The 18th edition of TechVenture opens in Singapore today at the Marina Bay Sands convention centre on 21-22 Sep 2015. It is expected to draw more than 1,000 people from the start-up community.
In 2014, there were about 5,400 in the country and they were able to raise more than US$850 million (S$1.2 billion) from local and foreign venture capital firms.
This was from:
- the National Research Foundation (NRF), and
- Spring Singapore.
The National Research Foundation
The NRF’s financing schemes are aimed at creating a start-up ecosystem. It provides seed funds by supporting incubators, which, in turn, help Internet firms. It also co-invests in start-ups with venture capital firms here.
Since 2010, the NRF has invested about $168 million through two schemes, helping 173 start-ups in all. Its Technology Incubation Scheme (TIS), rolled out in 2010, signed up 15 incubators. The NRF has since invested $68 million under this scheme, funding about 140 start-ups.
With its early-stage venture fund, the NRF has also invested $100 million in 10 venture capital firms. So far, $42 million has been invested in 28 start-ups. This scheme seeks to take the risk out of venture funding by co-investing with the venture capital firms.
Spring Singapore provides funding through two major programmes. By the end of last year, its technology enterprise commercialisation scheme had given out $78 million in grants to 209 projects. Its Spring start-up enterprise development scheme has, since 2001, committed almost $80 million in co-investments with investors to more than 200 firms.
Many of these startups do fail, while some do get acquired.
Funding is important to Singapore’s start-up ecosystem, so the Singapore Government will probably unveil new funding schemes at TechVenture but these will likely have a more targeted approach.
New startup investment will probably diversify beyond information technology into industries like biomedical science, hardware innovation and engineering.
So, the start-up community can expect the NRF to announce that it will fund new incubators with expertise in high-tech industries, aside from ICT. Another way that the Government could open up new industries to start-ups is to work with large local companies like SPH, Singtel and even government agencies like MINDEF, IDA.
Local companies tend to cannibalise and compete with their own startups. This is a disturbing situation, so unless a startup can attract venture capital from larger venture funds, most mid-sized struggling startups will be folded back into the larger companies.
There are only a handful of local venture capital firms today that are able to write these big cheques of between $2 million and $10 million. Larger nine-figure ones remain in the hands of foreign venture capital firms who have multibillion-dollar fund sizes.
There is space for more local investors to play an active role in the start-up community. But be-careful. You will be competing with all these players. Some actually add value, others are looking for a free lunch in a monopolistic economy.