Nowadays, innovative startups are able to disrupt existing markets, create niche markets, and come up with technology that connect people and make consumers’ lives easier. Tech startups are changing the way we conduct work, communicate, travel, track health and much more. For fledgling entrepreneurs who are just starting out, it is important to establish in a location conducive for startups.
Singapore has been and continues to be an attractive destination for local, regional and international entrepreneurs, multinational companies, and startups. It is recognized as the easiest place to conduct business in the world. There are many reasons why tech startups should consider establishing in Singapore.
#1: Singapore aims to become Asia’s Silicon Valley.
The Silicon Valley is home to some of the world’s biggest high-technology corporations and thousands of startup companies. Singapore seeks to replicate the same environment and become the home of leading technology start-ups in the region. The government is committed to supporting, nurturing and growing its startup ecosystem.
One of the key focus of the government starting this year is working towards becoming a Smart Nation. During his speech at the Founders Forum Smart Nation Singapore Reception on April 20, Prime Minister Lee Hsien Loong stated three key reasons why the advancement of Information Technology is beneficial to Singapore. Firstly, the ethos of Singapore’s society is rational, technological and forward-looking. Secondly, the city-state’s population is IT savvy, understands technology, and at least understands how to use it. And thirdly, Singapore is a highly connected and wired up island. “In order to bring all these advantages together, and become one of the top countries in terms of quality of life, vibrancy, and opportunities for our people.”
With a technology-ready market and a government that supports technological advancement to become a Smart Nation, startups that are working on innovations that aim to make a difference in people’s lives will find it highly beneficial to set up their business in Singapore.
#2: Startups can expect a smooth Singapore company incorporation process.
Singapore has consistently been recognized as the easiest place in the world to conduct business. Breaking one of the common barriers in setting up a business, the government made it easier to commence business operations by easing the company registration process. In fact, we can assist you in registering your business for as quickly as 2 hours as long as all your requirements are complete. For a complete list of requirements and a roundup of what to expect before, during and after your company registration, you may read through our guide to registering a business in Singapore.
#3: Singapore offers Tax Exemption Schemes for Startups.
Singapore has one of the lowest corporate tax rates in the world, on top of tax incentives it offers. One of these is the tax exemption scheme for newly-registered startups. Through this scheme, startups can enjoy a full tax exemption on its first S$100,000 normal chargeable income for 3 consecutive Years of Assessment.
In order to claim the tax exemption, the startup must satisfy all the criteria. It must incorporated and considered a tax resident; it must not have more than 20 shareholders with at least 1 shareholder who owns 10% of the company’s issued ordinary shares.
#4: Singapore’s Intellectual Property regime is one of the best in the world.
Singapore Intellectual Property regime has been consistently recognized as one of the best worldwide. The city-state ranks second globally in the area of IP protection according to the World Economic Forum’s Global Competitiveness Report 2014/2015. It also bagged the 5th spot in the recently conducted U.S. Global Intellectual Property Center’s International IP Index. Tech start-ups in Singapore can bank on the government to protect ideas and innovations, and uphold their rights to Intellectual Property.
#5: The government provides funding support.
The Singapore government has initiated grants and schemes bolster its start-up ecosystem. Among this is the Early Stage Venture Fund (ESVF) scheme which seeks to invest in early stage technology startups. Under this scheme, the government selected 6 venture capital firms that are renowned for providing early stage investment and business building infrastructure to the startup companies they fund. Each will receive S$10 million in taxpayer’s money which they will then use to support early-stage tech startups in Singapore.
ACE Startups Grant is a co-funding scheme that matches every S$3 raised by the entrepreneur with S$7. Qualified startups can get up to S$50,000 in funding. In order for you to get S$50,000, you must be able to raise S$21,429.
If your business happens to be in a competitive, capital-intensive industry, you may choose to apply for an additional S$50,000 fund support. In this case, ACE will match S$3 for every S$7 you raise. So if you want to get the maximum fund support, you will need to raise $116,667.
The funding may be used for various purposes that the company needs from operational expenses to marketing campaign budget, acquisition of intellectual property (IP), manpower, purchase of needed equipment or software, and the like. Just take note that the amount may not be used to pay off loans or any form of debt incurred by the founders and staff in putting up the business.
Before you apply for the grant, make sure that you and your company satisfy the criteria and that you have all the requirements. The evaluation process usually takes 6 to 8 weeks. Shortlisted startups will have the chance to pitch their proposed business idea to the ACE Evaluation Panel. If you are successful, A Letter of Offer will be sent by the SPRING Singapore.
The ESVF and ACE Startups Grant are just some of the funding schemes that are available to startups. You may read 5 Government Grants for Start-ups & SMEs in Singapore for more grants that are available to startups and SMEs.
#6: Startups have a variety of business premise options.
There has been a significant increase in the number of special offices all over Singapore that cater to startups. Renting an entire office for a small-scale business with just a few employees may not seem practical, especially to cash-strapped startups.
Renting co-working spaces where startup founders and team members can gather and work in a common space is one of the many options. The cost ranges from S$200 to S$2000, depending on the services included. Here are some co-working spaces in the island:
Hackerspace.sg is the first co-working space in Singapore and is known for its strong community. More than providing a space where individuals with common interest in technology in general can gather, collaborate and interact, Hackerspace also hosts events, meetups and workshops. Their membership fee ranges from S$64 monthly to S$512 monthly.
Another co-working space is [email protected], offering flexible work spaces. You can either choose to pay-per-use or subscribe and be a member. Their hourly rate is S$8 an hour and S$30 a day. You can choose from a variety of membership plans that range from S$400 to S$520 per month. Access to services vary depending on your membership.
Home Office Scheme
If your business is small scale, you may use your residential property or HDB as your official business address under the Home Office Scheme. You just need to ensure that you adhere with all the restrictions and conditions the Urban Redevelopment Authority (URA) set. For those who operate their business at home, it is important that no harm or inconvenience is caused to the neighborhood – from issues such as waste to odour, noise, excessive number of people going in and out of your property and such. Read: Setting Up a Home Office in Singapore.
JTC Commercial Business Premises for Startups
Another option for startups that are registered in Singapore, operating for less than 3 years, and generates less than S$1 million, are business premises from JTC Corporation. JTC has Technopreneur Centres and Parks that are specifically designed for qualified startups in Singapore. It includes facilities and services that are shared by the startups renting their incubator units. These services include business centers, meetings rooms, IT infrastructure and such. For more information, you may visit the JTC Corporation website.
#7: Startups can rely on the government for support that goes beyond financial.
Apart from financial support, the government hosts a number of initiatives to encourage startups and SMEs to improve business processes through training, productivity initiatives, and innovation. For one, SPRING could facilitate the matching of startups to an experienced mentor for a period of one year. This is subject to a mutual agreement between the mentor and startup.
Startups can also get either a tax deduction or cash payout by investing in qualifying productivity and innovation projects under the Productivity and Innovation Credit (PIC) scheme. For more information about this scheme and other grants catering to startups in the city-state, you may read: Government Grants for Start-ups & SMEs in Singapore.
On a final note
Enterprise development is among the government priorities. The grants and initiatives launched and ran by different government agencies addressed some of the most pressing roadblocks of startups including insufficient funding, difficulty in business registration, IP protection and mentoring. With a steadily growing startup ecosystem, strong government support, and technology-savvy market, tech startups will find it advantageous to choose Singapore as their business location.