Rebates for Angel Investors In Singapore? Awesome!

Singapore has almost everything anyone would need  for an Asia Pacific headquarters or an investment hub: access to capital, good laws, mentors etc.

Now, there’s yet another incentive for angel investors in this country as Spring, a government entity in Singapore, is giving qualified angel investors tax rebates for investing in locally-based start-ups. In fact this program, entitled Angel Investors Tax Deduction Scheme (AITD), has been active since March last year.

Here’s a quick digest on how you can become a qualified investor in Singapore. You basically need:

• Money to invest, obviously: A minimum of $100,000 in a Singapore-based start-up within a given year.
• Experience to guide the start-up: You should either be an experience entrepreneur yourself, an experienced angel investor or someone who has slugged hard and climbed the corporate ladder to reach to the top of the corporate food chain.

You can read more about the criteria here.

Here’s the scenario and math breakdown I received from Spring:

An investor invests $200,000 into a start-up in 2011, and holds investment for at least two years. The amount of investment that qualifies for tax deduction in 2014 (for 2013 income) is $100,000 (50 percent of the initial investment).

Assuming the investor is in the 20 percent income tax bracket:
tax savings = $100,000 x 20% = $20,000

For sure, that sounds pretty awesome for investors who wish to invest in a Singapore-based start-up. From what I have learned, about 40 angels have applied so far and 31 were successful applicants under the scheme. The success rate is pretty high at 75 percent.

Some thoughts

More money flowing into the industry is always a good thing. Perhaps if mentoring is a compulsory criteria, Spring should limit the rebate only to folks who have been through the entrepreneurial journey. I seriously can’t see how someone who hasn’t done so could act as a mentor to someone getting started on their own journey.

If my short stints in several internships counts, working in a corporate setting and a start-up are two completely different things. The mindset of a corporate worker and an entrepreneur are not at all the same, though both have their own merits.

Nonetheless, I’m still positive about this initiative. Without proper resources, entrepreneurship in Singapore won’t be an especially attractive option for young people. Grab all you can, folks.