A Map On Venture Capital In Singapore

In a turbulent and challenging climate now, it is unlikely to find funding via the traditional venture capital route. Wong Meng Weng, one of the Singapore entrepreneurs who have made his mark in the Valley (and now back in town) has recently created a map on the venture capital companies in Singapore. He has also presented this picture in a talk “Funding WTF” via the recent Barcamp Singapore 3. For those who are planning to seek venture capital funding, this might be a good map to look and get some perspective.

Looking at the map with the stage of company growth (y-axis) plotted against the actual amount of funding (x-axis), one can simply break up the fundraising in a few stages. For the sake of discussion, it might be good to just look at seed and early stage.

• Seed stage investors: In this phase, the first stage is to look at seed stage investors which is mainly friends and family, followed by angel investors. The amount is usually not big but enough for the entrepreneur to jumpstart a product. The iJam incubators also fall into this category but specifically for the interactive digital media. One important thing to take note. Usually a sum of 50K-100K can only last you for three to six months of survival time. The alternative strategy is to bootstrap your start-up and it is more painful to control cashflow (but the rewards will be great if you succeed).
• Early stage to Series A: This phase will bring in the BAF Spectrum angel investors, Innosight, Sirius Capital followed with the new NRF venture capital entities. In Singapore, it is usually hard to get these guys to invest. The dose of reality that I often tell some entrepreneurs (who thinks that I am being mean) is that these guys don’t fund unless you have a working business that is a spinning profit 10 times more. Yes, it does not sound like an early stage investment. Strangely, unknown to a lot of people here, the venture capital situation in Europe is similar. The venture capitalists do not like to invest in potential companies but companies which are already making money. This is the biggest missing gap in Singapore when it comes to growth financing and presents the highest risk from the perspective of the investors. In fact, it is every entrepreneur’s dream to break the chasm for this funding.

In my own humble opinion, I predict that it will be extremely tough to find any money within 9 to 15 months due to the current financial crisis unless your track record in creating companies of value have been in the seven digits mark. Perhaps, it may be good to go back to the lesson about what it means to be entrepreneurial. To be entrepreneurial is to take the path which no one takes or dare to take. The key to succeed is to be the exception rather than to be norm. Hence finding a bootstrapping strategy to organically grow your start-up is not a bad idea after all. That’s where I recall a good quote from Scott McLeod in TED: “Learn from Everyone, Follow No One, Look for Patterns and Work like Hell”.

Source: Meng Weng‘s blog. :)

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