Jurisdiction - Singapore
Reports and Analysis
Singapore – PE/VC Initiatives Stir Interest.

1 April, 2014

 

Singapore has been expanding its venture capital and private equity market in recent years through various incentives and schemes.


The Early-Stage Venture Funding Scheme


The market enjoyed a boost in September 2013 when Singapore’s Deputy Prime Minister Teo Chee Hean, Chairman of the National Research Foundation (the “NRF”) announced the second round of the Early-Stage Venture Funding Scheme (the “ESVF”) in which the government would inject an additional SGD 50mn to encourage investment by Venture Capital (“VC”) firms in early-stage technology companies. The NRF will invest SGD 10 to SGD 15m in each approved VC fund and the VC fund would be expected to raise matching funding on a one-to-one basis by other investors. Additionally, the VC fund would also have the opportunity to purchase shares from the NRF at an interest rate of five per cent.


The NRF and the ESVF evaluation panel will take certain factors into consideration in their evaluation of applications, including but not limited to:


(a) the VC fund’s investment mandate and focus;
(b) the profile of the VC fund’s management team; and
(c) the ability of the VC fund to raise funding.


Qualifying For The ESVF


Only Singapore-incorporated Fund Management Companies (“FMCs”) which have:


(a) been awarded with a Capital Markets Services (“CMS”) license;
(b) been registered with the Monetary Authority of Singapore (the “MAS”) as a registered FMC; or
(c) submitted a CMS licensing or registration application to the MAS prior to 31 January 2014, are eligible for the ESVF.


Other Government Supported Equity Financing Schemes


SPRING Singapore offers equity based co-financing through the SPRING Start-up Enterprise Development Scheme (“SPRING SEEDS”) and the Business Angel Scheme (“BAS”) for private limited Singapore-based companies with strong international market potential carrying out their core activities in Singapore. The relevant company must have been incorporated for less than five years, and must offer substantial innovative and intellectual content in its products, services, processes or applications.


SPRING SEEDS Capital Pte Ltd (“SSC”) manages SPRING SEEDS, and will match the funds invested by the independent third-party investor(s) up to a maximum total amount of SGD 1m.


The BAS comprises a list of preapproved participating business angel investors that companies which meet the above-mentioned criteria should directly approach. Where an approved business angel investor has agreed to invest in a company, the SSC may match the funds up to a maximum sum of SGD 1.5m.


We believe that the above initiatives bode well for the expansion of the venture capital and private equity market in Singapore.

 

ATMD Bird & Bird

 

For further information, please contact:

 

Marcus Chow, Partner, ATMD Bird & Bird

marcus.chow@twobirds.com

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