Start-ups can't bank on support

PHOTO: Start-ups can't bank on support

SINGAPORE - While Tuesday's commentary ("Generating bright ideas in Singapore") covered many challenges faced by innovation companies in Singapore, the lack of commercial banking support was not highlighted.

I sit on the board of an innovation company that has been supported by various government agencies since its inception nearly five years ago.

Indeed, our company has been awarded many grants and won many international accolades.

Now on the verge of manufacturing and marketing a revolutionary home-appliance product, we approached one of the "big three" local banks for a letter of credit facility for importing equipment from China worth $250,000.

We were shocked to be rejected outright by the bank, with which we had cultivated a relationship for a couple of years, unless we paid a 100 per cent margin for the letter of credit.

I can understand if there is any deficit or credit risk to the bank. But we have been deemed financially sound, and were rejected merely because we did not have a "mandatory three-year track record".

The bank even discouraged us from seeking similar facilities from other banks as it was an "across-the-board MAS (Monetary Authority of Singapore) rule".

It was also drilled into us that only a huge amount of turnover and sales would get us the requisite credit facilities, and not our innovations or impeccable record.

Naturally, we were perplexed at the irony of the situation. On the one hand, our product has been spoken about by the country's top leaders, and government agencies have deemed our company worthy of grants worth hundreds of thousands of dollars.

On the other hand, we were being shown the door merely for not having a track record. It is a crushing blow for any entrepreneur.

Therefore, I am not surprised at Singapore's ranking of 18th for innovation output.

While billions of dollars earmarked for research innovation and enterprise can spawn start-ups, it is the all-important commercial banking support that will see us grow into a Google or a Facebook.

For deserving start-ups, there are generous government grants, and crowd-funding is also possible.

But when these start-ups enter the phase of manufacturing and delivery of their products, the critical commercial bank borrowing is sorely lacking, leading many to sell their companies rather than groom them further.

Sadly, we are beginning to realise the toll exacted by the limitations and myopic view of enterprise-loving but innovation-baulking banking practices here.

Deepak G. Gurnani

Get a copy of The Straits Times or go to for more stories.