There is a reason why Singapore is popularly known as ‘Asia’s emerging Silicon Valley’. The city-state is host to an exceptional network of over 4,000 tech-enabled start-ups in 2021 alone. This is significant growth from about 1,000 tech-enabled start-ups in 2014.
Singapore has evidently become the tech start-up epicentre of South East Asia by raising $8.3 billion in the first nine months of 2021, nearly two-and-a-half times the $3.5 billion raised in the same period last year, according to Enterprise Singapore. This is close to 50% of the total funding for start-ups in South East Asia.
Investments in deep tech start-ups have surged from $324 million in the nine months ended Sept 30, 2020 to $861 million in the nine months ended Sept 30, 2021.
Tech Start-Up Landscape in Singapore
“Singapore is a nation where we can create possibilities for ourselves beyond what we imagined possible.” – Prime Minister Lee Hsien Loong
Singapore is ranked at 14th position in 2019 by Start-up Genome for its vibrant tech start-up ecosystem and was valued at US$25 billion.
Owing to its progressive information and technology infrastructure, friendly business ecosystem, stable political environment, conducive business policies, attractive tax laws, strategic location advantage, skilled workforce, friendly digital trade, and encouraging government schemes, technology start-ups in Singapore are amongst the fastest-growing industries in the entire Asia Pacific region.
The country boasts of its state-of-art technology that offers economic, environmental, and technological solutions to its entrepreneurs and global investors. It is why new-age entrepreneurs think of company formation in Singapore.
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According to a report, Singapore has birthed at least 22 unicorns, surpassing the combined total of the last eight years. Some of the industry-leading tech start-ups that have emerged as unicorns in the nation’s technology ecosystem are Carro, PatSnap, Nium, Cove, Trax, Grab, Acronis, Zilingo, Circles Life and Carousell, among others.
Furthermore, there is a huge concentration of investors coupled with the vast availability of funds in Singapore which further boosts the growth of the Singapore ecosystem. The local ecosystem benefits from over 600 accelerators, incubators and investors.
These are some of the major reasons why a lot of home-grown start-ups as well as overseas start-ups have relocated their base in Singapore. To name a few, Grab, Konigle, Interviewer.ai and Privyr are some of the tech start-ups that have relocated to Singapore.
In 2022, the economic output of the technology sector is anticipated to cross $5.3 trillion. The tech-savvy companies and entrepreneurs are leaving no stone unturned to leverage this opportunity.
The above mentioned facts and data very much prove that this is the right time for you to register your tech start-up in Singapore.
Singapore is Shaping the Future of Technology Start-Ups
Singapore has always been at the forefront of preparing for the digital future. The setting up of Punggol Digital District ( PDD) is a testament to Singapore’s reputation as the region’s digital innovation hub. It depicts Singapore’s efforts toward Smart Nation and digital economy plans.
Opening in 2024, the district will serve as a living hub for companies, students and the public to test digital and smart living solutions.
Some of the top global companies like Delta Electronics Int’l (smart living solutions), Boston Dynamics (robotics design solutions), Group-IB (cyber security services provider) and Wanxiang (blockchain solutions) along with a network of tech associations have already confirmed plans to set up their bases in Punggol Digital District.
In one of the PDDevents, Singapore Minister for Trade and Industry Minister Gan Kim Yong said, “The ecosystem will be further strengthened by the Cyber Security Agency of Singapore (CSA), Government Technology Agency (GovTech) and a network of tech associations. Together, we hope to create a vibrant ecosystem that promotes opportunities for collaboration in the digital technology space.”
His statement gives more power to Singapore’s first smart business district and promises an even better future for the technology sector in Singapore.
Guide to Incorporating Your Business in Singapore: Essential Checklist
Why Choose Singapore for Tech Start-Up
Strong IP Protection Laws
Conducive Testbed for Innovation and New Technologies
Vibrant and Thriving Technology Ecosystem
‘Smart Nation’ Initiative
Under the ‘Smart Nation’ initiative, the Singapore government has launched Digital Economy Framework to transform itself into a digital-based society. It is becoming a tech hub for future technologies. Some of the strategies followed by the government that supports the initiative include:
- Establishment of a high tech ecosystem to boost the number of local tech start-ups.
- Digitalisation of existing domestic businesses to spur economic growth.
- Tax Exemption Scheme for local companies incorporated in Singapore for the first three years. They can claim corporate tax exemption of up to 75% on their first S$100,000 taxable income and up to 50% on their next S$200,000 taxable income.
Ease of Doing Business
Funding Support from Government
The government in Singapore offers various attractive grants, incentives and funding schemes that assist entrepreneurs and start-ups to launch and expand their operations from Singapore. Enterprise Singapore is a government agency supporting the growth of Singapore enterprises. Action Community for Entrepreneurship (ACE) is responsible for driving entrepreneurship and innovation in Singapore. The organisation helps Enterprise Singapore to offer grants to start-ups.
Minister for Trade and Industry, Gan Kim Yong said, “The Government is committed to supporting research and innovation. Under the Research, Innovation and Enterprise 2025 masterplan, or RIE2025, the Government will invest S$25 billion to anchor Singapore’s positioning as a Global-Asia node of technology, innovation and enterprise.”
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Substantial Grants and Incentives for Tech Businesses in Singapore
Startup SG
Startup SG Tech
Start-up SG Tech scheme acts as a platform for entrepreneurs to access local support schemes. The scheme is specifically targeted at tech start-ups. It provides early-stage funding to local Singapore companies for commercialising proprietary technology ideas.
The scheme aims to offer funds for Proof-of-Concept (POC) and Proof-of-Value (POV) projects. POC projects can avail grants up to S$250,000 if the project is designed for testing the technical and scientific viability of new technology. Whereas, POV projects can avail grants up to S$500,000 if the project is designed for testing the commercial viability of a lab-proven technology.
Start-ups that meet the below-mentioned criteria are only eligible for Start-up SG Tech scheme.
- Core R&D activities to be carried out in Singapore
- The company should be incorporated within the last 10 years at the time of grant application
- Company is not a subsidiary of a corporate entity at point of incorporation
- Group annual sales of the company is not more than S$100 million or the group employment size is not more than 200 people
- The local shareholding of the company should be minimum 30%
Startup SG Equity
Startup SG Equity scheme aims to stimulate private sector investments in innovative Singapore-based technology startups. The scheme is specifically targeted at general tech start-ups and deep tech start-ups. While general tech start-ups are companies that use existing technologies to provide an online solution for an offline problem, deep tech start-ups are companies that deal with high level issues and bring advanced solutions to complex challenges affecting humanity.
The scheme aims to assist start-ups engaged in technology innovation to access funding from private investors. It is a co-investment scheme in which the Singapore government will co-invest with private investors in start-ups that require significant capital expenditure and time to be commercially viable.
Singapore government will co-invest in a 7:3 ratio i.e., the government will offer 70% funding in an initial investment round of S$250k to the start-ups that are improving existing technologies. At a later stage, the government will co-invest in a 1:1 ratio i.e., it will invest S$1 for every S$1 invested by private investors up to a maximum of S$2 million.
For deep tech start-ups, the government will co-invest in a 7:3 ratio i.e., the government will offer 70% funding in an initial investment round of S$500k. At a later stage, it will co-invest in a 1:1 ratio i.e., the government will invest S$1 for every S$1 invested by private investors up to a maximum of S$4 million. In the last stage, it will co-invest in a 3:7 ratio i.e., the government will invest S$3 for every S$7 invested by private investors up to a maximum of S$8 million.
Start-ups that meet the below-mentioned criteria are only eligible for Startup SG Equity scheme.
- The company should be Singapore based and the core operations must be carried out in Singapore
- The company should have been incorporated as a private limited company for less than 10 years
- The company should prove that its products or services and applications offer substantial innovative and intellectual property
- The company should have the potential for high growth and show its ability to scale in the international market
- The company should not be a subsidiary or a joint venture
- The company should have a paid-up capital of minimum S$50,000
- The company should not be involved in illegal acts or acts that are against the public interest such as gambling, tobacco-related products etc.
- The company should have identified an independent third-party investor
Incorporate your Tech Company in Singapore with IMC Group
How to Incorporate Tech Startup in Singapore - FAQ
1) How do tech start-ups get funding in Singapore?
Tech start-ups in Singapore get funding via the following methods:
- Cash grants
- Government funding
- Tax incentives
- Angel investors
- Venture capitalists
- Incubators
- Accelerators
2) How do tech start-ups benefit from start-up schemes and grants?
- Quick access to funds
- Eases cashflow
- Provides the capital needed to perform key business activities like conducting market research and Research & Development
3) What are the different business structures for tech start-up registration in Singapore?
- Private Limited Company
- Limited Liability Partnership
- Limited Partnership
- Partnership
- Sole Proprietorship
4) Which is the ideal business structure for tech start-up registration in Singapore?
5) What are some of the key considerations for starting a technology company in Singapore?
When you have decided to launch your tech company in Singapore, a few questions that you might need to ask yourself are:
- What are the associated risks? Does the technology have clearly defined applications and a definable market?
- Is it going to be a disruptive technological innovation? If not, which category will it fit into?
- Who will own the intellectual property rights?
- When can the product hit the market?
- Will you be the sole founder or group of founders?
- What will be the role of founders?
- Whether it will be a small sustainable business or grow as a company or go for public listing or position itself for acquisition?
- What will be the initial valuation of the company? Will there be a need for private investments for long term growth?
- Do you want to limit your liability?
