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Sources of Start-up Funding in Singapore

Prabhat Nigam

| Updated: Aug 10, 2022 | Category: Global Registration

start-up funding in Singapore

One of the crucial elements in the survival and growth of start-ups is securing investment at the right time. Due to the business-friendly ecosystem offered by Singapore, several start-ups are incorporated in Singapore. These start-ups are supported by a network of investors such as incubators, Venture Capitalists, Angel Investors, private equity firms and government-backed schemes. This piece of writing discusses the major sources of start-up funding in Singapore.    

What are the significant sources of start-up funding in Singapore?   

The major sources of start-up funding in Singapore are as follows:

  1. Private Equity Firms
  2. VC Firms
  3. Incubators for start-ups
  4. Angel Investing networks
  5. Government Schemes      

How does start-up funding in Singapore take place?

The:     

1. Private Equity Firms   

Private equity investments refer to the investments made in start-ups in return for a portion of ownership in the business. These investments are made in businesses where companies have not gone public. Several private equity firms in Singapore are investing in sectors such as biotech, media, real estate, software development, etc. private equity is generally in those businesses that are either in the growth or expansion stages.  

2. Venture Capital (VC) Firms    

Venture Capital is the investment provided to start-ups or businesses in their later stages with large capital requirements. Venture Capital firms comprise a group of investors who take money from wealthy individuals and invest it in start-ups that traditional investment institutions like banks are not interested in investing in.

3. Start-up incubators 

Start-up incubators are generally non-profit organisations that aim to help a start-up in its initial years of growth. They assist and solve the start-up with their fundamental problems related to finding a workspace, seed funding, training, mentoring, incorporation, etc. Both public and private players run these organisations.

Singapore has a number of government-accredited start-up incubators that mostly assist early-age start-ups in the following fields:

  • New age technologies such as hardware, robotics, automation etc.
  • IoT, Artificial Intelligence, AR/VR, big data
  • Advanced manufacturing and Engineering
  • Health and biomedical devices, medical technology
  • Urban solutions and sustainability, services and digital economy
  • e-commerce, logistics, enterprise solutions and marketplace platforms
  • fintech, education tech, energy tech, agriculture tech  
  • cyber security, data analytics, smart city innovations

4. Angel Investment Network  

Angel investment network comprises a number of angel investors. Angel Investors are those high-net-worth individuals who invest in start-ups in their early stages. These investors are known as angel investors because they invest in companies with no proof of concept or proven success of the proposed business model. These angel investors[1] invest either individually or either in groups. Angel investment is beneficial to those start-ups that do not have a verified and proven business model and require quick funding for the growth of the business.

Some of the angel investment networks in Singapore are as follows:

a. Business Angel Network South East Asia (BAN CA)

BANCA is an angel investment network established in 2001 that organises an event to promote the angel investment network for investing in early-age start-ups in South East Asia. It offers to fund entrepreneurs that have a great business ideas.

b. Business Angel Scheme (BAS)

BAS is an equity investment scheme for start-ups based in Singapore. They make investments in innovative start-ups and invest an amount of up to 1.5 million dollars. BAS takes equity share in the start-up in proportion to their investment.

c. Singapore Angel Network (SGAN)

SGAN is another Singapore-based Angel Network that usually invests in start-ups in their later stages of investment. This network does not target a specific network but various business sectors in Singapore and worldwide.  

5. Government-backed schemes   

The government of Singapore has launched a number of schemes for the start-ups registered in Singapore in the form of cash grants and equity financing schemes. The start-ups that meet the prescribed criteria set by the government are eligible to avail of the benefits of these schemes. These schemes allow Singapore-based start-ups to raise investment and turn their innovative ideas into thriving businesses. These companies can also raise business loans.

Specific schemes in which the Government of Singapore invests jointly with private investment partners require significant capital expenditure and have more extended periods to become profitable.

The government provides significant funding to companies focused on improving existing technologies. The government makes an investment of up to 70% in the initial investment round of 250,000 Singapore dollars. Further, where the companies are classified as deep tech, the government gives a grant of up to 70% for the initial investment round of 500,000 Singapore dollars.

In order to meet the criteria for receiving government funding, the start-up must be a Singapore-based company; the operations must be carried out in Singapore; the paid-up capital is less than 50,000 Singapore dollars; be able to prove innovative intellectual property; have high growth potential and ability to scale in the International market.  

Conclusion 

It is an excellent advantage for start-ups registered in Singapore to have access to investors from Singapore and around the world. The business-friendly ecosystem of Singapore has made it one of the best destinations for start-ups to register and raise investments from investors. If you want advice on sources of start-up funding in Singapore, get on a call with finance experts at Enterslice.

Prabhat Nigam

Prabhat has done his BA LLB (Hons) and has been writing research papers since his law school days. His interest in content writing made him pursue a career in legal research and content writing. His core areas of interest are indirect taxes, finance and real estate.

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