BURIED deep in the Singapore government’s Budget 2016 – past the Corporate Income Tax Rebates section, beyond the Enhancement to Revitalisation of Shops Scheme, and the assistance for small and medium enterprises – lies a scheme that I think will do more to boost the success rate of Singa-pore’s entrepreneurs and startups than any tax break could.
The SG-Innovate scheme promises to “match budding entrepreneurs with mentors, introduce them to venture capital firms, help them to access talent in research institutes, and open up new markets”.
As the co-founder of a fintech (financial technology) firm myself, I know exactly how challenging this process can be, and how useful good advice and mentorship are.
Many of the challenges that new startups face are well known, but some are less obvious. Most entrepreneurs are confident that, based on the strength of the business plan, they will secure funding – the idea is simply too good to turn down!
In reality, the level of detail a venture fund (or any other smart investor) requires can be jaw-dropping, resulting in investment proposals that can run into hundreds of pages of financial forecasts and micro-detail.
Success can bring its own unforeseen challenges. The holy grail for many startups – especially those in technology – is scale, and the ability to expand quickly and sustainably is central to their long-term survival. But this in itself is devilishly difficult; how do you expand a popular product without sacrificing quality? How do you hire the right people to drive this expansion? What kind of debt should you take on?
Wealth management
For startups which have developed an as-yet-unknown product or service, the challenge is even more daunting, as our own experience demonstrates. We developed an online platform linking wealth managers to investors. Think of the wealth management industry, and technological innovation is probably the last thing that comes to mind. The industry remains highly conservative and traditional, with a close-knit coterie of wealth managers referred to high net worth individuals through word-of-mouth – usually following a whisky at the polo club.
We wanted to open up the wealth management industry to a wider range of income levels, more transparently and efficiently, through the power of the mobile phone and Internet. We were the first company to attempt to do this, and so in addition to the usual startup challenges, we also had to contend with a highly technology-averse mindset that existed within the industry, and no forerunner that we could point to in order to establish credibility – we had a typical first-mover disadvantage.
That is why the guidance of a team of mentors – many of whom helmed other first-mover startups – was (and still is) absolutely vital to the success we enjoy today. Advice given via a quick phone call or WhatsApp message has saved us hours in wasted time, strategy guidance has helped us save money, and we continue to pick their brains for our forthcoming expansion into Asia and beyond. It is for this reason that Budget 2016’s mentorship schemes will provide disproportionate benefits to the next class of entrepreneurs.
Room for improvement
However, while SG-Innovate and other government schemes like this are a great start, there are still ways in which we can improve. One of the main differences between the United States and Singapore – beyond the obvious – is the acceptance of “new”. By this, I mean a willingness among corporations large and small to embrace new products and services much more eagerly than their counterparts in Singapore.
This attitude ensures that there is a market for goods and services provided by relatively unknown startups and entrepreneurs. The open-mindedness of decision-makers within these larger firms and government makes it easier for the startup owner to get a foot in the door, and make that all-important first sale which then leads on to bigger things.
In Singapore, “new” is seen more as a risk than an opportunity. Mindsets, especially among larger firms, are quite conservative with decision-makers erring on the safe side, preferring to keep the status quo rather than adopt an unknown product. This limits the market for firms which have developed something that may create benefits for consumers, firms and government, but is too innovative and “different” for established firms to feel comfortable adopting.
So while the current support programmes that Singapore has are excellent, looking ahead, I think we need to develop incentives for companies in Singapore to adopt products and services from local startups that they perhaps would not otherwise. This could come in the form of tax breaks or risk-sharing programmes, and of course we would have to define which startup would qualify for this in a way that maintains healthy competition. If this could be done efficiently, we could see the next evolution of Singapore’s startup ecosystem.
- The writer is co-founder and CEO of findaWEALTHMANAGER.com, an online services that matches investors to wealth managers
This article was first published on April 4, 2016.
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