The Singapore government, which recently consolidated various entrepreneurial grants and schemes under the Startup SG brand, is launching two new initiatives, Startup SG Equity and Startup SG Founder.
Additionally, it is simplifying rules for fund managers launching funds in the city-state.
Singapore’s Minister of State for Trade and Industry, Dr. Koh Poh Koon, shared, at a recent function, that the government “is further strengthening support for the startup ecosystem to help it take off in a much larger way.”
Startup SG Equity – which is allocating S$200 million ($143 million) for co-investments – is aimed at supporting ‘deep technology’ companies.
Swati Chaturvedi, co-founder and CEO of Propel(X), an angel investing platform for deeptech startups in the US, elaborates: “Deep technology startups have the ability to disrupt several markets to create incredible economic value for early investors and a lasting effect on mankind in positive and meaningful ways.”
Usually, these businesses require significant investment in research & development (R&D) and a longer runway for their go-to-market, representing a higher investment risk.
SGInnovate was launched to co-invest and underwrite part of the risk related to growing such businesses and will see them co-invest up to 70 per cent of an investment ticket into deep-tech startups up to $500,000 and 1:1 for subsequent rounds up to S$4 million ($2.9 million).
More traditional ventures will see Startup Equity invest 70 per cent up to $250,000 and then 1:1 up to a limit of S$2 million ($1.4 million).
It will also be replacing and consolidating the ACE Startups grant and iJam Tier 1 grant schemes into the Startup SG Founder, which is targeted at first-time startup founders and entrepreneurs. It has allocated S$20 million ($14.3 million) to this initiative.
Under this scheme, first-time founders will be matched with mentors under an Accredited Mentor Partners (AMPs) scheme that includes incubators and accelerators; this is aimed at fostering networking and learning opportunities for inexperienced company founders, in addition to opportunities for pre-seed funding.
This latest reform also sees eligible companies requiring that Singaporean citizens or permanent residents (PRs) own at least a 30 per cent equity interest, where before it required that 51 per cent of a venture be owned by a Singaporean. Both schemes are being officially launched from 1 May 2017.
Private sector & fund push
The Monetary Authority of Singapore (MAS) is seeking to simplify and ease the way for investors to establish funds based in the city-state, having opened a public consultation on a new corporate structure for investment funds.
Currently, investment funds based in Singapore are structured in three ways: unit trusts, entities formed under Singapore’s Companies Act, and limited partnerships. The latest proposed structure is the Singapore Variable Capital Company (S-VACC), which is aimed at offering fund managers greater flexibility and reduced costs.
This new S-VACC structure will permit fund managers to segregate assets and liabilities of sub-funds within a common structure, reducing administrative costs for all sub-funds at the single legal entity level. This will cater to both open-ended and closed-end funds.