VC Market in Singapore

 

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Efraim Landa is a venture capitalist who understands fully the challenges faced by an entrepreneur or a start-up business who is attempting to secure funding. A venture capital firm such as Effi Enterprises provides an investment into the business which is intended to provide the finances needed for the business to grow. VC firms are a type of high risk investment but they also have potential returns that are way above average. The venture capital firm invests finances into the emerging business in exchange for a return after the business becomes profitable. When a VC firm invests funds into a business, the goal is that within 10 years the company should be able to move from its inception to an Initial Public Offering (IPO). In most cases, an entrepreneur comes up with an ingenious idea, begins a business to market it and then enlists the help of a VC firm that can fund the business until it is profitable.

History of VC in Singapore

The venture capital firm has had a very slow start in Singapore. The nation falls way behind some of the other leaders such as Australia, Hong Kong and the US.  In the United States, the access to venture capital funding ranks at about 0.765 on a 1.o scale. Hong Kong drops to a rate of 0.568 and Australia’s rating is only 0.505 out of 1.0. Singapore sits right on 0.417. One reason the region has run behind in the VC market is that there are many other investing opportunities which have a much higher rate of return. Venture Capital requires a lot more time as an asset class and even though it has the potential of a very high return, it takes a lot longer to realize it. It can take from 6 to 10 years for an investor to produce a return. This is one reason why Singapore has been behind most of the world in VC funds.

Venture Capital Market in Singapore Today

In the middle of the 1990s there were a few indigenous manufacturing/technology companies that were successfully able to go with an IPO. Many feel like this was the beginning of the VC market’s recovery in Singapore. The Singapore Venture Capital Association (SVCA) helps entrepreneurs locate venture capitalists. There has been a trend toward the forming of angel groups and networks. The emphasis in the VC market in Singapore seems to be more on early stage high tech start-up businesses. This also includes some by-products that come from public research institutes as well as some of the local universities. There have been some attempts to create mentorship programs which are also essential to the VC market as mentoring is a key to successful business ventures. The government has launched several programs recently because of the recognition that the VC market in Singapore was relatively weak when compared to Israel and Silicon Valley. The programs which encourage investments, specifically early-stage VC are helping to establish the venture capital market in Singapore.

Future of VC Market in Singapore

It appears that early-stage venture financing has been on the rise in Singapore over the last few years. The expected result is of course that this success will encourage more of the same. The goal is to develop further global links with investors and Singapore’s community. The domestic market is relatively small in Singapore and so early start-ups may need to look globally early on in order to receive the financial backing that will be needed. In the meantime, the venture capital market in Singapore will continue to improve with the inflow of foreign investors and since they have such a strong governmental backing.