Singapore government backs six local VC funds

The capital is intended to facilitate S$120 million in VC fundraising, with the government contribution matched on a 1:1 basis by other investors. The funds are mandated to invest in early-stage local high-tech start-ups. They collectively cover the information and communication technologies, meditech, cleantech and industrial applications spaces.

This is the second batch of funds supported through the Early Stage Venture Fund (ESVF) initiative run by the National Research Foundation (NRF). Following a call for proposals in November of last year, the NRF received 32 submissions, of which 18 were shortlisted.

Five of the six selected firms are well established - indeed, New Asia Investments and Walden International were among the five VC firms whose funds were supported in the first batch of ESVF commitments in 2008.

Monk's Hill is the newcomer. It was set up by Peng T. Ong, a serial entrepreneur - best known for founding Match.com - turned angel investor in Singapore, and Kuo-Yi Lim, former CEO of Infocomm Investments, a government-backed group that supports local start-ups.

The first batch of ESVF commitments, which saw S$25 million split equally between five managers on the understanding that the capital would be matched by other investors, has resulted in S$38 million being pumped into 24 start-ups.

However, industry participants were not particularly enthused by the initiative, arguing that the infrastructure required to take companies from seed phase to a scale at which they were viable investment targets for ESVF funds was not present.

In recent years the government has taken steps to fill the gap, notably introducing the Technology Incubation Scheme (TIS), which was set up in 2010, also under the auspices of the NRF. A total of 15 VC firms are now part of the scheme. They make investment decisions and the NRF contributes up to 85% of the capita, subject to a ceiling of S$500,000 per company.

The NRF has committed around S$50 million to the program, backing 108 Singapore-headquartered start-ups.

With seed infrastructure now in place, there are insufficient investors at the Series A stage, taking companies from revenue generative to profitable. This latest phase of the ESVF is intended to address the shortfall. It is one of a number of measures introduced as the government seeks to realize its ambition of turning Singapore into a technology hub for Southeast Asia.

"We recognize that it is very competitive for high-tech start-ups to secure follow-on financing as they have to fight with the best in the region to get VCs' attention," Professor Teck Seng Low, CEO of the NRF, said in a statement.

"Through this investment, the government is addressing the gap in Series A funding, which is critical in sustaining the rapid growth of start-ups beyond the seed stage. With their expertise and savvy investments, VCs will help commercialize promising technologies into innovative products."

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• Topics
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• Southeast Asia
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• TMT
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• Venture
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