The Singapore government has done exceedingly well in ensuring the city-state remains top-of-mind and top of the rankings when it comes to entrepreneurship and doing business.
Singapore’s established reputation when it comes to Talent, Funding, Business Environment, Digital / Innovation Capabilities, Incorporation Process and Corporate Tax Rate proves unbeaten:
Talent: We surpassed Silicon Valley in terms of talent according to the Global Startup Ecosystem Report and Ranking 2017 by Startup Genome
Funding: We are prominent on investors’ radars, scoring 53.8% of total funding in Southeast Asia in 2016
Business Environment: We ranked 2nd in the “World’s Easiest Place to Do Business” 2017 report by World Bank Group, due to our transparent and clear government regulations
Digital / Innovation Capabilities: We are primed to be the digital capital of Asia, with 200 of the world’s top digital companies establishing their regional headquarters, management and innovation teams in Singapore
Incorporation Process: We allow for a business to be registered online by both locals and foreigners, in as little as 15 minutes with relatively low incorporation fees
Corporate Tax Rate: We have attractive corporate tax rates of 17%, with new startups getting to enjoy full tax exemption on the first $100,000 of chargeable income for first three consecutive Year of Assessments (YAs)
The incentive for entrepreneurs and startups to launch and expand their operations from Singapore is further strengthened by the launch of Startup SG, a SPRING Singapore-led programme that unifies all startup support grants and schemes under an umbrella initiative.
Here, we run through each pillar of the Startup SG programme in detail, to help you understand how you can tap on the respective schemes to access financial, talent and capability support.
What is Startup SG?
The programme has six different pillars dealing with the various aspects of a start-up ecosystem.
Start SG Founder – providing mentorship and startup capital grant to first-time entrepreneurs
Startup SG Tech – providing early-stage funding for commercialising a proprietary tech idea
Startup SG Equity – providing equity co-investment alongside private investors for general-tech and deep-tech start-ups
Startup SG Accelerator – providing funding and support to accelerators or incubators
Startup SG Talent – providing work pass schemes, grants and internship-matching to attract global talent for entrepreneurship and employment
Startup SG Loan – providing Government-backed loans for startups’ working capital, equipment/factory financing and trade financing needs
The details of each are as below.
1) What is Startup SG Founder
Startup SG Founder provides mentorship and startup capital grant to first-time entrepreneurs with innovative business ideas – SPRING matches $3 for every $1 raised by the entrepreneur. SPRING has appointed 17 Accredited Mentor Partners (AMP) to help identify qualifying applicants based on the uniqueness of business concept, the feasibility of business model, strength of management team, and potential market value.AMPs will assist the startups with advice, learning programs and networking contacts.
How to apply for the Startup SG Founder scheme
This scheme is open to all Singaporeans/Permanent Residents who are first-time entrepreneurs and are ready to commit full-time to their company, along with being involved in key decision-making. They must also not be in any other employment from the time they accept the terms and conditions of the Letter of Offer.
While you don’t need to incorporate a company to apply, if you have already incorporated one, it should not be more than six months old at the point of application to SPRING. In addition, the company must have at least 51% of local shareholding, with the applicant holding at least 30% equity stake in it. If you have received funding for the proposed business idea from another government organization, you will not be able to apply for the Startup SG Founder grant.
While SPRING takes the final call on the grant, all applications must go through AMPs. AMPs will recommend the application to SPRING, together with appropriate milestones for disbursement of grant amounts.
Do note that a progress update on meeting milestones is also regularly submitted to SPRING, which is essential for future disbursement of grants.
Documents Required for Application to Startup SG Founder:
Completed Startup SG Founder Application Form
ACRA e-statement declaring that the main applicant is a first-time entrepreneur
Business plan (optional but recommended)
CVs of the management team (optional but recommended)
2) What is Startup SG Tech
Startup SG Tech provides early-stage funding for the commercializing of a proprietary tech idea. This includes both Proof-of-Concept (POC) and Proof-of-Value (POV) grants depending on the developmental stage of the technology. Tech startups can use these grants to fast-track the technology development and catalyse their growth.
How to apply for the Startup SG Tech scheme
Startups have to undergo a three-stage process:
Registration of interest
Submission of formal application after SPRING has done an initial assessment and extended an invitation
Sit through final evaluation by a panel of industry experts based on the proposals’ innovativeness, technical feasibility and commercialisation potential
Preference is given to proposals which are at a breakthrough level of innovation, and lead to or build on proprietary know-how and intellectual property. Your proposal must include a detailed cost breakdown.
The grant cap for POC is at $250,000 and POV at $500,000, and start-ups are required to inject an increase in paid-up capital of 10 percent and 20 percent of the grant money for POC and POV respectively.
Grants are issued on completion of each milestone, and carry an equity component where SPRING has the rights to exercise a share subscription of 50 percent of the awarded grant to SPRING, up to 49 percent of the total shareholding of the company. This will be done when a qualifying equity financing round occurs.
It’s important that the project you are applying for must not have commenced at the time of application. Another important consideration for eligibility is that the company’s group annual sales turnover is not more than $100 million or group employment size is not more than 200 workers.
Sectors preferred include advanced manufacturing, robotics, healthcare, biotechnology and biomedical sciences, information and communication technologies, clean technologies, precision engineering, transport engineering and engineering services.
Finally, to be considered for this grant, applicants should be a startup company with all core activities carried out in Singapore. The company must have at least 30 percent local shareholding, and must not have been registered more than five years ago from the time of grant application.
3) What is Startup SG Equity
With Startup SG Equity, the Singapore Government co-invests in general tech and deep tech startups along with third party investors according to these parameters:
Investment Cap for each startup
7:3 up to $250K, 1:1 thereafter up to $2M
7:3 up to $500K, 1:1 thereafter up to $4M
Notably, the Government only co-invests if the interested third party individual or corporate investors are prepared to invest at least $50,000 each, and are able to contribute to the start-up’s growth via management experience, relevant business contacts and necessary technical expertise.
This scheme is aimed at stimulating private-sector investments into Singapore-based technology start-ups with global market potential.
How to apply for the Startup SG Equity scheme
Start-ups must submit:
A two-page executive summary
Background of potential co-investor
for a first-level assessment. In addition, the company must:
Be incorporated less than five years ago from the time of application
Have a clear internationally-scalable business model
Have substantial intellectual product content
Have all its core activities in Singapore
Not be a subsidiary of a joint-venture
Have paid-up capital of at least $50,000
Have a ready, independent third-party investor(s)
4) What is Startup SG Accelerator
Startup SG Accelerator provides funding and non-financial support to incubators and accelerators working in strategic growth sectors. This assistance is not available to venture capitalists and consultancy firms.
How to apply under the Startup SG Accelerator scheme
The incubators or accelerators can use this funding support to cover partial operating expenses such as salaries of the incubation team, hiring of mentors and experts to guide start-ups, and expenses in developing programmes to help start-ups develop new products and services, obtain business financing, and improve market access.
To be approved, applying incubators and accelerators must:
Have a long-term sustainable revenue model
Possess a unique value proposition
Be led by an experienced management team with the necessary expertise to groom innovative start-ups
5) What is Startup SG Talent
Startup SG Talent’s aim is to foster a conducive environment for promising global talent to set up innovative businesses in the city-state, as well as help start-ups attract good talent. The scheme has three avenues for this – Entrepreneur Pass (EntrePass), Technology for Enterprise Capability Upgrading (T-UP) and SME Talent Programme (STP) for Start-ups.
How to apply under the EntrePass scheme
EntrePass is a work pass scheme, which was overhauled on August 3, 2017, to facilitate and simplify the entry of global entrepreneurial talent into Singapore. Along with SPRING, InfoComm Media Development Authority (IMDA) and the National Research Foundation are the other two government agencies appointed to assess and support EntrePass applicants who meet the criteria.
In order to qualify for EntrePass, one has to meet at least one of the following criteria issued under the three categories of Entrepreneur, Innovator, and Investor:
Has at least S$100,000 monetary funding from a Government-recognised VC or business angel
Holds intellectual property
Hold good track record of investing in businesses and want to grow new or existing businesses in Singapore NEW
Is an incubatee at a Government-recognised incubator/accelerator
Has research collaboration with an Institute of Higher Learning or credible research institute in Singapore (i.e. A*STAR)
Holds significant business experience/network and promising entrepreneurial track record NEW
Has exceptional technical/domain expertise in an area related to proposed business NEW
If you are unable to meet any of the above criteria, it is always advisable to go for a Singapore Employment Pass (link to Employment Pass service page).
Also, having already registered (for not more than six months) – or intend to (after knowing the outcome of the application) – a private limited company in Singapore is a prerequisite for all. While earlier, applicants were required to hold at least 30 percent share in the registered company, the enhanced scheme has deterred that requirement until the end of year one of holding the EntrePass. The S$50,000 paid-up capital requirement has also been removed.
The validity period of EntrePass has been extended from one to two years, after the first renewal to provide more certainty for global entrepreneurs in scaling up their businesses. Renewals are based on documentary proof of ongoing business activities as described in the original business plan, and that you hold at least 30 percent shareholding of the company. As an EntrePass holder, your family members can join you in Singapore if you meet certain requirements.
*Hold a minimum of 30% shares in the Company from Year 2
**Total Business Spending (TBS) refers to total local business spending excluding remuneration to EntrePass holder
***Full-time Employees (FTEs) refer to Singaporeans and Permanent Residents who earn a monthly salary of at least $1,100
****PMEs refer to professionals, managers and executives who are Singaporeans or Permanent Residents and earn a monthly salary of at least $3,600
Note: 1 local PME = 3 local FTEs
How to apply for the T-Up scheme
The T-Up scheme subsidises up to 70% of the secondment costs of research scientists and engineers from A*STAR’s Research Institutes for a period of up to 2 years. SMEs with a minimum of 30% local shareholding and group annual turnover of not more than S$100 million or group employment size of not more than 200 workers, are eligible to apply.
How to apply for the SME Talent Programme (STP) for Start-ups scheme
Run by the Action Community For Entrepreneurship (ACE), this assistance scheme facilitates intern-ship matching between students and technology-based local start-ups, and allows for a 70% subsidy in stipends paid to interns. To be eligible, SMEs must have a minimum of 30% local (Singaporean or Singaporean PR) share-holding, must have less than 50% ordinary shares owned by other corporate entity, and be less than 5 years from date of incorporation at time of application.
6) What is Startup SG Loan
Startup SG Loan consists of Government-backed loans, which can be used either as working capital, equipment/ factory financing or trade financing. They are offered through participating financial institutions. The major categories include:
SME Micro Loans – up to S$100,000 working capital financing of for companies with 10 or less employees
SME Venture Loan – up to S$5,000,000 for high-growth companies for the purpose of business expansion
SME Working Capital Loan – up to S$300,000, unsecured working capital financing, in place till May 31, 2019
SME Equipment and Factory Loans – up to S$15 million to purchase equipment, machines or selected factory properties
Even before the launch of the Startup SG programme, Singapore was on most entrepreneurs’ radars when it came to incorporating a company. This was thanks to its tight intellectual property rights regime, skilled man-power, high productivity, rule of law, good connectivity and high quality of life.
With Startup SG, there is no better time than now to use Singapore as a launch pad for your business to access Asia.
Let the experts in businesses and start-ups guide you through Startup SG
Eric comes from banking background. He provides consultancy to local and foreign entities on the ideal market-entry strategies for setting up or expanding operations in Southeast Asia.
Eric also provides advisory to fund managers and family offices on structuring as well as applicable tax incentives. He has also set up many VCC structures for licenced fund managers.