As we already knew that Singapore is a very attractive place for entrepreneurs to set up a business. Despite the low tax rates and the ease of doing business, there is another important factor that attracts entrepreneurs from around the world to the country is the multiplicity of financing sources for companies, such as startups. If you are keen to know how to get and utilize the business grant in Singapore, let’s keep reading until its end. This article will introduce you to the government sources of funding for companies like startups.
Guide to Business Grant in Singapore
If you decide to incorporate your startup in Singapore, the government offers several attractive grants and funding schemes that help grow a business through its various early stages. In addition to the government support, there are many angel investing networks, venture capital firms, private equity firms, startup incubators and accelerator programs that assist entrepreneurs in raising capital.
The government agencies in Singapore will provide the following cash grants and equity financing schemes to local startups in the country. The startups are eligible for these grants and schemes on the basis of qualifying criteria that is set by the government. This is the government agency will offer you a business grant:
The Standards, Productivity and Innovation Board Spring (SPRING) has strengthened its previous startup assistance schemes under one program, which is now called Startup SG. The goal of Startup SG is to accommodate Singapore-based startups with access to funding sources and mentorship programs and help turn innovative business ideas into thriving companies.
Under Startup SG, qualifying startups can access cash grants, equity financing and business loans. The following provides an overview of the funding programs offered by Startup SG:
- Startup SG Equity
It is an investment fund managed by SPRING Seed Capital and SGInnovate. Under the Startup SG Equity scheme, the Singapore government will co-invest with 11 private investment partners in startups which require significant capital expenditure and may take longer to be commercially feasible.
For startups that are improving existing technologies, the Singapore government will provide 70% of the funding in an initial investment round of S$250K. Thereafter, the Singapore government will invest S$1 for every S$1 invested by private investors up to a cap of S$2 million.
For startups classified as “deep tech”, the Singapore government will provide 70% of the funding in the initial round investment of S$500K. After that, the Singapore government will invest S$1 for every S$1 invested by private investors up to an investment cap of S$4 million.
The Singapore government defines deep tech companies as developing products based on scientific or technological breakthroughs that are unique, comprehend and hard to reproduce. Generally, the technology a deep tech startup is developing the result of years of research and lab testing, and also requires a longer period to reach market viability.
The startups must meet the requirements that Startup SG has been set. These are:
- Be a Singapore-based company
- The core operations of the company must take place in Singapore
- Be incorporated as a private limited company for fewer than 5 years
- Have paid-up capital of at least S$50.000
- Be able to prove substantial innovative and intellectual property
- Have high-growth potential with clear ability to scale in the international market
- Have identified an independent third-party investor
- The business must not be involved in gambling, tobacco-related products, or any other activities which are in violation of the law, or against public interest
- The company cannot be a subsidiary of joint-venture.
This grant offers project funding for local Singapore companies to develop breakthrough technology that can rattle current markets or create new markets. The companies will receive funding for both Proof-of-Concept (POC) and Proof-of-Viability (POV) projects. POC projects are designed to test the technical and scientific viability of the new technology and can receive funding of up to S$250.000. Meanwhile, the POV projects are for testing the commercial viability of a lab-proven technology that can receive up to S$500.000 in funding.
Moreover, the qualifications for the companies to obtain the Startup SG Tech grants are:
- The company must register as a Singapore company less than 5 years old.
- The company must operate in Singapore
- The company must have at least 30% local shareholding
- Annual revenue must be less than S$100 million or the company must employ fewer than 200 people.
The scheme is for new entrepreneurs with innovative businesses. Startup SG Founder provides up to S$30.000 by matching S$3 every S$1 raised by the startup. In addition, entrepreneurs receive mentorship and business guidance from Singapore-based incubators. The program is open to Singapore citizens and permanent residents.
How To Apply for Business Grant from Startup SG?
Applying for a business grant is relatively easy as long as you prepare the important documents. Furthermore, these following documents that you need to submit for first level assessment:
- Business plan
- Financial statements or management accounts
- Background of potential co-investor (if available)
You need to submit the documents above along with a two page executive summary providing the following details:
- Company profile
Provide details on existing products or services, traction achieved, and management profile.
- Proposed Product or Solution and its Distinct Advantage
Explain the needs or problems of the market which need to solve. Also, describe the novelty and merits.
- Technology or Innovation to Develop (if applicable)
Describe the technology involved, stage of its development, potential hurdles in the development and prospective partners, if any.
- Business Roadmap
Describe the go-to-market strategy, revenue model and scalability.
- Competitive Landscape
Describe potential or existing competitors and your edge over the competition.
- Use of Funds
Provide details on estimated fund requirement and allocation along with information on any existing or potential investors.
If your application is successful for a shortlist (both POC and POV), the Enterprise Singapore will invite and you need to present your proposals for a final evaluation panel comprising industry experts. The decision of the evaluation panel is final. If you want to know more information related to this, you can visit Startup SG website.
Now, you know how to utilize the business grant in Singapore, starting from the overview of the business grant in Singapore, the types of the business grant, to the steps to apply it. The business grant information above is necessary for startup founders. In conclusion, preparation is the key for a successful application, just keep it mind that you need to equip yourself with a complete document before submitting it!