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What our members have to say...
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"Sincere regards from my team to the Indian Investment Network. Our start-up was struggling through a hard time raising funds and getting a really good mentor, but through the Indian Investment Network we had lots of potential investors and we have just chosen one of them who is willing to put in money as well as mentoring us in our business. I deeply thank the Indian Investment Network for helping us grow and have another business plan, which I would definitely like to discuss with you."
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Apurva Singh - WebWalks |
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Venture capital for SMEs behind in global rankings
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Venture-capital (VC) funding for Singapore's small and medium enterprises (SMEs) falls short on a global comparison, according to a study that surveyed SME sentiments across 71 countries.
The inadequacy of funding is perplexing, analysts say, given that Singapore ranked 15th globally in overall entrepreneurship. Only Australia, at 11th position, did better in the Asia-Pacific region, according to the study by the Global Entrepreneurship and Development Institute (GEDI).
On a scale of 1.0, the United States scores 0.765 for access to venture capital, while Hong Kong and Australia have ratings of 0.568 and 0.505 respectively. The figure for Singapore is 0.417.
Analysts say this is because investors in Singapore are distracted by other opportunities to earn a high return.
"We are seeing a lot of competing investment opportunities, whether it is privatisation or public equity markets, currencies and real estate, so these are all things that compete for investor's dollars," said Mr Pierre Hennes, managing partner at Extream Ventures.
"Venture capital is an asset class that requires a lot more time."
VC funds typically buy into early-to-mid-stage companies that have a commercially viable product and a management team. Such companies usually take six to 10 years to produce returns for investors.
While the failure rate in early-stage investments is high, businesses that succeed can offer 25- to 35-per-cent annual return on investment. VC funds also tend to invest in companies with potential to scale up their businesses. In this, the small size of Singapore's domestic economy is a natural constraint.
"A company growing its business in Singapore is, generally speaking, still too small to attract VCs, no matter where they are based," said chief executive Singapore International Chamber of Commerce Phillip Overmyer.
"The key challenge that these very good companies face is being able to demonstrate their ability to reach to other markets in the region."
Experts say there are fewer than 20 pure-play VC funds focusing on companies here. These need money, which comes from institutions and wealthy individuals willing to take a risk on lumpy, illiquid investments. They also need capable managers that are able to spot future winners.
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