In an effort to lure high-growth, high-tech local and regional firms to list on the Singapore Exchange, the Singapore government has presented a package of measures (SGX). Despite the fact that this is the first time Singapore has offered incentives to high-growth, high-tech enterprises, this is not the first time the government has done so.
It was in 2017 that Singapore’s Ministry of Trade and Industry established the “Startup SG” initiative, which brings together a variety of programs and creates a network aimed at supporting start-ups of all sizes and stages of development. It was then presented in 2019 by MAS, the Monetary Authority of Singapore (MAS), that the Grant for Equity Market Singapore (GEMS) program was established to encourage SGX listings, among other things.
SG Equity for Startups
As part of this program, SEEDS Capital will partner with third-party investors to co-invest in general and deep tech firms that have been registered in Singapore for less than five years and have at least SGD 50,000 in paid-up capital.
General tech businesses are firms that give an online solution to an offline problem utilizing current technology, while deep tech companies are companies that tackle more major concerns and deliver innovative answers to difficult challenges that impact mankind.
Businesses that want to get investment must be able to demonstrate that their goods, services, and software applications are both innovative and creative, as well as having a high potential for growth and scalability on the global market. The following are the criteria for making an investment:
Startup SG Tech Companies
Entrepreneurs who want to commercialize innovative technologies that fall under one of the following categories: advanced manufacturing and robotics, biomedical sciences and health care, clean technology, information and communications technology, (v) new industries such as augmented reality and distributed ledger technologies (vi), precision engineering, (vii), transport engineering, cloud kitchen and engineer entrepreneurship. Singapore in preparation for these startup has been building more business park, industrial and also food factories like Food Fab and Apex Foodwork.
Applicant must clearly show how novel technology may disrupt an existing market or establish a new market, purpose, or specialty to be eligible for this program. A project’s financial viability and ability to produce or expand on private knowledge or intellectual property must also be shown by the applicant. Additional requirements include a minimum of 30% local ownership, no more than 200 workers, and a turnover of no more than SGD 100 million for the application, as well as the fact that the applicant’s principal operations should be conducted in Singapore.
POC and POV projects are eligible for a maximum award of SGD 250,000 and SGD 500,000. In exchange, Enterprise Singapore requires that the firm issue Enterprise Singapore shares worth 50% of the grant given, up to a maximum of 49% of the company’s total ownership.
Founder of Startup SG
In order to apply for the Train track, candidates must complete a three-month venture building program that will help them source innovation, commercialize ideas into scalable enterprises, get product/solution validation from consumers, and secure funding for their firms.
In order to be considered for the Start track, a company must have a minimum of three Singapore-based shareholders holding at least 51% of the company’s shares, two of whom must be first-time founders. Enterprise Singapore has chosen approved mentor partners to assist successful candidates. Networking connections and educational programs will be shared with them. In addition, Enterprise Singapore will award the start-ups with an SGD 50,000 grant, and the applicant firms must raise and commit SGD 10,000 as a co-matching money.
Industrial Research & Development Program between Singapore and Israel
This program promotes Singapore businesses to collaborate with Israeli businesses on cooperative industrial R&D. In order to participate in this program, Singapore enterprises must collaborate with Israeli counterparts and carry out at least 30 percent of their R&D in Singapore and Israel, respectively. Grants are available for a variety of project kinds, including full-scale R&D and commercialization, micro R&D and commercialization, feasibility studies, and pilot projects. Each of these sorts of projects has its own set of grant options.
Full-scale R&D projects must cost at least US$400,000 and run no longer than two years in order to be considered full-scale. A grant of between US$200,000 and US$1 million or 40% to 50% of the total cost of the eligible project, whichever is lower, is available for the eligible project to receive. Up to US$30,000 is available for commercialization initiatives.
In order to qualify for small R&D, the project must cost at least $400,000 and must not exceed one year in duration. A grant of up to US$200,000 or 50% of the project’s total cost, whichever is lower, is available. Up to $30,000 is available for commercialization initiatives.
There are grants of up to US$30,000 or 50% of the total qualifying project costs, whichever is smaller, for feasibility studies to establish whether or not a novel product or process idea is technically feasible or marketable.
The applicant may apply for a grant of up to $1,000,000 or 50% of the total cost of the qualifying project if the project is to pilot or testbed near-market innovations with a specified customer or market segment for commercialization.
Acceleration Grant for Digital Media
If a Singapore-based fintech company is approved by the Singapore FinTech Association and employs no more than 200 people, it is eligible for this program. Digital solution and software related expenditures, including as license and subscription charges, as well as professional services associated with adoption of the digital solution (training, installation, etc.) – up to SGD 120,000 per entity – are eligible for co-funding by MAS.
Assistance in Getting Your Company Ready for the Marketplace
The purpose of this award is to assist enterprises grow their operations abroad. Singapore-based firms must have a minimum of 30% Singaporean ownership and no more than SGD 100,000 in international sales in each of the past three preceding years at the time of application to be considered. Additional requirements include a turnover of no more than SGD 100 million or a workforce of no more than 200 people.
The qualifying expenditures (capped at SGD 100,000 per new market) of: I international market marketing (capped at SGD 20,000); (ii) international business development (capped at SGD 50,000); and (iii) international market establishment (capped at SGD 100,000) would be reimbursed to the eligible enterprises (capped at SGD 30,000). There would be a maximum assistance level of 80 per cent of qualifying expenditures until March 31, 2022, and thereafter 70 per cent until March 31, 2023, in Singapore’s Budget 2021.
Loans for Small and Medium-Sized Enterprises
Grants are not the only way that the Singapore government helps growing Singapore businesses that are at least 30% owned by Singaporeans and have a turnover of no more than SGD 500 million. The government also partners with financial institutions to provide different types of loans based on the company’s growth stages. ESB will share the risk of loan default if the firm goes bankrupt.
Traditional bank financing requires considerable assets to be used as security, which is why the Venture Debt Program targets high-growth start-ups. Warrants or rights to acquire stock are utilized instead to compensate for the greater risk of loan defaults. SGD 8 million is the maximum amount a firm may borrow, which can be repaid over the course of five years. In addition to growing and expanding current capacity, the loan may be used to help meet working capital requirements for new projects, as well as mergers and acquisitions.
The IPO Growth Fund
Entrepreneurs that are at least two fundraising rounds away from a public stock market offering will be targeted by the Singapore Economic Development Board’s EDBI Growth IPO Fund. A typical investment occurs in the Series B capital round or later in companies with a strong potential for growth, global competitiveness, and innovation.
Grant for Singapore’s Equity Market (GEMS)
An equities research ecosystem in Singapore’s public stock market has been expanded by the GEMS program, which was implemented by MAS. It will contribute to the costs of all SGX-listed enterprises. Firms having a market capitalization of SGD 1 billion or more are eligible for 70% co-funding up to SGD 2 million, while smaller companies are eligible for 70% co-funding up to SGD 1 million. MAS will contribute 20% of qualifying expenditures for Catalist listings on the SGX, independent of market capitalization, with subsidies limited at SGD 300,000. All legal expenses, audits, asset appraisal, independent market research and SGX listing, management and sponsorship of an initial public offering are eligible charges.