Singapore is often lauded for its achievements in the startup and business space. Specifically, when it comes to the areas of Business Environment, Talent, Funding, Digital / Innovation Capabilities, Incorporation Process and Corporate Tax Rate, the city-state clinches the top few spots.
- Business Environment: Singapore took second place in the “World’s Easiest Place to Do Business” 2017 report by World Bank Group, thanks to our transparent and clear government regulations
- Talent: Singapore surpassed even Silicon Valley when it came to talent, according to the Global Startup Ecosystem Report and Ranking 2017 by Startup Genome
- Funding: Singapore is prominent on investors’ radars, scoring 53.8% of total funding in Southeast Asia in 2016
- Digital / Innovation Capabilities: Singapore is primed to be the digital capital of Asia, with 200 of the world’s top digital companies establishing their regional headquarters, innovation and management teams in Singapore
- Incorporation Process: Singapore allows for a business to be registered online by locals and foreigners, in as short a time as 15 minutes, at relatively affordable incorporation fees
- Corporate Tax Rate: Singapore has an attractive corporate tax rate of 17%, with new startups getting to enjoy full tax exemption on the first $100,000 of chargeable income for the first three consecutive Year of Assessments (YAs)
The motivation for entrepreneurs and startups to launch their business from Singapore is enhanced by the launch of Startup SG, a Government-led programme that unifies all startup grants and schemes under an umbrella branding.
Let us bring you through the 6 schemes in the Startup SG programme, to help you understand how you can tap on each respectively to access financial, talent and capability support.
What is Startup SG?
The programme has six different schemes addressing all aspects of a start-up ecosystem.
- Start SG Founder – provides startup capital grant and mentorship to first-time entrepreneurs
- Startup SG Tech – provides early-stage funding for the commercialization of a proprietary tech idea
- Startup SG Equity – provides equity co-investment together with private investors for general tech and deep tech start-ups
- Startup SG Accelerator – provides funding to accelerators or incubators
- Startup SG Talent – provides work pass/permit schemes, grants and internship-matching to attract global talent for entrepreneurship and employment
- Startup SG Loan – provides Government-backed loans for startups’ equipment/factory financing, working capital and trade financing needs
The details of each are as below.
1) What is Startup SG Founder
Startup SG Founder provides startup capital grant and mentorship to first-time entrepreneurs with innovative business ideas. In terms of the capital grant, SPRING matches $3 for every $1 raised by the entrepreneur.
SPRING has appointed 17 Accredited Mentor Partners (AMP) to help with the identification of qualifying applicants. This is 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.
Application Process for the Startup SG Founder scheme
The Startup SG Founder scheme is open to all Singaporeans/Permanent Residents who are first-time entrepreneurs, ready to commit full-time and be highly 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.
If you have already incorporated a company prior to application, it should not be more than six months old at the point of application to SPRING. Otherwise, you don’t need to incorporate a company to apply. The company must have at least 51% of local shareholding, with the applicant holding at least 30% equity stake. In addition, if you have received funding for the business idea from another government organization, you will not be able to apply for the grant.
All applications have to go through AMPs, but SPRING will take the final call on the grant. AMPs recommend the application to SPRING, alongside appropriate milestones for disbursement of grant amounts. A progress update on meeting milestones will have to be regularly submitted to SPRING.
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 commercialization of a proprietary tech idea. This includes Proof-of-Concept (POC) and Proof-of-Value (POV) grants depending on the stage of the technology. Tech startups are able to use these grants to fast-track the technology development and catalyse their growth.
Application Process for the Startup SG Tech scheme
Startups have to go through a three-stage process:
- Registration of interest
- Submission of formal application after SPRING does an initial assessment and extends an invitation
- Sit through final evaluation by a panel of industry experts based on the proposals’ technical feasibility, innovativeness and commercialisation potential
Proposals which are at a breakthrough level of innovation / lead to or build on proprietary know-how and intellectual property, are preferred. Your proposal must include a detailed cost breakdown.
The grant cap for POC is at $250,000 and startups are required to inject an increase in paid-up capital of 10% of the grant money. For POV, the grant cap is at $500,000 and the increase in paid-up capital at 20%.
Grants are issued upon completion of each milestone, and carry an equity component where SPRING has the rights to exercise a share subscription of 50% of the awarded grant to SPRING, up to 49% of the total shareholding of the company. This is done in the occurrence of a qualifying equity financing round.
It’s key that the project you are applying with has not commenced at the time of application. Another important eligibility criterion 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.
There is a preference for sectors such as advanced manufacturing, robotics, healthcare, biotechnology and biomedical sciences, information and communication technologies, clean technologies, precision engineering, transport engineering and engineering services.
In addition, applicants should be a startup company with all its core activities carried out in Singapore. The company must have at least 30% local shareholding and must not be more than five years old 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 alongside third party investors. Co-investments are done according to the following parameters:
|General tech||Deep tech|
|Investment Cap for each startup||$2M||$4M|
|Co-investment ratio||7:3 up to $250K,
1:1 thereafter up to $2M
|7:3 up to $500K,
1:1 thereafter up to $4M
Co-investments are only done by the Government if interested third party investors are prepared to invest at least $50,000 each, and are able to contribute to the start-up’s growth via technical expertise, management experience and relevant business contacts.
Application Process for the Startup SG Equity scheme
Start-ups must submit:
- A two-page executive summary
- Business plan
- Financial statements
- Business ACRA
- 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 support to incubators and accelerators operating in strategic growth sectors. This assistance is not applicable for venture capitalists and consultancy firms.
Application Process for the Startup SG Accelerator scheme
Incubators or accelerators can use the 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 generate 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 aims to foster a conducive environment for promising global talent to set up innovative businesses in Singapore, and help start-ups attract talent. The scheme has three avenues – Entrepreneur Pass (EntrePass), Technology for Enterprise Capability Upgrading (T-UP) and SME Talent Programme (STP) for Start-ups.
Application Process for EntrePass scheme
EntrePass is a work pass scheme that facilitates the entry of global entrepreneurial talent into Singapore. SPRING, InfoComm Media Development Authority (IMDA) and the National Research Foundation are the three government agencies appointed to assess and support EntrePass applicants who meet the criteria.
In order to qualify for EntrePass, the applicant has to meet at least one of the following criteria issued under the three categories of Entrepreneur, Innovator, and Investor:
|Has funding from a Government-recognised VC or business angel||Holds intellectual property||Investment track record 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|
|Business network and entrepreneurial track record NEW||Extraordinary achievements in key areas of expertise NEW|
If you are unable to meet any of the above criteria, it is advisable to opt for a Singapore Employment Pass (link to Employment Pass service page).
Applicants will need to either have a registered private limited company (that is not more than six months old at the point of application), or intend to register a private limited company after the application has been approved. 30% shareholding in the registered company is also a requirement after one year of holding the EntrePass. There is no need for the previously-required S$50,000 paid-up capital.
Validity 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 business plan, and the EntrePass holder must have at least 30% shareholding of the company.
Renewal Criteria of EntrePass
|No. of years you have held an EntrePass||Total business spending** must be at least||Must employ at least|
|2*||$100,000||3 FTES** OR 1 PME***|
|4||$200,000||6 FTEs OR 2 PMEs|
|6||$300,000||9 FTEs OR 3 PMEs|
|8 or more||$400,000||12 FTEs OR 4 PMEs|
*Hold a minimum of 30% shares in the Company from Year 2
**Total Business Spending (TBS) refers to total local business spending excluding renumeration 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
Related Article: Company Registration with EntrePass Package
Application Process for the Technology for Enterprise Capability (T-Up) scheme
The T-Up scheme subsidises up to 70% of the secondment costs of research scientists and engineers from the Agency for Science, Technology and Research (A*STAR) for 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.
Application Process for the SME Talent Programme (STP) for Start-ups scheme
Run by the Action Community for Entrepreneurship (ACE), the STP scheme facilitates internship-matching between students and technology-based local start-ups, allowing for a 70% subsidy in stipends paid to interns. To be eligible, SMEs must have a minimum of 30% local (Singaporean or Singaporean PR) shareholding, 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 provides Government-backed loans to startups which can be used either as working capital, equipment/ factory financing or trade financing. These loans are offered through participating financial institutions. The types of loans 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, till May 31, 2019
- SME Equipment and Factory Loans – up to S$15 million to purchase equipment, machines or selected factory properties
Prior to the launch of Startup SG, Singapore was already top-of-mind in the region when it came to incorporating a company. This was in part to its skilled manpower, high productivity, tight intellectual property rights regime, high productivity, high quality of life, rule of law and good connectivity.
With Startup SG, the advantages of starting a business in Singapore are multi-fold. Grab the Startup SG opportunity today.
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