Singapore Company Incorporation: Government Grants and Private Funding Options

Business Fund

Singapore has a thriving business sector that encourages start-up companies and organisations to get involved in with.

This can be attributed to the fact that it has easy access to key growth markets around the world, and particularly in Asia. Its business friendly regulations, outstanding tax system, and strategic location are also some key factors that have a positive impact for anyone interested in starting a company here.

But one key element why the start-up ecosystem in Singapore is a thriving scene that is admired by its neighbouring nations is because of its government’s generous funding programs as well as the availability of private sources of funding for capital.

The growing pool of institutional investors, venture capitalists, and high net worth individuals as well as the robust funding incentives from the government make Singapore an encouraging platform from which start-up companies and organisations can take part in.

Knowing the various options for capital funding is very important for entrepreneurs so they can have a sense of what will likely be a secure and successful business enterprise in the foreseeable future.

A start-up company or organisation, however, must be able to prove its business rationale, viability, and sustainability to be eligible for a government grant or private investment funding.

This article provides a short description of a variety of grants, schemes, and financing options – both from the government agencies and private sectors – to make Singapore company formation easier.

Government Cash Grants

Cash Grants

Cash grants are disbursed by several government agencies to entrepreneurs that pass the set of qualifying criteria for eligibility to receive funds. However, this can only cover a certain percentage of the required business capital and financial funding.

  1. ACE Start-ups Scheme

    The Action Community for Entrepreneurship or ACE Start-ups Scheme is a SPRING-administered financial assistance scheme available for entrepreneurs interested in setting up differentiated businesses.

  2. ComCare Enterprise Fund

    The ComCare Enterprise Fund (CEF) is under the jurisdiction of the Ministry of Social and Family Development, which provides the necessary seed funding for start-up companies keen to get involved in the social services sector only.

Government Incubator Systems

Business incubation systems provide start-up companies and organisations not only capital funding but also access to business mentorship, physical space for operations, and cost-effective aggregated services during the beginning phase of development.

  1. iJam Micro Funding System

    The i.Jam Micro Funding system is the brainchild of the Media Development Authority (MDA) in partnership with the Interactive Digital Media Programme Office (IMPO). It is for technically competent and qualified start-up companies.

  2. Fast-Track Environmental and Water Technologies Incubator System (Fast-Tech)

    The Singapore Economic Development Board provides financial assistance to start-up companies interested in the environmental and water technology sector through its incubator system, Fast-Tech.

Government Equity Financing Systems

Equity financing provide grants to start-up companies in need of additional capital. Private third party investors are the key stakeholders in this type of system and in return, they are given shares or equity stake in the company ownership.

  1. SPRING Startup Enterprise Development System (SPRING SEEDS)

    In this equity funding system, SPRING SEEDS Capital (a subsidiary of SPRING) in partnership with third party investors provide capital funding ($300,000 up to $1 million) to commercially sustainable start-up companies.

  2. Business Angels System (BAS)

    In this equity funding system, SPRING SEEDS Capital in partnership with screened business angel organisations provide capital funding (maximum of $1.5 million) to growth-oriented and highly innovative enterprises.

  3. Early-Stage Venture Funding System (EVFS)

    This equity investment scheme is for early-stage technology start-ups, granting them financial assistance of a minimum $3 million and a maximum $10 million, depending on eligibility.

Tax Incentive Schemes

If a newly incorporated company in Singapore satisfies the criteria set by the government, they can enjoy full tax exemption on a certain amount of their company’s taxable income for the first 3 years of its existence.

  1. Investment Allowances

    Capital allowance can be provided as a way to recoup any expenses on necessary plant and equipment as well as fixed capital expenditures by the start-up company.

  2. Productivity and Innovation Credit (PIC) Scheme

    This is provided to start-up companies who are heavily involved in innovative and productive activities such as Intellectual Property Registration and Acquisition; Research & Development; Automation and Employee Training; as well as the Purchase of Technology and Equipment.

  3. Development and Expansion Incentive (DEI)

    This is provided to start-up companies who engage in high value-addition business activities that lead towards operation expansion within Singapore or that would result to procurement of advanced machinery and equipment for the business.

  4. Pioneer Incentive Scheme

    Start-up companies in the manufacturing and services sector may be eligible to this tax exemption for their continuous efforts to boost their overall industry standards.

Private Equity Financing

Private equity financing is a capital funding and financial assistance source available to start-up companies that do not have sufficient collateral for traditional loans.

High net worth individuals, venture capitalists, and private investors are key players in this financing scheme and in return, they are looking for capital gains and dividends within the business organisation.

  1. Angel Investors

    These refer to affluent individuals and successful businessmen who provide both investment capital and their business skills to start-ups and early-stage businesses that have a high growth potential.

    These private personalities can either take on an active role in the business operation and management or just merely act as behind-the-scene partners.

  2. Venture Capitalists

    These refer to professional investors who offer funding as well as business advice to advanced-stage start-ups and entrepreneurs in IT, biotechnology, and nanotechnology.

    Venture capitalists play a more hands-on role in the business operation and management as they have a vested interest in the profitability of their own clients.

  3. Private Funds

    This refers to cash funds provided by financial institutions, banks, and investment companies. These entities are not keen in playing an active role in the business operation and management; rather, they are more interested in getting an attractive ROI for the cash assistance they granted in the first place.

    However, one requirement for access to these funds is good credit track record and high business revenues, which makes it more applicable to established companies.

Get Professional Advice from Corporate Services Singapore

Corporate Services Singapore can provide expert assistance for all your company incorporation requirements. We have competent and reliable company incorporation solutions from start-up to medium-sized enterprise and even multi-national companies.

With our strong background in business accounting and more than a decade of knowledge in providing business support services many Singapore companies, you will be assured of getting sound advice in determining the right financing scheme for your business.

Posted in Company Incorporation.