Why NRF’s TIS may be the Fix that Singapore’s Tech Ecosystem needs

Some weeks back, the National Research Foundation (NRF) issued a call for proposal for their latest initiative termed “Technology Incubation Scheme” (TIS).  A public briefing session was conducted last Friday to a sell-out crowd at the Treasury Building where NRF’s office is, where it was revealed that up to S$50 million had been set aside for the new initiative.

In view of the declared kitty, I will now revise my prediction from 3 initially, to 4 incubators that will eventually receive the nod – from a presumed expert panel that NRF is most probably in the process of assembling – to tap on funds from TIS.  $50,000,000 representing 85% of investments up to S$500,000 means that the TIS kitty will be able to support up to 100 investments, assuming every deal maxes out at S$500,000 (~US$350,000).

SGentrepreneurs believes that TIS would be able to fill the 6-figure funding gap in our ecosystem and offer Singapore start-ups a funding lifeline.

This scheme is great for startups because I’ve seen many of them struggle at the in-between stage whereby their product or operations aren’t attractive enough to get through the SPRING SEEDS, Business Angels Scheme or iMATCH matching programme and platform whereby startups get to pitch to many investors at a time.

I would like to elaborate on Gwen’s statement and perhaps offer some clarifications.  Strong start-ups will always attract financing, regardless of the funding climate that they operate in, i.e. cash-strapped risk-averse Singapore.  The rest of the start-ups that fail to secure financing are broadly separated into two categories.  The first category represents start-ups that have ‘red flags’ sticking out of them, i.e. lacking a strong founding team or addressing a small target market – these are the sort of companies that investors wouldn’t touch with a 10-foot pole anyway.  The second category represents start-ups who have one or several ‘yellow flags’ – i.e. go-to-market strategy needs reworking, CEO needs replacing, product roadmap vs technology potential misaligned, etc – and could go much further along if they had good advisers, mentors and investors who have the right pedigree to roll up their sleeves and give these start-ups a nitro boost or two.  I believe it is this second group that will benefit the most from NRF’s TIS.

I also believe this initiative could be the fix that our tech ecosystem has been long waiting for.  A lot has been done by our government over the past decade – starting from Kent Ridge Digital Labs (KRDL) and its amazing spin-out track record but subsequent demise; the S$1.2 billion Technology Innovation Fund (TIF) that resulted in countless VC/PE funds being managed out of Singapore but little or no local investment activity; founding of Singapore Venture Capital Association (SVCA); the Startup Enterprise Development Scheme (SEEDS) and Business Angel Scheme (BAS) equity matching programmes that were born out of EDB but are now managed by SPRING; and in more recent years, MDA’s Micro-Funding Scheme (MFS) and NRF’s Early-stage Venture Fund.  Yet, despite the billions poured into them, most of these government-led initiatives were capital-focused.  None had ever focused on bringing in people with the right experience and networks that can help our start-ups scale and grow beyond our shores.  With TIS, it would appear that our mandarins have learnt their lessons well.

For the first time, with the Technology Incubation Scheme, our government is dangling a larger-than-50% carrot, by offering appointed incubators 5-odd times leverage to the tune of S$50 million.  This is the first time that equity-matching schemes have gone past the 70% mark (SEEDS) with such generosity (buy back, etc) built in.  Some may balk at the relatively smaller sums of money involved (S$50 million capped at S$500,000 per deal), or NRF’s insistence on incubators having a sustainable business model and not being allowed to tap into SPRING’s IDP grant to cover operational costs.  I say this is a clear attempt by NRF at weeding out boys (read, free riders) from men.  The serious players will figure a way to operate a break-even or *gasp* profitable incubator in order to have a bite at some extreme leverage.

We’re already starting to see some early budding in our tech start-up scene.  Still, with the right people in our ecosystem, the right support structures and culture will naturally take shape.  Bjorn and Mohan would agree.    Singapore could be churning out global-ready start-ups sooner (in a year or two) than you think.  I believe TIS would have succeeded in its developmental objectives when the incubators have done enough to draw our first waves of VCs out of their cushy Sand Hill Road offices to check out the scene here.

NRF’s TIS could just be the NOS that our tech ecosystem needs.  I just hope NRF has actively gone beyond our shores to entice the real Slim Shadies to stand up and participate.  Let’s bring the real deal into Singapore, shall we?

Related posts:

1. NRF issues Call for Proposal for Technology Incubation Scheme
2. Six winners for NRF Early Stage Venture Fund
3. Singapore’s Uncoordinated Initiatives for Entrepreneurs
4. Hitchhiker’s Guide to Starting your Venture in SG (with Govt as your guardian angel)
5. Of Lee Kai-Fu’s new US$115m Investment Fund and NRF’s TIS

Tagged as: BAS, EDB, IDP, incubation, incubator, KRDL, MDA, mentor, MFS, NRF, SEEDS, SPRING, TIF, TIS