Funding Grants for Startups in Singapore

The Ecosystem

Singapore consistently ranks among the top 20 start-up ecosystems in the world (Compass rates Singapore as 17th overall, scoring highly in funding and talent). Indeed, Singapore is blessed with a number of ideal factor endowments which help to foster a  start-up ecosystem: a highly educated/tech savvy population, concentration of significant wealth, excellent infrastructure, low-taxes, transparent legal system and a very business friendly environment.  

However, if Singapore has an 'unfair advantage' above most other places when considering start-up ecosystems it is this: the Government. Singapore boasts a highly stable and forward thinking government, determined to make the island state a global player in the entrepreneurship game. To my mind, the grants and schemes designed to promote entrepreneurship in Singapore are unparalleled anywhere in the world. Silicon Valley on steroids, if you will.  

Make no mistake in thinking that the start-up funding scene in Singapore is all hyperbole. Singapore accounts for 19% of venture capital in tech funding across Asia, ahead of Japan, Korea and Hong Kong, and only second to China. That's big. 

Of course, the reality is more nuanced. The Singapore start-up ecosystem does have inherent flaws and limitations on both the supply side and demand side; a small domestic market and high cost structure for instance.The challenges facing Singapore's start-up ecosystem warrant an entirely separate discussion, and I am looking forward to putting together an article on this later on.

In this article however, we will take a closer look at the funding grants and schemes available to start-ups in Singapore. Do note that this list is not exhaustive; it is a curated list intended to include only the most common and important schemes available to entrepreneurs and start-ups in Singapore today. For the full list, you can check here. 

I also make a distinguishing point of cash grants, business incubation schemes and equity financing schemes. While the latter two schemes are both equity-based, they differ in nature and approach. Incubation schemes are usually more appropriate for early-stage start-ups, since the incubator often provides mentoring services and other non-cash support. 

All SGD unless otherwise stated.  

Cash Grants 

SPRING – Innovation & Capability Voucher (ICV) 

The ICV is a $5,000 cash-equivalent voucher to help first-time entrepreneurs with consultancy and productivity expenses. This is usually the first rung in the government funding ladder. 

ACE Start-ups Grant 

The ACE Start-ups Grant is intended for first-time Singaporean/Permanent Resident entrepreneurs raising their first round. Under this scheme, ACE will match $7 for every $3 raised, capped at $50,000. In other words, entrepreneurs who raise $21,429 can receive a $50,000 cash top-up from ACE, with no additional equity dilution. Start-ups in capital intensive industries can get access to an additional $50,000 under this scheme, i.e. total of $100,000.   

IRAS – Productivity & Innovation Credit (PIC)

First introduced in 2010, the PIC scheme is part cash pay-out, part tax benefit scheme, and is meant for companies to boost productivity and innovation enabling initiatives (as the name would suggest!). Start-ups can elect to receive up to $100,000 in cash pay-out (or up to $400,000 in tax deductibles) to spend on R&D, intellectual property activities, IT expenditure, or staff training. PIC is a very popular choice with start-ups, however it has also drawn some consternation from authorities due to cases of exploitation and abuse. 

SPRING – Capability Development Grant (CDG) 

The CDG grant covers up to 70% of productivity and capability boosting activities up to $30,000. This includes consultancy, training, certification and equipment costs.  

SPRING – Technology Enterprise Commercialisation Scheme (TECS) 

The TECS grant is the largest cash grant in Singapore, and it is positioned to support R&D-intensive early stage ventures. The grant is split into two tiers - Proof of Concept (POC; $250,000) and Proof of Value (POV; $500,000). The typical route is to apply for POC first and POV subsequently for a total of $750,000, and qualifying for POC is usually a good indicator of subsequently receiving POV. However, do note that start-ups must undergo a fairly rigorous application process to qualify (I have been through the process myself), and it helps to have patented or patentable technology when applying.  

Business Incubation Schemes

MDA – iJam 

The Media Development Authority’s mission is to promote media companies, meaning that if you are in broadcasting, filming, publishing, animation, interactive media and games, you should definitely look into the grants available here. The main startup grant under the MDA isiJam (IDM Jump-start and Mentor). A total of $250,000 is disbursed through government-appointed private sector incubators over two tranches.  The first cut is $50,000 and the application process is usually fairly straightforward. Qualifying start-ups can then apply for the second cut of up to $200,000, half of which has to be injected by a private sector investor. The iJam scheme has come in for some flak over recent months given onerous restrictions as well as bad experiences with certain incubators. 

NRF – Technology Incubation Scheme 

The TIS scheme is another public-private joint investment scheme, modelled on Israel’sTechnological Incubators Programme. Under TIS, the National Research Foundation co-invests up to 85% of an investment (capped at $500,000), with a government appointed incubator providing the remaining 15% (for a total investment of $589,000). This scheme was originally introduced in 2008, and has proved to be very popular with investors and start-ups alike. The future of TIS is unclear, given recent changes to the application process. The TIS scheme is set to be evaluated later this year. [Full Disclosure – I am based at Red Dot Ventures, one of the 14 government appointed incubators].  

Equity Financing Schemes

SPRING – Sector Specific Accelerators (SSA) 

A relatively new initiative, SSA is a government initiative to identify, invest, and grow start-ups in nascent yet strategic sectors such as medtech and cleantech. It is a 1:1 co-investment scheme with government appointed accelerators. The entire fund is worth $70million. 

SPRING – Startup Enterprise Development Scheme (SEEDS) 

Under SPRING SEEDS, SPRING collaborates with independent investors to co-invest in commercially viable start-ups. While the first tranche is usually capped at $300,000 in a dollar-for-dollar arrangement with the investment partner, SPRING can invest up to a maximum of $2million.  

NRF – Early Stage Venture Funding (ESVF) Scheme 

The ESVF scheme was launched in 2008 and remains the largest available government-supported equity scheme on this list. Under ESVF, the NRF co-invests up to $10million with pre-qualified incubators on a 1:1 basis. These incubators have the right to buy out the NRF’s stake at premium plus interest. 

Debt Schemes

Recently announced at the Singapore Budget 2015, a new venture debt scheme enables small businesses with “minimal collateral” to apply to one Singapore’s major banks for loans, with the risk getting shared between bank and government. This gives founders a major advantage of accessing alternative capital source with far less equity dilution. It can be used as an alternative to venture capital or, more likely, form part of a complimentary fundraising strategy by extending cash runways between funding rounds thus enabling companies to reach key value inflection points before raising a larger round. To qualify, start-ups should have raised USD1 million of series A funding. Unlike traditional loans, venture debt takes equity in the company instead of charging interest, lessening the burden on capital.