.com/startu…)
  • There is iJams reloaded, administered by MDA. It has two phases to its funding scheme. MDA works with private or institutional incubators to administer this fund. In the first phase, MDA will match $50,000 to about $10,000 that the founders or the incubator puts up. If the milestones are hit and the startup is eligible for phase two, MDA will match $100,000 to $100,000 raised by the founders or the incubator.
  • There is also a scheme under the NRF (National Research Foundation), TIS Technology Incubation Scheme. “NRF would co-invest up to the lower of S$500,000 or 85% of the incubator’s investment in a qualifying company, and grant the incubator the call option to buy over its investment at 1.1x before the second year, and 1.15x between the second and third year.” Check out (NRF reopens TIS, opens floodgate on early-stage tech investments in Singapore) (James Chan, thanks for pointing out my confusion and original inaccuracy https://www.techinasia.com/startu…)
  • There seems to also be an NRF ESVF scheme which offers up to $3 million, though I don’t have much details on this scheme (NUS Entrepreneurship Centre)

There are some nuances for each scheme that a founder should be aware of, between schemes and between the bodies that administer these schemes.

Nuances

On top of where to get funds for your startup, each funding scheme has its own set of advantages and intricacies. These are some things to think about when deciding which funding scheme would work for you.

Funding Considerations

I’ve shared a quick mind map with a few more details of the funding landscape in Singapore. It’s not complete, but is a pretty good guide to founders fresh to the ecosystem. You can view it below.

mind map

More questions on Startup Advice and Strategy:


Replies
  • Brian

    Some inaccuracies:

    1) “The ACE Startup Grant is a co-funding scheme in which ACE will match $7 to every $3 raised by the entrepreneur up to a value of $50,000. For example, if you are looking to apply for a grant of $50,000, you must raise a matching value of about $21,500. ($50,000 / 7 x 3 = $21,428.57)” (quoted from: http://ace.sg/acestartups/) (NOT $13,000)

    2) For iJam, there is no mention of a need to put up your own money. But you may have to give up equity to the incubator/investor. (http://www.idm.sg/support/ijam/guidelines/)

  • http://clearballoondog.wordpress.com/ Thomas

    Hey Brian, thanks for pointing it out, you’re right about the matching sum and I’ll update my post on Quora.

    iJams wise a few founders, its normally administered by an incubator, however some founders have been asked to raise or provide the initial matching themselves. Each incubator does manage this process differently.

  • http://www.siliconstraits.com James Chan

    Yet another factual inaccuracy – the TIS only goes up to S$500K per company, and not S$3M. I think you have lumped TIS together with ESVF. These are 2 separate initiatives, and aren’t as linked or as “automatically” matching as you make it to sound.

  • http://clearballoondog.wordpress.com/ Thomas

    Hey James,

    You’re absolutely right! I’ve muddled the 2 NRF schemes together, and I actually don’t know much about the ESVF scheme, would love some of your insight as well, I think you would have a much better lay of the land than I would. Will have to update that Quora answer.

    Might have changed a little but for those interested in the NRF TIS scheme this article seems to detail a bit of it (http://www.motochan.com/2011/12/08/nrf-reopens-tis-opens-floodgate-on-early-stage-tech-investments-in-singapore/).

    As for the NRF ESVF scheme this is as much as I’ve got (http://www.nusentrepreneurshipcentre.sg/funding/grow/nrf_early_stage_venture_funds)

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