Common Types of Private Investors For Startups In Singapore

By
Writers@Aspire
Published
September 19, 2020

Singapore boasts of a thriving startup ecosystem that stands tall because of a robust infrastructure, cash grants, tax incentives, and financial schemes, offering a friendly environment for most startups. In Singapore, there is a growing pool of private sources of funding for businesses.


Funding comes from various types of private investors in Singapore. Before we get to the common types of private investors for startups in Singapore, it is good to familiarize yourself with the different types of private investors:

1. Angel Investors

Angel investors are private investors who invest in capital for startups and contribute skills or business expertise in the business's early stages to set the startup for success. Angel investors do this in exchange for a significant share in the company. They are normally individuals or groups of people. If it is a group, it would be part of the angel network group that usually engages businesses they are familiar with and with high growth potential.


Some business angels play as sleeping partners for startups while others are engaged in active roles. Angel investors in Singapore are often successful businessmen or high-net-worth individuals who have an insatiable appetite for risky startups with a great potential to yield high returns. High growth potential is a prerequisite to winning favors from angel investors in Singapore.


Example: Crystal Horse Investments

Crystal Horse Investments is an incubator and angel group based in Singapore and the official fund manager of Asia's first reality TV series, Angel's gate. It was founded in Singapore in 2010. It makes seed investments in startups of internet, mobile, and data sectors in South-east Asia. Crystal Horse largely invests in Malaysian and Singaporean companies where it can add value to and gain profit in the long-term.



2. Venture capitalists

Venture capitalists are professional investors who will have an active role in your business, and their interest is on their profitability.

Venture capitalists offer both funding and advice on how to increase the profitability of your business and operational matters if your startup business requires input from different areas of expertise.

Startups with high growth potential in biotechnology, nanotechnology, and IT are popular for startups since they have a competitive advantage and have a longer profiteering period. There are over one hundred venture capital firms are in Singapore.


Example: Golden Gate Ventures

Golden Gate Ventures has its founding partners in San Francisco and Singapore. It is an initial stage VC firm that bridges Asia and Silicon Valley through investments, relationship building, and experience.


Vinnie Laurie, one of the firm's founding partners, is known to have invested in startups like Lenddo, Coda payments, and Nitrous.


500 startups

500 startups is a global venture capital seed fund with its headquarters in Silicon Valley, incepted in 2010, and has invested in over 1800 technology startups worldwide, such as Udemy, Talk desk, intercom, and Twilio since then.


The managing partner of 500 startups in South-east Asia is Khailee Ng, who himself is a famous angel investor in Singapore.



3. Private Equity Firms

Private Equity is considered a traditional path for investor fundraising. In Singapore, private equity firms will grant you access to millions in investment, especially if your startup is in the early stages of development and has the potential of yielding high returns in the long run. How they achieve that is simply selling their stake in the startup a few years down the road to reap profit from their investment in the business.


If you opt to finance your startup through the private equity route, note that it entails the selling of a part of your business ownership in the form of shares for cash. There is also the requisite to prove to private equity firms that your startup has a comprehensive business plan, clear exit strategies, financial prudence, reasonable financial projections, and full growth potential to secure equity capital with them.


Example: AT Capital Group

AT Capital Group is a good example of a private equity firm headquartered in Singapore. It was founded by Arvind Tiku, specifically to leverage global opportunities across established and startup businesses.

It  has an asset portfolio with an estimated worth of US $2.5 billion. It has global investments in residential and commercial real estate, natural resources, engineering, and hospitality.

4. Incubators and Accelerators

These two terms have a few fundamental differences while used interchangeably.


An incubator is a funding system that works with startups that are in the initial stages of development and are aimed mostly at getting these startups off the ground; an accelerator, as the term suggests, usually helps those businesses that are past the initial development stage and are ready to have their business running or are planning on taking a giant leap like expanding the branch of the company overseas or venturing into a different market or industry.

You do not need to follow a schedule while dealing with incubators; accelerators work closely with investors and other startups for several months before operating independently.


Some examples of incubators and accelerators are:


1. Entrepreneur First

Entrepreneur First (EF) is backed by Greylock Partners, Mosaic Ventures, Reid Hoffman, and Mustafa Suleyman is a traditional accelerator in Singapore.

2. TechCube8

TechCube8 is a private incubator approved by Singapore's National Research Company to promote startups focusing on high-end technology in the region.


3. Rikvin Capital

Rivkin Capital is considered an alternative to Singapore's private funding options. It has funded various projects for startups in Singapore that need short-term funding for their secured assets. It is a current financing source for those startups affected by the Total debt Servicing ratio (TDSR) or has no track record with financial institutes.



Summary

Singapore has a lot of potential for startups due to the available options of private investors at their disposal. The government is also supportive of offering a friendly business environment to the investors. Government bodies such as SPRING Singapore supports starts by leveraging third-party investors' expertise and encouraging co-investments.



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