Tech start-ups to get better support

Tech start-ups to get better support

A tweak to the funding regime and a push to get large local enterprises working with high-tech start-ups are in the offing this year.

Funding undertaken now by various public sector agencies will be brought together under the National Research Foundation (NRF).

Wider emphasis will be given to sectors such as medical technology and engineering to support Singapore's strengths in electronics, disk drives and manufacturing.

Large local enterprises will also be encouraged to set up corporate ventures with financial support from the NRF.

These ventures will give the supporting firms insights into new technologies and provide much-needed managerial support and test-bedding for new products and services devised by start-ups.

NRF chief executive Low Teck Seng said a simpler funding framework is needed to make it clearer to entrepreneurs the financing schemes available.

"The schemes have done well to create a vibrant and lively start-up ecosystem. But there are so many schemes which can be confusing," he added.

He was giving The Straits Times a sneak preview of the NRF's strategies to support start-ups.

More details will be released later this week, when Prime Minister Lee Hsien Loong announces Singapore's sixth science and technology budget on Friday.

Prof Low said some schemes managed by public sector agencies will be moved to the NRF and integrated with others.

The iJam programme that provides $50,000 grants to support interactive digital media projects have been moved from the Media Development Authority to the NRF.

iJam will be integrated into other schemes and will be known by a new name.

The NRF's own Technology Incubation Scheme (TIS), which involves working with tech incubators to hot-house start-ups, will also be tweaked and integrated with other funding programmes.

Prof Low assured the start-up community that while names of schemes may change, funding for every innovative idea regardless of which sector they fall into, will continue.

Tweaking of the funding regime will generate greater support for medical and clean technologies, and the engineering sectors.

So far, 70 per cent of all start-ups funded fall into the infommunication technology (ICT) sectors.

"NRF will also work with new technology incubators to provide more focus on other sectors like medical and clean technologies and engineering," said Prof Low.

"We need these new innovations to support Singapore's other strengths in consumer electronics, disk drive and manufacturing."

The NRF hopes to repeat its success with its current group of tech incubators, such as Stream Global, Golden Gate Ventures and Jungle Ventures. They have groomed ICT start- ups like TradeGecko, a regional leader in inventory management, and location-based outfit YFind, which was acquired by US-based Ruckus Wireless in 2013.

Prof Low likes the incubator model as it provides mentorship and business guidance, which give start-up founders a better chance of building profitable businesses.

The NRF said there has been good interest from larger firms here, with almost 50 attending a briefing last year.

Corporate ventures are common among US multinationals like chip giant Intel because they provide insights into new technologies and new business ideas.

The Straits Times reported last year that the NRF had set aside $40 million to kick-start the corporate venture scheme. The Government will support local companies on a dollar-for-dollar basis.

Prof Low said: "The local companies have to propose their plans. We'll look at them and announce the results in March."

Submissions of corporate venture plans close on Friday.

The NRF also released figures to show the success of four of its schemes, including TIS and Early Stage Venture Fund. The NRF co-invests in these schemes together with the private sector. These firms in turn select the start-ups to fund.

Between 2008 and last year, the NRF invested $41.3 million in 144 start-ups. Of these, 58, including iCarsClub and TradeGecko, drew $315 million of additional investment. Follow-on funding is an important benchmark of success as it indicates a start-up's potential.

Of the 144 investments, 25 went under due to a lack of funds or product failure.

Generally, the start-up community welcomes the new initiatives but many are concerned that the ICT sector will be sidelined in favour of other high-tech industries.

Mr Bill Liu, chairman and managing partner of incubator Stream Global, said: "ICT products and services are very much enablers of the economy, so they should continue to get support."

This article was first published on Jan 6, 2016.
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