27 Sep We Need Angel Investors In Singapore
I have a mechanical engineering degree but I have never done an engineering job.
I have never thought that I would be an entrepreneur but I became one.
BigFatPurse is almost 3 years old and I must say it has been a good and lucky ride thus far. Being an entrepreneur has taught me to count my blessings more readily.
Just as I thought that I would never touch engineering again, BigFatPurse is evolving into a tech company, developing a software solution to help you invest better.
The lesson is, never say never.
Is Tech the Silver Bullet
Singaporeans are warming up to the tech revolution as the Government has been obvious in positioning it as a new economic thrust.
I am not an expert in economics but I try to understand the reason for the Government’s move.
We want better jobs and pay, and they can only be fulfilled by a growing economy. How do we grow the economy then?
We strive to increase the output as much as possible. While a country is developing, it might be easy to increase output by putting more capital to work. This process is known as capital deepening and at some point in time, it is no longer efficient to add more capital as the gain in output is getting smaller. Developed countries like Singapore is at this stage where capital deepening is not as effective as before. The better option is for us to adopt technology in order to make a big improvement in output.
I have heard a myriad responses to Singapore’s tech pursuit.
The believers are all for it and embracing anything related to tech. The success stories of Google, Facebook and Tesla are inspirational. It is a dream of building our own Silicon Valley in sunny Singapore. Given that our country has one of the highest smartphone penetration rate, it is a no brainer that our people are able to adopt new technologies readily. We also have one of the most educated population in the world, which would serve a good foundation to develop technologies to boost productivity in our economy and reap efficiencies in our lives. To top it up, Singapore was surveyed as the world’s most attractive country for expatriates, which is a good position to attract talents to work and invest here.
The dream is sexy but skeptics do not believe we have sufficient quality people in Singapore who are willing to take the risks associated with entrepreneurship. On one hand we want the brightest people in the civil sector to govern and administer, on the other hand we want brilliant people running businesses. Is our talent pool large enough to go around? Some would even argue that policies and incentives can only do that much, our culture is not for risk taking, and would need a long time to shift. Skeptics would imagine a fresh out of university lad clad in a company branded t-shirt, and his job is to build castles in the air. Seriously, get a proper job, they say.
Both sides have their merits and no one would know if Singapore’s bet on tech is going to work out.
Another lesson I have learned in entrepreneurship is that never do, never know.
Founders and Funders
For the tech initiative to work, entrepreneurs alone are not enough. Startups need funding.
Over lunch, I asked my friend about the situation in Singapore – are we lacking entrepreneurs or funding.
He told me straightly it is the lack of entrepreneurs, specifically great teams with good ideas. He also said that capital is aplenty.
I wouldn’t challenge that as I have no stats to prove a case. But I believe bulk of the capital are available at the later stages of the startup lifecycle.
Funders and Founders did up a very nice infographics about the various stages of funding if you aren’t familiar with terms like seed, series A….
My perception is that the funding at the seed stage is not as much as series A and beyond. Angel investors, who are typically wealthy individuals, would usually be the ones who invest at the seed stage. Venture Capitalists (VCs), who are professional fund managers, would invest in the later stages. The larger and renowned VCs may not even enter until series D. Hence, the money is in the later stages.
It is indeed more risky for investors to get in at an early stage. Entrepreneurs have got little to prove but yet need money to build something worthy. It is a catch-22 situation. If lucky, entrepreneurs can convince a few angel investors to fund them for the development of their product.
Angel investors are interested in startup investments for tangible rewards like a 100x return, or for altruistic reasons such as backing entrepreneurs or ideas they like. As funding in the early stages are lesser, angel investors play an important role to provide capital to the deserving startups. They are the initial fuel for the sparks. Else there won’t be flames.
As such, we have organised an Angel Investing Course for aspiring investors to learn about the practical aspects in startup investing. The course will be conducted by an active angel investor and venture capital partner. BigFatPurse readers can use the discount code “BFP” when enrolling into the course.
One more piece of good news is that the Government has introduced the Angel Investors Tax Deduction (AITD) scheme. The aim is to incentivise qualified individuals to invest at least S$100k into startups. Angel investors can enjoy a tax deduction of 50% of their investment amounts, up to $250k.
At the end of the day, we hope we can play a part to level up the angel investing space in Singapore. It would indirectly help more entrepreneurs make their ideas a reality and hopefully going on to greater success.
We need both driven entrepreneurs and smart money.