Singapore has been a preferred hub for international business for decades. It has been consistently ranked as one of the easiest countries in the world to start business. Its business-friendly environment, various grants and transparent tax system offered by the Government make it an attractive destination for entrepreneurs and start-ups alike. Besides, it has a developed technological infrastructure, robust legal system (including IP laws) in place and huge pool of investors. With multiple advantages to offer, Singapore company incorporation becomes worthwhile for many businesses looking to accelerate their growth to unprecedented levels.
Let’s look at what makes Singapore an ideal destination for budding business owners.
Start-up Culture in Singapore
The start-up ecosystem in Singapore has a worldwide reach. The business hub is known to hold one of the largest Fintech events in the world which draws over 45,000 participants from 130 countries. Singapore prides itself with its vast network consisting of over 100 incubators and accelerators with over 150 venture capitalists (including the likes of Mistletoe, GGV and Wavemaker) vying for potential investment opportunities actively.
In 2019, venture investors had invested more than S$ 14 billion into Singapore based start-ups, a 36% jump from previous year, highest in South-east Asia. Beside it’s also home to crowd funding platforms (such as Kickstarter and Indiegogo) and angel investors in the form of HNIs who have appetite for start-up companies in return of higher ROI. The career-oriented local culture combined with the dynamism of the island nation has given rise to a strong startup culture.
Singapore emerged as the top destination for AI and robotics investment in 2018 as per reports by FDI Intelligence. It was also placed second in the 2019 Index of Economic Freedom. The island city-state’s pro-business mindset can be said to be the result of its geographic location and its politics. Conveniently located at the heart of Asia, it offers a level playing field to start-ups to rub shoulders with established businesses.
Grants Offered by Government in Singapore for Start-ups
Apart from the VC funds and other private players that contribute to a healthy start-up ecosystem in Singapore, the Government agencies also champion them. For instance, the Government of Singapore set aside nearly $30 million for developing 5G technology, according to an announcement from the Minister for Communications and Information. The Singapore Government agency ‘Enterprise Singapore’ serves as a hub for start-ups and global trading. Whereas, SEEDS Capital (its investment arm) invests in multiple industry verticals including Health & Biomedical Sciences, Advanced Manufacturing & Engineering and Urban Sustainability & Solutions, to name a few.
Besides, Enterprise Singapore has also joined hands with private and public sectors to establish ‘Startup SG’ which is the umbrella branding for unifying all the support schemes for start-ups in the island nation. Here are some of the major Government grants and incentives you can enjoy after company formation in Singapore:
- ACE Startups
This scheme offers startup capital grant and mentorship support for first-time entrepreneurs who have an innovative idea. The Accredited Mentor Partners (AMP) selects applicants based on their business model feasibility, business concept, potential market value and management team. The ACE scheme is capped at $50,000.
- Early-Stage Venture Funding (ESVF)
ESVF is an equity scheme wherein the Government co-funds startups alongside VC firms. The main beneficiaries are early-stage technology startups based in Singapore. The National Research Foundation co-funds startups up to $10 million on a matching basis.
- Capability Development Grant (CDG)
The CDG scheme offers financial assistance to startups for developing their capabilities in ten business areas. Beneficiaries can apply for a grant of up to 70% of manufacturing processes, new product design, development, among other things. The grant is capped at $30,000.
- Start-up SG Tech
Tech start-ups can immensely benefit from this scheme to realise their technology-based ideas. They can either apply for a Proof-of-Value (POV) grant of up to $5,00,000 or Proof-of-Concept (POC) grant of up to $2,50,000, depending on the development stage of their technology or concept.
- Business Improvement Fund (BIF) for tourism-related businesses
Singapore Tourism Board is offering this scheme for small to medium enterprise applicants registered in the tourism sector to improve their productivity and competitiveness. They can receive support for 70% of the qualifying costs which include travel costs, training costs, hardware and software costs, among others.
- Financial Sector Technology and Innovation (FSTI) Scheme
Momentary Authority of Singapore (MAS) offers benefit to the Singaporean Financial Institutions and technology or solution providers working with Singaporean Financial Institutions for investments made towards innovation and development of technology infrastructure. Under this scheme, MAS bears the expenses up to 50 to 70 percent of qualifying costs with a maximum cap of $200,000, for up to 18 months.
- Technology Enterprise Commercialization Scheme (TECS)
Under this scheme, the Singapore Government offers benefit to the newly incorporated Singapore registered companies who are in existence for less than five years. With this scheme, companies having commercially viable and strong technology Intellectual Property and business model get assistance from the Government in their growth stage and later in obtaining the required funding from the third-parties. The grant is capped at Proof of Concept of $250,000 and Proof of Value of $500,000.
- ComCare Enterprise Fund (CEF)
The scheme aims to help social enterprise startups that assist disadvantaged Singapore citizens become self-reliant by providing employment and training. The benefit can be availed for the capital expenditure up to 80% and operating costs up to $300,000 for the first two years.
- Startup SG Founder
This is the latest addition of grants for Singaporean startups announced on 17th August 2020 up to $150 million for enhancements of the Startup SG Programmed. It will involve two tracks namely That Startup SG Founder “Train” track and Startup SG Founder “Start” track. Prior to 25th September 2020, Enterprise Singapore will offer eligible startups with a startup capital grant of $30,000 with a co-matching fund of S$10,000 to be raised and committed by the startup. Effective from 25th September 2020, to help cope with the financial difficulty in COVID time, the grant will be enhance to S50,000 whereas the co-matching fund requirement of the startup remains the same at S$10,000.
Impact of COVID on Singapore Start-ups and Entrepreneurs
COVID-19 has turned many lives upside down on a global level. Start-ups across all countries and sectors have been facing huge challenges, both from operations’ and business perspective. However, the start-up ecosystem in Singapore has been continually striving to beat the odds and adapt to the pandemic as flexibly as it can.
The Economic Development Board and the investment arms of Enterprise Singapore are launching a fund worth $206 million (SG$285 million) to offer financial support to start-ups working on “national priorities”. These include start-ups in food security amidst the ongoing pandemic. To soften the blow of the pandemic, the Singapore Government announced a Special Situation Fund for Startups (SSFS) outlining a variety of spending plans. Under the scheme, the Board’s EDBI and SEEDS Capital will co-invest with private sector partners to support early to late-stage innovative start-ups that can contribute to the city-state’s national priorities.
Moreover, the Singapore Government announced nearly S$ 100 billion to support its economy during this time of crisis to cope with the economic impact of COVID-19.
Future Post COVID
“Singapore will not return to a pre-Covid-19 world, and must chart a new path by building a new economy now”, said Trade and Industry Minister Chan Chun Sing. The need of the hour is to re-plan business models and strategies, reimagine the future, and adopt an entrepreneurial mind-set for recovery.
With the various support packages, grants and incentives offered by the Singapore Government, measures are being taken to revive the healthy business hub Singapore is known for. The need of the hour is to re-plan business models and strategies, reimagine the future, and adopt an entrepreneurial mindset for recovery.
Firms with good opportunities in areas such as biopharma, supply chains and precision engineering will be given a boost. There will be a conducive and attractive environment for new businesses to start up and plant their investments here for the long term, The Government will also train Singaporeans for the jobs of tomorrow and strengthen job matching efforts.
The Government is already focusing on developing new capabilities and helping innovative start-ups kickstart their business thereby capitalising on emerging sectors based on the demands during the pandemic. The support is more towards helping to generate fresh revenue and become more cost-efficient. The Government will establish the right macro conditions, including strengthening Singapore’s links to the global markets for supplies, technology and talent.
The pandemic may have adversely hit economies worldwide, but with this comes many opportunities to seize during this adversity. Singapore is a thriving business hub which is backed by the Government taking a leading role in bringing its economy back on track. Its strategic location, attractive taxation rates and ease of doing business remain unparalleled making it a hotspot to set shop even today. Besides, like other countries, Singapore is also giving its citizens a financial cushion to emerge stronger from the pandemic and return to normalcy.