Having written about Singapore’s generous yet uncoordinated initiatives for entrepreneurs, I decide to be helpful and shed some light on the otherwise dark and confusing path. The following are my personal views on the path that entrepreneurs in Singapore could take to gain leverage, stretch their dollars and extend their runway as they innovate amidst tough times. Kids, please don’t try these at home.
Before you continue the rest of this post, if you have not, I’d advise you to first check out my advice on taking money from the government with as little pain (and hassle) as possible.
Assumptions
You are a budding entrepreneur with a solid idea and nothing much else. You worked at an MNC for a year and decided being a cog in the massive corporate wheel was just not your cup of tea. You wrote your resignation letter and made preparations to hand it to your boss. Here’s how I think you can go about starting your venture in Singapore, with a ‘lil help of our Government.
Taking Baby Steps
- Don’t quit immediately – stay on at your job for as long as you can take it, so that your day job can cross-subsidize your night passion. Look for like-minded people to build your dream team by hanging out at the government-funded local entrepreneurial entities (NUS Enterprise, NTU Technopreneurship Centre and SMU Business Innovation Generator) and participating in events organised by them and others such as SGentrepreneurs, E27, TDM etc. Spend some time to find advisers/team members with relevant start-up/fund-raising experience – street cred always helps with investors down the road.
- Write your business plan and put it through the test (and iterate through multiple revisions) by participating in the annual Start-up@Singapore competition. If you win, go to step 3. If you don’t, continue on to the next step only if you decide you’re still going ahead with that great idea of yours.
- Incorporate and register as a start-up at any of the three university entrepreneurship centres to benefit from the low-cost office space (amongst a suite of other goodies). Try and ensure that at least 30% of the venture is held by Singapore residents (citizens or permanent residents) – most local grants require that.
- Spend the next 3 – 9 months huddling with the team to understand market needs, gather user feedback and build a prototype product/solution with a sufficiently low common denominator to enable your venture to address larger markets beyond (measly) Singapore. To pay the bills, half the team could stay on their day jobs and pool their salaries together to help the rest of the team out with their bills. The deeper your innovation and technology basis, the more time you can afford for this step.
- Go for SPRING Singapore’s Young Entrepreneur Scheme for Start-ups (YES! Start-ups) if you need to pay for servers and other early development costs. Raise S$12.5k by pooling a month’s worth of salaries from the team in exchange for S$50k ($4 from govt for every $1 raised by start-up).
- Secure your marquee customer(s) or initial user base by hook or by crook – this is absolutely critical. Throw out a tonne of PR and drum up publicity and make an awful lot of noise. This is in preparation for the next phase of your venture’s development.
Run Forrest Run!
- Try and get funded. If you can’t tempt any of the 6 early-stage venture funds seeded by NRF, another way would be to pitch to the business angels under SPRING’s Business Angels Scheme. Alternatively (I like this for the way it games the system), take out whatever savings your team’s got left, and beg, borrow or steal from friends, families and fools. Give that money away to person A. Look for person B to invest in your start-up by approaching SPRING Seeds Capital and apply for matching equity funding under the Start-up Enterprise Development Scheme for up to an additional S$300k to start with (the scheme can scale up to S$1m subsequently, not sure how that happens). I don’t want to know what happens between person A and B, and you really shouldn’t break any laws in the process.
- Post-financing, apply for SPRING’s Technology Innovation Programme (TIP) for between S$200k to S$500k (based on anecdotal sources of successful applicants) of grant support to fund your ongoing product development. Use your freshly-raised funds from the previous step to match the paid-up capital required by the TIP grant while seeking reimbursement of the project expenses as approved under your venture’s TIP grant offer letter. This should easily extend your runway by 20 – 40%.
- (where relevant) Build your overseas markets by participating in the government-subsidised overseas exhibitions and conferences (e.g. by IE Singapore and IDA, amongst others).
- Once you are close to break-even, and have a decent pipeline of sales leads and a fast-growing revenue run-rate, approach the more established VC funds to fish for term sheets. Any earlier and valuations/terms are bound to be crappy/unbalanced. Once you’ve successfully closed your first institutional round of venture capital, the sky’s your limit!
How has your start-up leveraged on our Government’s initiatives? What did you wish you’d done better in the past? Do share them with me.
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{ 8 comments… read them below or add one }
TECS may also be suitable for many startups (must be new product!)
http://www.spring.gov.sg/Content/WebPageLeft.aspx?id=52659c28-0dcf-4ce6-94f1-94b06f00c490
The TECS is indeed one other option to consider, given the attractive up-to-100% support for the Proof-of-Concept and up-to-85% support for the Proof-of-Value phases. However, I am not so hot about it given that it’s a competitive grant with limited places each round (and hence uncertainty), and with each round being months apart (timing may not match start-ups’ internal timelines). Still, it can be a good choice if all caveats are taken into consideration.
Does anyone know how the evaluation and assessments are done?
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TECS process -
1. Submit application via TECS portal, there is round every 6 months
(Deadline is VERY strict, electronic system, cuts off mid-night sharp, submit ahead of time to avoid last minute system overload. POV projects MUST have letter of intent from potential customers. You can find a lot more info here: http://www.spring.gov.sg/tecsportal/Home.aspx)
2. wait ~2-3 months
3. Shortlist for technical evaluation – no in-person meeting required, government agencies experts of the related area will contact applicants for technical evaluation matters (can get quite in depth)
4. wait ~1-2 weeks
5. Shorter list for committee evaluation (largely commercial but sometimes also technical). Committee usually consist of diverse group of high level executives, investors and senior management from respective gov agencies depending on your industry
6. Usually decision is pretty quick, within one week. Expect the following month or two for various processes, verifications and documents such as confirmation letter, agreement, etc.
7. Project can begin shortly after, costs to be reimbursed starts as soon as the first month of the project
Process is rather competitive and takes about 4-6 months from day of application to project commencement. But generally quite decisive and clear instructions on how to proceed, and not much paper work (SPRING rocks), sensible processes and requirements.
It’s a rather long cycle for startups to bear, but not much cumulative effort, quite worthwhile attempt even though competitive.
Spring seeds:
pre-revision the grant matches 1:1 up to $300K. post-revision the grant matches 2:1 up to $1 million ($500K from angels).
“Do an IOU with your most reputable advisor/board member and hand the entire sum to him/her. Have him/her approach SPRING Seeds Capital and apply for matching equity funding” – wah you can do this?
i’ve found (from my very very small sample size) that people who take baby steps in starting up generally end up not starting or take a very long time to get going compared to people who just take the plunge. what’s your experience with this?
@a perhaps an IOU is extraneous and brings with it questions on related party transactions. My point here is, dollars do not necessarily need to have their owners’ names on them. Neither am I asking anyone to do anything illegal
. Go figure.
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I have an alternative suggestion, for Internet ideas:
Learn to !@#$ing program.
Then you can skip all the fundraising and hiring steps and go straight to building your product.
Fundraising is way easier once you have traction.
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also, iJam.
also, read Founders At Work.
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this process takes far too longgg… the market would have moved on by the time it takes to get past some of the government schemes’ processes.