The National Research Foundation (NRF) recently announced a war kitty of S$50 million under the Technology Incubation Scheme (TIS) to attract both local and foreign technology incubator investors to set up in Singapore and spur the growth of early-stage, high-tech startups here. The scheme aims to provide up to 85 percent co-funding in each startup in the incubator’s portfolio up to a maximum of S$500,000. However, the incubator is required to invest the remaining amount of at least 15 percent, although there is an option for the incubator to buy out NRF’s share in the start-up within three years of investment.
The scheme is part of the S$360 million National Framework for Innovation and Enterprise (NFIE) announced in March 2008 to strengthen innovation and entrepreneurship in Singapore, and the NRF says it’s actually modelled after Israel’s successful Technological Incubator Programme. Proposals will be evaluated and selected by an expert panel formed by the NRF. Also, funded startups don’t have to be locally owned but need to operate from Singapore, and must be less than 5 years old.
According to certain sources, the NRF also revealed that while the total fund allocated is officially S$50 million, the amount can go up to S$75 million.
I agree with NRF‘s CEO Dr Francis Yeoh, who says that experienced mentors are very helpful to high-tech start-up entrepreneurs to guide them in the early and most risky stage of their companies’ development. However, the challenge is to find the right incubators that will add value to the entrepreneurship scene here, and that is going to hugely depend on who that panel comprises of.
Local serial entrepreneur Alex Toh believes that this scheme is targeting “wealthy, made-it entrepreneurs” to start and run these incubators, rather than traditional VCs. “Sand Hill needs to come down from the mountains and plough the fields themselves”, as he puts it. Yes, I can see local tech tycoon and Creative Technology boss Sim Wong Hoo signing up for this scheme already.
Another question that begs asking: what does this mean for incubators that currently administer the Media Development Authority’s iJAM microfunding scheme? Thymos Capital‘s Bernard Leong, speaking in a personal capacity, said on Twitter that the iJAM incubators are close to the end of their contract with MDA on the scheme and this means those iJAM startups that decide to ramp up their operations are likely to follow up with the TIS incubators or NRF early-stage funds.
Whatever the case with MDA may be, both Bernard and Alex agrees that if the NRF‘s TIS scheme takes off, it will create more incubators that fill the 6-digit funding gap that’s severely lacking in Singapore.
And that can only be a good thing.
Official press release here (pdf).
You can find NRF‘s Call for Proposal here (pdf).
SGEntrepreneurs‘ view here.
Hi Bernard,
Thanks for the clarification – I’ve amended the post that you’re speaking on your personal capacity and not on Thymos’.
Hope that works for you.
Thanks for the mention on Twitter. Except that all opinions made by me, are in no way representative of Thymos Capital but rather in a personal capacity.
A few important things to note:
1. The TIS does not have a management component for payment. It really makes me wonder if any foreign incubator will want to put money here in SG. It require an initial capital of at least S$2.5M to be injected by the incubator. I hope that they don’t think that it’s free money. 🙂
2. It does not really mean that the iJAM start-ups might get a chance to get additional funds from TIS appointed incubators.
3. Physical space and management staff will constitute the largest costs for the TIS incubator.
again a good move much like the beginnings of the ijam program from mda.
the leverage effect is a great structure for investors. the only area to note will be the actual investment criteria imposed.
if the approval process and funds administration is smooth, coupled with the right team with strong dealflow, strong network to secure follow on financing plus deep expertise with technology exits, the objective to make returns should be easily met.
Comments are closed.