(b) Startup SG Tech

Startup SG Tech supports proof of concept (POC) and proof of value (POV) for commercialisation of innovative technologies that fall under one of the following categories: (i) advance manufacturing and robotics, (ii) biomedical sciences and health care, (iii) clean technology, (iv) information and communications technology, (v) new industries such as augmented reality and distributed ledger technologies, (vi) precision engineering, (vii) transport engineering and engineering services, (viii) food science and technology, and (ix) agritech.

To apply for this scheme, the applicant must clearly demonstrate the use of an innovative technology and how such technology has the potential to disrupt or replace an existing market or to create a new market, purpose or niche. The applicant must also show that its project is commercially viable and can create or build on proprietary know-how or intellectual property. In addition, the applicant should have been incorporated for less than five years, and have a minimum 30 per cent local shareholding, no more than 200 employees and an annual turnover of no more than SGD 100 million, and its core activities must be carried in Singapore.

The grant cap for POC and POV projects is SGD 250,000 and SGD 500,000 respectively. In return the company must issue shares to Enterprise Singapore worth 50 per cent of the grant awarded, up to 49 per cent of the total shareholding of the company.

(c) Startup SG Founder

This scheme comprises two tracks: (i) the ‘Train’ track and (ii) the ‘Start’ track.

For the Train track, individual applicants must undergo a three-month venture building programme which will provide them with support for sourcing innovation, commercialising ideas into scalable businesses, getting product/solution validation from customers and finding capital.

For the Start track, applicant companies will be required to have at least three Singapore resident shareholders who hold a minimum of 51 per cent of shares, two of whom must be first-time founders. Successful applicants will be mentored by accredited mentor partners appointed by Enterprise Singapore. They will receive advice, learning programmes and details of networking contacts. Enterprise Singapore will also provide the start-ups with a start-up capital grant of SGD 50,000 and the applicant companies will be required to raise and commit SGD 10,000 as a co-matching fund.

Commercialising and expanding

(d) Digital Acceleration Grant

This scheme is targeted at supporting fintech companies based in Singapore which are certified by the Singapore FinTech Association and have no more than 200 employees. MAS will co-fund 80 per cent of the qualifying expenses – such as digital solution and software related costs, including licence and subscription costs, and costs of professional services tied to the adoption of the digital solution (training, installation, etc.) – up to SGD 120,000 per entity.

(e) Singapore-Israel Industrial Research and Development Programme

This scheme encourages Singapore companies to embark on joint industrial R&D collaboration with Israeli companies. Singapore companies are required to partner with an Israeli counterpart for this scheme and undertake a joint project in both Singapore and Israel with at least 30 per cent of the actual R&D carried out in Singapore and Israel respectively. The four types of project grants available cover: (i) full scale R&D and commercialisation, (ii) mini R&D and commercialisation, (iii) a feasibility study, and (iv) a pilot project.

For full scale R&D, the project costs must be over US$400,000 and the project associated with the commercialisable product or technology must last no more than two years. The available grant is between US$200,000 and US$1 million or 40 per cent to 50 per cent of the total cost of the qualifying project, whichever is lower. The grant for commercialisation activities is up to US$30,000.

For mini R&D, the project costs must be over US$400,000 and the project associated with the commercialisable product or technology must last no more than one year. The available grant is up to US$200,000 or 50 per cent of the total cost of the qualifying project, whichever is lower. The grant for commercialisation activities is up to US$30,000.

For the feasibility study, the applicant can apply for a grant of up to US$30,000 or 50 per cent of the total cost of the qualifying project, whichever is lower, to carry out an investigation to determine the technical feasibility and market acceptability of the new product or process concept.

For the project to pilot or testbed near-market technologies with a specific customer or market segment for commercialisation purpose, the applicant can apply for a grant of up to US$1,000,000 or 50 per cent of the total cost of the qualifying project, whichever is lower.

(f) Market Readiness Assistance

This grant is targeted at helping companies expand overseas. To be eligible, applicants must be Singapore-incorporated companies with a minimum local shareholding of 30 per cent and no more than SGD 100,000 in overseas sales in each of the last three preceding years at the time of application. Further, either the company’s annual sales turnover must not be more than SGD 100 million, or the company must have no more than 200 employees.

Eligible companies will receive part of the eligible costs (capped at SGD 100,000 per new market) of: (i) overseas market promotion (capped at SGD 20,000), (ii) overseas business development (capped at SGD 50,000), and (iii) overseas market set-up (capped at SGD 30,000). As announced in the Singapore government’s Budget 2021, the maximum support level will be 80 per cent of eligible costs until 31 March 2022, and then 70 per cent until 31 March 2023.

(g) Enterprise Financing Scheme Loans

In addition to offering grants, the Singapore government also makes financing easier for growing Singapore companies which are at least 30 per cent owned by Singapore residents and have an annual turnover of no more than SGD 500 million by partnering them with financial institutions to provide different types of loan depending on the stage of the company’s growth. Enterprise Singapore will share the loan default risk in the event of company insolvency.

For example, the Venture Debt Programme is targeted at high-growth start-ups that do not have significant assets to be used as collateral, as required under traditional bank lending. Instead, warrants, or rights to purchase equity, are used to compensate for the higher risk of loan default. A company can borrow up to SGD 8 million with a maximum repayment period of five years. It can utilise the loan to, among others, grow and expand existing capacity, augment working capital needs, undertake new projects or undergo mergers or acquisitions.

Going public

(h) Anchor Fund @ 65

This is a new co-investment fund established by the Singapore government and Temasek to support promising high-growth enterprises in their public fundraising in Singapore’s public equity market, and to provide financing prior to initial public offering in order to propel the growth of target enterprises and support them in their public listing.

(i) Growth IPO Fund

EDBI, the dedicated investment arm of the Singapore Economic Development Board, intends to establish a new Growth IPO Fund to invest in later-stage enterprises, typically those that are two or more funding rounds away from a public listing. It aims to invest in high-growth, globally competitive and innovative enterprises, typically at the Series B funding round or later.

(j) Grant for Equity Markets Singapore (GEMS)

MAS introduced the GEMS scheme to support listings and expand the equity research ecosystem in Singapore’s public equity market. It will co-fund the listing expenses of all companies listing on SGX. For listing on the Mainboard of SGX, companies with a market capitalisation of SGD 1 billion or more will qualify for 70 per cent co-funding up to SGD 2 million, while smaller companies will qualify for 70 per cent co-funding up to SGD 1 million. For an SGX listing on Catalist, MAS will co-fund 20 per cent of eligible costs, with grants capped at SGD 300,000, regardless of market capitalisation. Eligible costs include lawyers’ fees and the costs of audits, asset valuation, independent market research, SGX listing, management and sponsorship, and placement and underwriting of an initial public offering.

With the Singapore government’s recent move to extend more financial support to entrepreneurs and start-ups, we are confident that Singapore will be able to attract talented entrepreneurs. Such initiatives will enhance Singapore’s reputation as a leading ‘start-up nation’ in the Asia-Pacific region.

If you wish to know more about grants and other funding available to your company, please feel free to contact the authors listed above.

Reed Smith’s Emerging Growth / Venture Capital team has active start-up lawyers worldwide – from Silicon Valley to Singapore, from Los Angeles to London, from Pittsburgh to Paris and from Chicago to New York. We work closely with our colleagues in Reed Smith’s leading industry and practice groups – Life Sciences Health Group, Financial Industry Group, Entertainment & Media Group, and IP, Tech and Data Group – to provide thoughtful, strategic counsel to start-ups at every stage.

Reed Smith in Singapore is in a Formal Law Alliance with Singapore law practice Resource Law LLC. The Reed Smith Resource Law Alliance expands our ability to handle multi-jurisdictional transactions involving both international and Singapore law.

Client Alert 2021-173