Best ways to raise funds for startups in Singapore?
Startups and SMEs require funding for their business to sustain. There are several difficulties when it comes to operating a business. For instance, a business that has been operational for some time may require funds to grow or expand its operations whereas the companies that have just started may require funds to manage their working capital. A company needs to see that it has enough funds at all times to run its business.
There are several ways for a startup or SME to raise funds in Singapore. They are listed as follows:
Government Grants and Programs:
As Singapore is the hub for startups and SMEs, it becomes highly competitive to raise funds. Most of the companies try to seek this funding through government grants and programs.
Enterprise Singapore: The ACE grant offered by Enterprise Singapore gives the new entrepreneurs funds to launch their business ideas for the first time. Other funds associated with Enterprise Singapore and Capabilities Development Grant and Innovation and Capability Voucher. These funds help established startups and SMEs to grow and expand. Along with funding they also help these entrepreneurs with branding, marketing, strategy development, financial management, and so on. To support the businesses affected due to pandemic, the enterprise development grant is giving SMEs 80% of qualified project costs. The ones who have been severely affected due to COVID-19 may even get 90% of project costs, however, this depends on a case by case basis. The businesses can apply for this specific grant until 31st December 2020.
Startup SG Founder: This offers a variety of funds. If a startup is looking for funding support, then it should look at Startup SG Equity. To get funding support for deep tech commercialization, businesses should look at Startup SG Tech.
National Research Foundation: The Early Stage Venture Fund by NRF connects the tech startups looking for funding with venture capital firms.
Other grants and schemes which one can look to raise funds are Financial Sector Technology and Innovation Scheme, ComCare Enterprise Fund, and Technology Enterprise Commercialization Scheme.
Another way to convert your startup idea into a business is by raising funds through crowdfunding. For this, companies should market and create awareness about their product and gather customers who would be willing to invest even before the launching of the product. Online platforms like Indiegogo, Kickstarter, Fundnel, and FundedHere have aided various startups and SMEs to raise funds through crowdfunding. By summing up the individual amounts, the startup could raise a huge fund that could really kickstart its operations.
Friends & Family
Many startups and SMEs raise their first round of funding from friends and family. The ones who have close relationships with you and have faith in your business idea would be willing to invest in your business as they already have that trust in you. This can give your business an initial boost and give you confidence. However, there are various risks that investment entails, so it is better to inform the friends and family members about these risks in advance so that it does not spoil your relationships in the future.
Bootstrapping is a way to self-fund your business. If you have enough funds, then it’s the easiest and the quickest way to start your business. However, you need to be mindful that in case the business idea does not work out then it may lead to loss of the funds invested. Henceforth, this is a risky way as only one person is accountable for the losses.
Venture Capital funds usually invest in a business in exchange for a stake in equity and they plan to exit with 4-5 years through the way of an IPO. They usually invest in stable companies. This is a good way of raising funds at a later stage when the business is already established and is generating positive revenues. Some of the popular VCs in Singapore are B Capital Group, Monk’s Hill Ventures, Quest Ventures, 500 Startups, Jungle Ventures, Golden Gate Ventures, and Sequoia Capital.
Angel investors are high net worth individuals or groups who are willing to invest in startups. In most cases, businesses will need to dilute their equity in order to get funds. Depending on the business needs, you can get an angel investment ranging between $50,000 to $500,000. However, the only drawback is that the business founders need to adhere to the guidelines stated by the angel investor. They like to get involved in the decision-making process. Therefore, it is very important to see that the founders and the investor are on the same page.
This is one of the routes for SMEs and startups to get funding. They can get these loans from either banks or private financial institutions depending on factors like the company’s requirement, operations, revenues, and, so on.
Peer to Peer Lending
It is like a marketplace that connects businesses in need of funds with public investors who want to invest their money. Investors get higher returns than they would have if they would have invested in banks and businesses also get their funds which they could not get from a bank because of not fulfilling certain criteria. Some of the popular peer to peer lending platforms are Vulcan Capital, Funding Societies, Capital Match, and MoolahSense.
If you are a startup or SME and looking to raise funds in Singapore, we can help you out and take care of all the documentation and processes. Do get in touch with us so that we can help you grow!
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