What Grants are Available for a New Start Up Company in Singapore?

  • Posted by admin
  • 12 February 2018
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One of the biggest challenges start-ups face is acquiring the capital they need to move forward with their operations. Fortunately, government agencies in Singapore provide equity finance schemes and cash grants for eligible startups to help new firms raise capital.

SPRING SEEDS

SPRING SEEDS, or the Startup Enterprise Development Scheme, offers equity financing options to local startups with innovative ideas and products.

As the investment arm of SPRING Singapore, SPRING SEEDS matches investments made by a third-party investor, with a limit of $2 million. The equity is distributed between the investor and SPRING SEEDS in proportion to the amount of money invested.

To be eligible, a startup must meet the following requirements:

  • Have at least $50,000 in paid-up capital
  • Be incorporated as a Private Limited company for less than five years
  • Have identified a third-party investor
  • Have high-growth potential with scalability
  • Be able to prove substantial intellectual and innovative content

Investors must be able to contribute to the growth of the startup, and have the management experience as well as the business network to value-add to the startup. Investors must also be prepared to invest at least $50,000 in each startup.

ESVF Scheme

The Early Stage Venture Fund (ESVF) scheme first launched in 2008, and is administered by the National Research Foundation, or NRF.

NRF works with venture capital firms to co-invest on a 1:1 basis. These investments are made in early-stage tech companies that are based in Singapore.

Venture capital firms that take advantage of this scheme have the option of buying out NRF's share within a five-year period. Firms are required to pay back NRF's capital with interest.

NRF invests $10 million on a matching basis to seed venture capital firms that invest in Singaporean startups.

PIC

The Productivity and Innovation Credit, or PIC, is an initiative launched by the Revenue Authority of Singapore. Under the scheme, businesses can take 400% tax deduction up to $400,000 or a 60% cash pay-out up to $100,000 for investments in productivity improvements and innovation.

PIC covers six activities:

  • Registration of IP
  • R&D
  • Acquisition or leasing of prescribed automation equipment
  • Acquisition and unlicensing of IP
  • Approved design projects
  • Employee training

To be eligible for PIC, startups:

  • Must carry active business operations in Singapore
  • Must meet the three-local-employee rule if opting for the cash payout

Financial Sector Technology and Innovation Scheme (FSTI)

The FSTI scheme was launched by the Momentary Authority of Singapore (MAS) as a way to support innovation. The Authority has made a commitment to spend $225 million over a five-year period as part of the initiative.

The goal is to attract financial institutions that will establish innovation labs in Singapore and to support technology infrastructure.

Under the FSTI is a sub-scheme known as FSTI-Proof of Concept, or POC. Through the POC, MAS provides funding for up to 50-70% of qualifying costs (maximum of $200,000) for up to 18 months. This support is available for financial institutions in Singapore as well as IT providers working with Singapore-based FIs for early-stage development of solutions to industry problems.

Capabilities Development Grant (CDG)

The Capabilities Development Grant offers financial assistance to startups and SMEs in building their capabilities in 10 key business areas, including:

  • Business excellence
  • Service excellence
  • Branding and marketing
  • Human capital development
  • Standards adoption
  • Enhancing business processes for productivity
  • Product development
  • Financial management
  • Intellectual property
  • Business model transformation

To be eligible for this grant, startups must be registered and operating in Singapore and have at least 30% shareholding. The startup must also have at least $100m in annual sales turnover or have at least 200 employees.

Business Improvement Fund (BIF)

The Business Improvement Fund is available to all businesses registered in Singapore that are launching projects with a tourism focus and are run by the Singapore Tourism Board (STB). The goal of the fund is to drive innovation in the tourism industry, and to redesign business models and processes to improve competitiveness and productivity.

Funding will be awarded based on the STB's analysis of the merits and scope of the project.

SME applicants can receive up to 70% of qualifying costs, while non-SME applicants can receive up to 50% of qualifying costs.

Building Information Model Fund (BIM)

The BIM fund is designed to encourage the adoption of BIM collaboration in the built environment industry. Eligible companies can apply for up to $30,000 in funding to subsidize the cost of software, hardware, training and consultancy.

The fund is open to construction companies registered in Singapore that are also registered with one of the following:

  • Accounting and Corporate Regulatory Authority Singapore
  • Building and Construction Authority
  • Board of Architects
  • Professional Engineers Board Singapore

MRA Grant

The Market Readiness Assistance (MRA) Grant is designed to help cover up to 70% of the costs to cover the identification of business partners, overseas set-up and promotion in overseas markets.

To qualify, the startup must have a global HQ in Singapore and have an annual turnover of less than $100 million.

Innovation and Capability Voucher (ICV)

The ICV is an easy-to-use voucher that's valued at $5,000 and encourages start-ups to develop their capabilities. The voucher can be used for consultancy services to help the startup improve their core business operations in the following areas:

  • Productivity
  • Innovation
  • Financial management
  • Human resources

Each SME or startup can obtain up to eight vouchers. No project should exceed six months. Each project must also be complete before the next application.

Angels Investors Tax Deduction Scheme (AITD)

The AITD scheme was launched for approved angel investors who commit at least $100,000 in a qualifying startup. Angels receive a tax deduction of 50% of the investment after the two-year holding period. Eligible investments each year will be subject to a cap of $500,000 and the maximum tax deduction will be $250,000.

All of these grants and schemes are available to qualifying startups in Singapore. The goal is to promote innovation and growth, which will ultimately help improve Singapore's economy. The application process for most grants is simple and straightforward, and information can be found on the respective Authority's website.


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