How To Get Funding For Startups In Singapore
Situation is developing almost all over the world, but startup funding Singapore is lucky in this regard. The government-built scheme allows new companies with a good business idea not to worry about a lack of funds for at least several years.
The proposed ideas and schemes for financing startups are universal, so they may not suit your particular company. If you need specific additional information on a practical plan, it is best to seek help from specialists.
Many startups start their business with a great business idea and a general scheme for its implementation. It would seem, what else is needed for success? But practice shows that very few startups end up surviving for one year. Most of them, not having coped with financial obligations, end their activities almost at the very beginning. And the idea either remains unfulfilled or intercepted by creditors who rarely remember its true authors.
This scheme, alas, has become almost the norm for business, and this applies both to the countries of the elite G-20 club and developing economies. There can be many reasons for the failure, but the main one, as practice shows, is most often one lack of money and the inability of the startup management to calculate the necessary funding, at least in the short term.
There can be many options for solving the shortage of working capital, but almost all of them are not devoid of significant drawbacks.
- Credit, for example, is rarely given to start-up companies, reluctantly, and at high-interest rates.
- Attracting an outside investor threatens to lose control over the firm.
- Crowdfunding does not guarantee success and is generally not designed for long-term funding with an unclear final amount.
Options for organizing additional financing for startups in Singapore
The attitude of the Singaporean government towards helping start-ups but already promising companies is very benevolent and even more interesting. Thanks to this, the likelihood of finding Singapore government funding for startups is very high, and you will be partially protected from aggressive venture capitalists.
- Issue of shares. The traditional option of additional startup funding in Singapore. Suppose the IPO (Initial Public Offering) is properly organized. In that case, it will be possible to receive a sufficient amount of funds, compensation for which in the form of dividends will be, figuratively speaking, stretched over time.
It should be understood that the remuneration paid for financial support will still be less than the interest on bank loans. True, in the latter case, the company remains wholly in your ownership, and the scheme with the issue of shares partially deprives the founders of the startup of the rights somewhat blurred, which could potentially create problems in the future.
- Equity financing. This arrangement is similar to the one described in the previous section. The difference is that partial ownership of your company ends up in the hands of one or more investors, so the risk of losing control of the startup is quite high.
Recommended initial requirements:
- Transparent and understandable business plan.
- A clear and well-thought-out strategy.
- Objective financial projections.
- Experienced managers. If only a few people are in the startup team, they must have the appropriate skills and abilities.
Singaporean equity investors are very fond of newcomers with strong potential rather than cheerful business reports and listings of founders’ regalia. Therefore, do not be upset if you have nothing to show. The main thing is faith in one’s strength and fire in the eyes.
- Angel Investors . Private financiers are ready to launch startup funding for Singapore even at an early stage of its development. Moreover, for money, they share their experience, skills, and connections with the founders, but not for free, but in exchange for a share in the company. Such investors can be either individuals, most often successful businessmen, or whole groups.
Standard financial aid package from SGD 25,000 to SGD 750,000. The most popular areas for investment are business services, the HoReCa sector (Hotel, Restaurant, Cafe/Catering), and retail. The so-called is no less in demand, which may become a hit in the coming years.
- Private investors. They often do not pretend to participate in the management of a company or a startup, but they work with them at a rather immodest percentage of 7% to 12%. Most of all, for startup funding in Singapore, they are interested in stable and well-established companies with high growth potential. Structures that have just started their activities and have no experience have almost no chances of additional funding, although exceptions do occur.
- Singapore government funding for startups. The Government of Singapore establishes them with direct involvement of the Spring Singapore, The Standards, Productivity and Innovation Board, and the Statutory Council under the Ministry of Trade and Industry of the Government of Singapore (IE Singapore / International Enterprise Singapore).
- Venture capital. Singapore‘s risky startup funding industry is relatively young in enterprise profitability (at least compared to European and American financial institutions). There are at least 100 players on the market, starting with independent companies and pumping into large venture capital corporations.
In addition, funding funds are often set up by governments, large corporations, and even individuals. This is largely facilitated by the stimulating policy of the authorities, which encourages assistance to startups, making it beneficial to both parties.
Make a plan for your startup funding in Singapore
Before starting your project and seeking startup funding in Singapore, there are certain things you need to do first to ensure the success of your business. Registration of a company in Singapore is not difficult; the government provides support at different stages of the development of start-up projects. However, it is very important to prepare a proper foundation and come up with a business plan that analyzes your project from all angles.
- Be progressive. It is best to talk to people working and running a business in the field of your choice to get an idea of the market. Then you can most likely understand whether your product or service is needed. Perhaps, after such a consultation, it will be enough for you to make some changes to your business plan. In addition, you must calculate your costs and always look for ways to reduce them. Be progressive in your way of promoting your product to the Asian markets. The Asian economy encourages technological progress. Therefore, companies must be innovative, use modern technologies in order not only to improve productivity but also to gain a competitive edge.
- Think about the name of the company. Choosing a suitable and unique name for your future company is a necessary part of registering and receiving Singapore government funding for startups. The law requires that the name not sound obscene and does not resemble the names of other existing companies. It would be nice if the name of the company reflects the philosophy of your project. The service company can do a thorough name verification to save time and get a better presentation of your business. Then, to register your business, you must provide a real, local address for all official documentation to be sent to that address.
- Learn about licensing and government grants. Some companies require special licenses to operate. And although you will only be able to go through the licensing procedure after registration and startup funding in Singapore, it is wise to study the legal field in advance to avoid any legal problems in the future. It would be better to involve a company that deals with the registration and maintenance of your project to make sure that you are doing everything right. Please be aware that the government offers several attractive Singapore government funding for startups and funding schemes to help develop a startup project at various stages. In addition to government support, many investment companies, venture capital firms, start-up incubators, and acceleration programs help entrepreneurs raise capital. It would be better to understand what types of grants are available before applying for any of them.
- Focus on your business. Singapore Prime Minister Lee Hsien Loong said, “We will provide assistance to private businesses, not by providing grants and Singapore government funding for startups, but by buying products and services from local businesses. This model is demand-driven. Technology development spending in Singapore’s budget is $ 2.4 billion. More than 60% of this funding goes to digital startups. This is an example of demand-driven support for empowering their startups and businesses. Products and services that the government would not, by definition, or could not respond to as quickly and efficiently as the private sector.
- Don’t forget about anyone. Another important point raised by the minister is the government’s obsession with industrial transformation plans developed by the Committee on the Economy of the Future, chaired by Minister Heng Swee Kit. This is important because the real challenge is to bring technology closer to the population so that the new middle class adapts to the digital revolution without job losses and wage stagnation. The authorities need to completely repurpose and prepare society to look for new ways to create value and distribute the results obtained. And this must be organized in such a way that no one is left on the sidelines. To achieve this, it is necessary to accelerate the transformation process and carry out everything so comfortably, painlessly, transparently, and gently that all objections are dispelled.
- Learn about strategic national projects. The government is actively using digital technologies to meet the needs of the population better and starting active startup funding in Singapore. The country is keeping pace with the times in such promising areas as electronic payment systems and digital identification. In this regard, five national strategic projects were developed:
- A national digital identification system for convenient and secure electronic transactions;
- An electronic payment system that provides simplicity, speed, convenience, and security;
- Smart Nation Sensor Platform to accelerate the implementation of sensors and other devices for the Internet of Things;
- The Smart Urban Mobility program for the development of intelligent transport systems to use data and digital technologies to improve the public transport system;
- The Moments of Life program, which brings together government services from various departments for the convenience of citizens.
As you can see, there are many options for financing startups, you just need to choose the one that is right for you.