Jun 10, 2014

    Govt grants crowding out angel investors

    WHILE entrepreneurs have welcomed the growing pool of government grants for start-ups, some angel investors here say that they are feeling "crowded out" from the scene.

    At the 21st Singapore Economic Roundtable, jointly organised by the Institute of Policy Studies and The Business Times, angel investor Tan Chin Hwee said that the Government, through its generous financial support for start-ups, has unwittingly made it harder for private investors to get in on the action.

    "On the ground, (the Government) is sometimes crowding out the private investors... Quite a few (start-ups) hide within research labs, and never really go out into the real world to meet people like us, to raise the money that is required," said Mr Tan, a veteran investor behind a number of start-ups in Silicon Valley, Israel and South Korea.

    He also argued that such early and immense support from the Government had allowed less innovative companies to scrape by.

    "Many of these Singapore companies, if they fail, they go from incubator A to incubator B, and if they fail again they go to incubator C. It doesn't create opportunities for people like us, because at the end of the day, (these start-ups) continue to have that link back to the mothership. Many of them may not want to innovate, (and are) just depending on (government) grants to survive," said Mr Tan, voicing a view held by other angel investors in Singapore.

    Edwin Chow, executive director of Spring Singapore, said that although Mr Tan's point was "well-taken", he noted that it all depended on "which side of the fence" one is on.

    Mr Chow - who was a speaker at the event - said that from the Government's point of view, "by supporting so aggressively the individual inventor and entrepreneur... we have sort of encouraged more companies to form".

    "And we are beginning to see success stories," said Mr Chow, who oversees Spring Singapore's innovation and start-ups group as well as Spring Investments.

    Nevertheless, he conceded that going forward, the Government may need to tweak its funding approach to leverage both private and public funding in order to support burgeoning enterprises.

    But for companies which may need more sustained support for a longer period of time - such as those in the medical technology sector - the Government will "maintain" funding, said Mr Chow.