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Why Should You Consider Incorporating Your Tech Start-up in Singapore?

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Why Should You Incorporate Your Tech Start-up in Singapore

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.

Tech Startups in Singapore

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.

Deep Tech Funding

The government is also making every effort to develop Singapore into the world’s first truly ‘Smart Nation’. The Infocomm Development Authority of Singapore (IDA) which looks after the technological sector is on a mission to build an innovation driven economy where technology start-ups have a crucial role to play in bringing innovation and vibrancy into the tech ecosystem.

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.

Singapore: The Smart Choice for Your New Business

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.

Why Choose Singapore for Tech Start-Up

  • Strong IP Protection Laws

Singapore has successfully positioned itself as a ‘global IP hub in Asia’, with a range of programmes to accelerate the patenting process to match up to the demands for IP rights worldwide. Singapore company incorporation enables you to protect your innovative tech ideas through strict IP laws.

  • Conducive Testbed for Innovation and New Technologies

With a population of around 6 million, Singapore is considered a perfect test bed for new technologies and for testing your innovative tech ideas. It is also seen as a gateway to access the broader Southeast Asia market opportunity. This is one of the prime reasons that attract creative and innovative entrepreneurs to locate their start-ups in Singapore.

  • Vibrant and Thriving Technology Ecosystem

Singapore’s ecosystem of open innovation enables technology businesses to thrive in a digital economy. Leading tech companies like Facebook (now META), Amazon, Apple, Netflix and Google have their bases in Singapore. This gives an opportunity to start-ups to draw on cutting-edge research and also connect with thought leaders in their respective industries.

  • ‘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:

  1. Establishment of a high tech ecosystem to boost the number of local tech start-ups.
  2. Digitalisation of existing domestic businesses to spur economic growth.
  3. 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

The start-up culture in Singapore is supported by the forward-looking government that ensures ease of doing business. Singapore has consistently been recognized as the easiest place in the world to conduct business. In fact, as per the ‘World Bank Annual Ratings 2022’, Singapore is ranked at 2nd position among 190 economies across the world in the ease of doing business. Also, as per the Economist Intelligence Unit’s ‘Business Environment Rankings, 2022’, Singapore ranks 1st in the Asia Pacific and the world for having the best business environment.

  • 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.”

A Complete Guide for Doing Business in Singapore

Substantial Grants and Incentives for Tech Businesses in Singapore

Some of the grants offered by the government agencies to tech start-ups in Singapore to accelerate their development and fund their operations include:

Startup SG

Startup SG is a SPRING Singapore-led programme that unifies an array of start-up support grants and schemes under an umbrella initiative. The programme has six unique pillars that deal with the various aspects of a start-up ecosystem. Let us take you through each pillar of the Startup SG programme in detail so that you can tap on these schemes to avail financial, talent and capability support if you plan on starting a new company in Singapore.

  • 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%.

Start-up SG Tech offers grants to companies in the sectors such as advanced manufacturing and robotics, biomedical sciences and healthcare, food science and technology, agritech, information and communications technologies, precision engineering, transport engineering and clean technology.

  • 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

With easy and efficient access to IP protection laws, testbeds, grants and resources, Singapore is the most ideal destination to incorporate your tech company and establish your presence in Asia. If you need help with your technology company formation in Singapore, get in touch with IMC Group and find out more about our company incorporation services.

Singapore Tech Landscape at a Glance

How to Incorporate Tech Startup in Singapore - FAQ

Tech start-ups in Singapore get funding via the following methods:

  • Cash grants
  • Government funding
  • Tax incentives
  • Angel investors
  • Venture capitalists
  • Incubators
  • Accelerators

Tech start-ups benefit from start-up schemes and grants in the following ways:

  • Quick access to funds
  • Eases cashflow
  • Provides the capital needed to perform key business activities like conducting market research and Research & Development.

You can register your tech start-up in Singapore with any of the below-mentioned business structures:

  • Private Limited Company
  • Limited Liability Partnership
  • Limited Partnership
  • Partnership
  • Sole Proprietorship

The most ideal business structure for tech start-up registration in Singapore is a private limited company. It is dynamic and scalable. Moreover, a private limited company also limits your liability to your share capital.

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?

If all the documents are in order, incorporation of a technology start-up in Singapore takes only 1 to 3 days.

Yes, it is mandatory to have at least 1 local director who is either a natural resident of Singapore or a permanent resident or holder of an Employment Pass, Entre Pass or a Dependant’s pass.

As per provisions of the Companies Act in Singapore, you can incorporate a tech company in Singapore with just S$1 share capital. You can increase the share capital in the future as per your choice.

You can incorporate a tech company in Singapore with a minimum of one share, S$1 paid-up capital, one shareholder, one local resident director, and a local registered address.

Private limited company formation in Singapore requires at least 1 local director who is either an ordinarily resident in Singapore or a Singapore citizen or permanent resident in Singapore or holder of an Employment Pass or Entrepreneur Pass. The person should be 18 years of age or above.

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