“More funds on tap for start-ups”, so says The Straits Times

I didn’t realize I was quoted on an article on the March 27 Sunday edition of The Straits Times until a co-founder we backed cued me in.

I did say those words to Lester, and it’s really nice to be quoted on the national newspapers. I also understand the need for The Straits Times to endow its articles with plenty of mass appeal, and offer opposing opinions for readers to draw their own conclusions. However, I had made those statements in a different context and think that I should at least set the record straight here.

Mr. James Chan, investment manager at Neoteny Labs, said that while the wide range of grants may increase the quantity of entrepreneurs by lowering the risk of failure, too many grants may cause the quality to drop.

“I think the Government is doing this with good intentions, but money traditionally should be hard to get, not easy to get,” he said.

The following paragraph was excluded from print, probably because it wasn’t the focus of the article.  Besides, who really wants to be the one to open Pandora’s Box anyway?

Awarding grants too easily can cause a dilution in our already-strained software engineering talent pool, i.e. leading “American Indians” to think that they too can become “American Indian Chiefs“.  Few engineers have the chops to head and operate a company right out of the gates, and might be better off working in funded startups.

Successful entrepreneurs represent the top 1 – 2% of the population who are able to draw on just the right mix of ability, stubbornness and luck to bring their dreams into reality. Grants generally cause the opportunity cost deltas of the rest of the talent pyramid to shrink inversely to their risk aversion and change behavior.  For some individuals, the grants are the balancing figure that they’ve been looking for to complete their mix of ability, stubbornness and luck, and taking the money make perfect sense.  Still, I would argue that these individuals represent the minority of those who cross over the tipping point as a result of the grants. What we’ll end up doing in the long run with grants is to increase the overall average, instead of targeting the peaks, which is what high-return venture capital and entrepreneurship is all about.

It is actually insanely difficult to design a government grant or equity program that achieves balance between (1) the government’s developmental objectives, (2) entrepreneur-friendliness and (3) governance and risk management.  The NRF TIS has been pretty cool thus far, and for that, I’m truly grateful.

It’s cool that we’re having more funds on tap for start-ups in Singapore, but not so cool if and when they end up down the drain :-(.

About James Chan

James Chan is an entrepreneur, investor, geek, photographer and husband/father based out of Singapore. Apart from frequent travels to Vietnam, Myanmar and Indonesia for work, James can also be found online via his trusty 15" Retina MacBook Pro or iPhone 6+.