Risk Capital

INTRODUCTION

Risk Capital are funds invested in businesses and commonly comprises of angel investors and venture capital firms. To technology startups, they provide immense resources through funding for their business growth. Risk Capital comprises of angel investors and venture capital firms. They provide funding to promising technology startups for business growth.

 


International Risk Capital 
Total startup economy as of 2019 is worth nearly US$3 trillion in value. VC activity is booming as well, with close to US$300 billion of investment activity globally. With the startup economy booming, unicorns – startups achieving over US$1 billion valuation – aren’t as “rare” or as “mythical” as its name suggests, with more than 80 startup ecosystems worldwide producing at least 1 unicorn each.

Startup Genome identified 30 startup ecosystems that would be up-and-coming hubs for innovation and technology, including Singapore’s very own booming startup scene. With the rise of innovation and the demand for sectors like IoT and Blockchain, there is an increase in the number of tech startups being created to address real-world challenges. This presents attractive opportunities for risk capital firms and startup investors to invest in high potential startups globally.

 


Risk Capital in Singapore 
Ranking 4th in Blockchain and 5th in Fintech in the global ecosystem by Startup GenomeSingapore is recognised as the startup investment hub in Southeast Asia, especially with bigger funds secured year by year.  

Further increasing the vibrancy of our ecosystem, there is a surge in investors’ interest in the deep-tech domain, attracting many deep-tech startups worldwide to set foot on our sunny island. 

Investment in Singapore has grown seven-fold since 2015. Investments in the deep-tech sector shown high growth too as reported by Enterprise Singapore. Advanced Manufacturing, Urban Solutions and Sustainability, and Healthcare and Biomedical Sciences domains gained investment traction, with a 25% growth in investment amount in 2019 as compared to 2018.  

As of 2020, there are reportedly more than 160 VC firms in Singapore. To boost the startup investment landscape, the Singapore government implemented several measures to drive investments in startups and increase support into Innovation and Enterprise. Some of the schemes are: 

  • Startup SG Equity: Aiming to catalyse more investments into Singapore startups, the government has set an additional S$300 million in Startup Equity, in hopes to increase interest in Singapore-based deep-tech startupsInvestment cap for general tech startups and deep tech startups are S$2 million and S$8 million respectively 
    • Co-investment ratio are at:
      • For general tech – 7:3 up to first S$250K, 1:1 thereafter up to S$2M
      • For deep-tech – 7:3 up to first S$500K, 1:1 from S$500K to S$4M, 3:7 thereafter up to S$8M
  • Section 13H/Fund Management Incentive: Aims to encourage investment into Singapore-based businesses and startups, providing tax exemption up to 15 years for startups with income that meets the scheme’s requirements. Fund management companies stand to get 5% concessionary tax rate on income derived from managing.
  • Section 13 series: Other tax incentive schemes for Singapore funds are outlined in section 13CA, 13R and 13X under Singapore Income Tax Act.
  • 13CA: Suitable for funds that are not wholly owned by Singaporean investors. Fund’s Residence need not be Singaporean-based. Exempted from filing income tax and the need to seek approval from MAS.
  • 13R: Similar to S13CAHowever, requires the company to be incorporated in Singapore, must be a tax resident, at least S$200,000 business spending in a year, requires approval from MAS, as well as the need to file income tax. 
  • 13X: No restriction on the percentage of shares by local or offshore investors, but requires approval from MAS, a minimum of S$50 million Asset under Management, at least S$200,000 local business spending in a year, and income tax filing. 
  • Variable Capital Companies (VCC): A new corporate structure for investment funds, complementing existing suite of investment fund structures available in Singapore. To be managed by a Permissible Fund Manager, under the purview of the Monetary Association of Singapore (MAS). Aims to provide flexibility in issuance and redemption of shares, as well as countering against finance terrorism. 

ACE, being the heart of Singapore’s startup ecosystem, is well-positioned to drive curated deal-making opportunities between regional risk capital and tech startups! 


WHAT WE DO


Advocacy: Public policies that develop the Singapore venture ecosystem
We engage with risk capital firms and key stakeholders in the Singapore venture ecosystem to gather insights on the ground and advocate for policies that strengthen the Singapore venture ecosystem.

 


Investments:
– Demo Day
– Meet the VC
A platform for risk capital firms to meet curated local & international tech 
startups who are pitching and showcasing their businesses.
 


VCs IN OUR NETWORK

    …and more!


    TALK TO US

    Are you a risk capital firm keen to connect with rising tech startups in the region? You have come to the right place; get in touch with ACE, the National Representative for Singapore Startup Ecosystem, at info@ace.org.sg