A decade ago, startup was a wild notion for Singapore. Conservative and moderate, this society preferred seeing their best brains in the government or in banks – safe and sound places. Starting a company, investing and risking were fads acceptable for a very small handful of people. But the government that became keen on entrepreneurship managed to infect with startup virus not only the Singaporeans, but also the whole business-active part of the world. Now it is a prominent example for other first-world countries of how to knock together a group of innovative investors and develop powerful venture capital sector that worked as a keystone for a strong startup ecosystem.
Many countries tried to repeat the triumph of the Silicon Valley that now is an unsurpassed world’s startup leader. But boosts what perfectly worked for one place and time (technologies, unparalleled brains, venture capital, and a huge dose of adventurism) refused to work for another. Remember miserable efforts of the “Silicon Pyramid” in Egypt and Tsukuba, Japan’s Science City? Just investing heaps of money in cool buildings and technologies and even implementing a super light tax mode don’t boost business if you miss the key startup ingredient – attracting venture capital. Without a crowd of “cheque-writing” personalities that will back young companies and support them, building a self-supporting startup community is impossible.
When an entrepreneur hears about the idea of creating a startup in SG, he or she would coolly remark with indifference something like: “Singapore? I’ve heard their government controls everything. How can a startup survive there?” But the mind-blowing fact is that there is no such country on the planet that has done as much for cherishing its startup activity as Singapore has done within the last five years. SG is often compared to Israel in efforts to kickstart a startup system; the country even adopted some principles from a famous Israeli Yozma Programme. However, Singapore’s version has its own unequalled advantages no other country can offer in one package.
Advantages of “Startup-ing” in Singapore
- SG attracts foreign businesses with its unparalleled clever and business-friendly laws. Legislation is well-considered and easy to follow; business procedures are laconic and free of red tape and corruption.
- Singapore was again dubbed the “easiest place to do business” by the World’s Bank in 2014. Procedures of running a business are very simple and transparent here. Paperwork for hiring, firing, and filing has been shrunk to a minimum. It would take you a day to register a company here and get full government’s support.
- Low crime index and political steadiness guarantee more peace for your money.
- Singapore has developed a premium intellectual property protection framework.
- SG is a tax paradise. Personal income tax ranges from 3.5 to 20% for salaries over US$230,000. Corporate tax is below 9% for incomes below US$222,000 and is capped at 17% for revenues that are above this benchmark. There is no death, inheritance and capital gain tax. It means that if the revenues were taxed inside your startup, you can enjoy your gains tax-free.
- Singapore fosters business-friendly migration policy. There is a work pass developed especially for potential entrepreneurs – EntrePass. After incorporation procedure, directors and professional staff can be invited to Singapore under Employment Pass. Both types of business visa give an opportunity to pretend to a permanent residency. With competent assistance and strategising, obtaining visa for entrepreneurial purpose can be done in a matter of days.
- Cost of living in Singapore is lower than in other famous business hubs like, for example, Hong Kong. Here you can get affordable and advanced health-care, enjoy fresh unpolluted air and clean uncrowded public transport, leverage top-notch infrastructure and be welcome by cross-cultural and mostly English-speaking honest and hard-working people.
- Singapore government is nuts about innovativeness. Ideas that would be met coolly elsewhere have a chance to get the green light here.
Venture Capital Burst
Singapore has invented a smart way of involving venture capital. At first, the government took the lead and introduced grants to boost startup creation. And on the next stage, it made startups attract investments from a third-party.
Back in 2009, under Technology Incubation Scheme the government offered a mind-boggling solution: it will put in 85% of needed capital if an investor agrees to put up 15% (a 5-to-1 scheme). Later, this government’s share can be bought out any time. Building a startup community requires enormous trust between the government, investors and crude companies, but success is impossible without such commitments. After Singaporean government kickstarted a robust venture capital sector, the startup ecosystem became self-sufficing. It’s hard to name another government that would support startup attempts so faithfully from an idea to fruition.
Under the Early-Stage Venture Financing Scheme, the government co-invests in teams with investors that have enough private capital. The scheme is very comfortable for investors as their capital stays with them and they can benefit from it. This way, hordes of new and generous investors were attracted. In two years from 2011 to 2013, the amount of venture capital involved in Singapore skyrocketed from a modest SG$27 million to an eye-popping US$2 billion.
Unlike Silicon Valley’s startup ecosystem which is hardly replicable anywhere in the world due to the uniqueness of the conditions that made it possible, the Singaporean model is quite universal and can be globally leveraged. Taking the Singaporean startup framework as an example, any country can boost its business potential by creating a robust venture capital base. It’s hard to predict the scale of progress that awaits Singapore in the next five years if they turn out to be at least as effective as during the past five.
Roman Yarovyi is the PR and Communication Manager for One Visa.