The proportion of tech enterprises below five years old has gone up as a result.

Also, the survey found that 61% of all new enterprises in Singapore survived beyond three years, comparable to the US (59%) and several European countries (60%).

These results were revealed by Singapore’s Deputy Prime Minister Teo Chee Hean in a speech  on 13th October, at the annual Techventure conference held at the Marina Bay Sands.  The event gathers entrepreneurs and investors from all over the world to discuss the latest trends in technology.

The Deputy PM also mentioned that startups in Singapore face the problem of being unable to secure funding for expansion. In my opinion, this could indicate that the growth of the venture capital and angel investing industry has not kept pace with the sheer increase in volume of new tech enterprises.

At a separate press conference later in the day, NRF CEO Francis Yeoh highlighted the lack of funding as the major reason why the government has stepped in with funding schemes of its own.

The NRF Technology Incubation Scheme (TIS) for instance, works with selected startup incubators in Singapore to provide funding to promising enterprises. Incubators have autonomy to decide who gets funding, with the government co-investing up to 85% of the total amount.

Mr Yeoh said that the scheme for incorporating the best of both worlds — the government contributes the money, while private sector investors decide who’s the hottest ticket in town.

The government would consider lessening their involvement in the startup ecosystem here when more private investors step in. He maintains, however, the government will always have a part to play.

“Our role should be to facilitate. We should not be performing the role of the venture capitalist,” he says.

Besides funding issues, another problem that startups are facing at the moment is securing top talent. Some entrepreneurs have complained that the arrival of global companies like Google and Facebook to Singapore means that small enterprises struggle to find top engineers.

While attracting foreign workers to the country is a solution to the talent crunch, the general population in Singapore have grown increasingly resistant to the idea, accusing them of stealing jobs and places at universities. The government, in turn, has responded by raising foreign worker levies, although critics see this as a blunt instrument that hurts enterprises unfairly.

It’s unclear at this moment how the government will balance political interests with business needs, although they are moving full-steam ahead when it comes to providing more capital.

The Deputy PM said in his speech that the government is in the midst of fine-tuning the details for a Co-Investment Programme, with S$500 million  (US$390 million) in funding contributed equally by the private and public sector.

The fund will be managed by Heliconia Capital Management, a fully-owned subsidiary of Temasek Holdings, the government’s investment firm.

The aim of this fund is to catalyze the expansion of local SMEs as they enter foreign markets.

“I hope that Singapore-based enterprises will take advantage of this new initiative to push ahead with their next stage of growth,” he says.

7:45 AM Registration & Breakfast
8:15 AM Presentation
8:40 AM Q & A
8:45 AM Networking Breakfast continues

HIGHLIGHTS
1. Discuss the various situations under which minority
shareholder can compel a purchase of its shares.
2. Liquidation of a company to remedy an infringement
of its rights.

Eddee Ng is a partner with the Firm’s Litigation and Arbitration and Banking and Insolvency Practice Groups. He graduated from the National University of Singapore with a Bachelor of Laws (Honours) degree in 1996 and was admitted as an Advocate and Solicitor of the Supreme Court of Singapore in 1997.

Eddee started his career as a litigation lawyer in a number of high profile defamation cases. Since then he has handled a wide spectrum of corporate and commercial litigation cases. These include matters as diverse as:
- advising and/or acting for a number of government-linked organisations in respect of disputes arising out of infrastructure projects in Indonesia;
- advising and acting for a state-linked entity in China in respect of a dispute arising out of the sale of soy bean from an international commodity conglomerate to the state-linked entity in China;
- advising and acting for a joint venture partner in respect of disputes in relation to investment in an industrial park;
- advising and acting for a Singapore listed company in respect of fraud committed by employees in respect of the company’s Mexican subsidiary;
- advising and acting for a Middle-Eastern bank in relation to fraud committed by a bank employee where funds were transferred to Singapore;
- advising and acting for a government ministry in relation to numerous issues arising out of the construction of a government complex;
- advising and acting for a major coal producing company in Indonesia in respect of disputes arising from the supply of coal to a Hong Kong-based entity;
- advising a major export and import bank in relation to the Debt Standstill of a company;
- acting for a major international hotel chain in relation to the aborted acquisition of a hotel in Bangkok.
- acting for a major luxury resort chain in relation to dispute arising from an investments made by private equity funds.

Eddee has also acted in a number of matters which proved to be the first cases of their kind in Singapore. These included a claim for the wrongful seizure of property and a case which dealt with the right of an execution creditor to conduct the sale of secured property vis-a-vis the secured creditor. These cases received favourable outcomes after being heard by the Court of Appeal.

Eddee’s special interest continues to be in shareholder disputes. In 1998 and 1999, he acted in a high profile minority shareholder’s action where complex issues of law and fact arose. In 2001, he acted for majority shareholders in relation to an application for an injunction to restrain the payment of an interim dividend of S$90 million. To-date, Eddee gives talks on the minority shareholders’ remedies under law.

Eddee’s other special interest is private banking disputes. Eddee has acted for both banks and banks’ clients in numerous matters involving a wide range of investment products. In 2004 and 2005, together with another Partner, Eddee assisted PriceWaterhouseCoopers in the investigations of the oil trading losses of China Aviation Oil which amounted to US$ 550 million. This won the Asian Legal Business award for South East Asia Deal of the Year in 2005. Eddee is a member of the Law Society and the Singapore Academy of Law.

When: Thursday 19th May 2011
Time: 745am-930am
Where: Singapore Cricket Club, Gilmour Room, Connaught Drive, Singapore 179681
Fees: SVCA Member: S$35/pax; BANSEA/TIE Member: S$45/pax; Non Member: S$65/pax

Register here by 9th May. Please contact Miss Sylvia Koh at +65 6224 7001 should you need more information.

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Probably, as an investor and entrepreneur myself, I have never believed that you should pay consortiums or groups of angels and venture capitalists to pitch. It is totally contrary to the spirit on how the entrepreneurial ecosystem should work. Sometime back, Jason Calacanis, CEO of Mahalo and also host to “This Week in Startups” took on angel groups in US, for example, Keiretsu Forum, Angels Den and Tech Super Club. According to Jason Calacanis, get entrepreneurs to pay for pitching is ridiculous. As a result of taking on these groups, Jason Calacanis led the beginning of an Open Angel Forum to provide a new model for entrepreneurs to pitch for free against these groups.

It is not in my place to offer any opinions about Angels Den, but I will state my opinion why entrepreneurs should not pay investors to pitch.

• Renowned Business Angels and Venture Capitalists who created big companies don’t do that: Ask the famous business angels like Joi Ito or famous venture capitalists from Sequoia Capital, Kleiner Perkins, Benchmark Capital and etc, you do not hear that they require the entrepreneurs to pitch. Instead, they are ready to buy the entrepreneur a meal or drink and spend the time to listen to the ideas of the entrepreneurs. These are the same angels and venture capitalists who produce Google, Facebook and Twitter. None of the top notched companies pay angels to pitch their ideas. Consider another argument, entrepreneurs are trying to set up companies with limited resources and financing, and yet these groups make them pay to find investment. In fact, a lot of entrepreneurs and developers enjoyed the free Neoteny Conference organized by Joi Ito last year. The people who attended (including myself) even learned more abut term sheets and valuation. Try to make a guess how much it cost to get Joi Ito to talk about start-ups and new venture financing: Absolutely Free! and I did not add the free lunches and coffee breaks too.
• Even agencies Singapore Government make it free for entrepreneurs: If you have recently watched the iMatch conference, where MDA organized entrepreneurs in Singapore to pitch in front of an international consortium, you do not hear the Singapore government will tell you to pay for pitching. In fact, they enlisted the services of the incubators in iJAM and several business angels to help the companies to prepare their presentation for the investors. It’s probably one of the things I praised the government agencies like SPRING and MDA are doing with the iJAM and TECS schemes.
• If you fail many times to get an investor, you will end up losing more money doing this: Here is a way to think about this. If you pitch your idea and the investor did not respond to you, it just means that he or she has no interest to invest in your company. Your job is to iterate from the reason to why the investor did not think that it’s a good proposition to invest in your idea. If you are serious about your start-up, you will put your own money to make it work than to spend the money to pay some middle men to get you investors who may or may not put money into your company.

I will leave the entrepreneurs to decide whether to engage with these groups. Ultimately, in the ecosystem, there must also be a natural selection to decide the weak and the strong. Perhaps, having these groups help to make that distinction.

• Do not sound arrogant to investors you meet: I understand that ego is part and parcel of the trait of an entrepreneur. However, there is a base line which each investor have with arrogance. Arrogance can deter an investor away easily. Never make the investor feel that they owe you a living or some entitlement. If you made it sound that your investor owes you a living, it is almost certain that he or she will never put a single cent in you. The problem with arrogance is the following: if you do not sound humble even dealing with him, how can he have the faith to entrust that sum of money with you? It also means putting checks and balances on you can be a pain for the entrepreneur to manage. I have seen very experienced investors turn down good deals because they know that they will incur more pain and depression dealing with an arrogant prick.
• Do not tell the investor that you don’t need money: The most common mistake that an entrepreneur made is to tell the investor that you don’t need money. Oftentimes, you don’t need it when it is offered to you and when you really need it, the person who offered the money will say, “Good luck with your ventures” which implies that he or she is not going to put money in you. It is alright to be polite to say that you are planning for future investments and tell the interested party that he or she will be informed, rather than outright tell the investor that you don’t need money. I have a story where a company was offered US$10M for 10% equity when the product was launched. They really did not need the money and told the investor that they don’t need it. In the end, when they are in cashflow problems, they ended up selling the company for a much lower price.
• Do not tell the investor that you are just checking them out: This is something that I learned the hard way in Asia, and I bet no business school actually teaches that. I once hear an interesting innovation by an entrepreneur in a business plan competition some years back as a judge. The entrepreneur was queried about the business model and the technology by the judges. After minutes of probing, we realized that the technology is not ready for consumption and we ask the entrepreneur why he took part in the competition, and he said that he was checking the investors out. The funny part is that when the judges discussed the team, we all agreed that they should be the lowest scoring team because they violated the cardinal rule of telling investors that they are “checking them out”.
• Do not ask the investor to share his contacts or share the privileges his portfolio companies receive with you: I often think that it is just basic etiquette that when you reject someone for investment, you should not ask for more. I have the unfortunate experience of being asked to share my contacts with investors or the privileges of the link-ups my portfolio companies have to China and other parts of the world. It happened with many people who I taught that they are professional enough to realize that it is not appropriate to do that. Let me put it in another way, if you made so much effort to build these contacts as an investor, will you share it if there is no value proposition for your business and even worse, you need to account to the other partners in your firm? Actually, when I was living in Cambridge and visiting Boston to meet potential investor, I was told by mentors and experienced entrepreneurs that there is a basic etiquette. Of course, some young entrepreneurs in Singapore think that they are being smart to squeeze something out from the investor, which backfired on them practically all the time. If you ask someone for something without reciprocation, you will not expect that someone will give it to you. Not to mention that there is the professional reason that the investor has to keep his core competitive advantage to run his funding business. That being said, if you meet up with one of the investor’s contacts by your own merit and ask the other person to refer to you for reference, that is allowed and completely appropriate. In fact, some businesses ended up getting funding just on that account where the investor did not get directly involved.
• Do not press your investor or even tell him how to conduct his business: Never try to press your investor to give you money and tell him how to conduct his business. Even if the process is taking a long time, you should not lose patience and demand an ultimatum from the investor. That is just suicidal and if not stupid. Perhaps, it might be easier to share with you the other side of the story. Every investment an investor makes, depending on the stakeholders who they need to account for, they need to ensure that every stone turned and every page flipped so that their money will gain returns from the opportunity.

I am not advocating the entrepreneur not to negotiate and suck up to the investor without principles. The essence is that there are issues which are negotiable. The equity stakes and some aspects of the term sheet can be debated and argued. If you don’t think that the valuation is fair, you can always walk out. Here is the part which I find it ironic when I do my deals. The shortest deals I have concluded within a span of a month is inversely proportional to the potential of that deal. In fact, those companies are the best in my portfolio that has potential for greater heights. Sounds strange, partially because the entrepreneurs made none of the mistakes above and in fact, have done another company before this venture. Hopefully, it might help those to bear this in mind when approaching potential investors.

Article photo courtesy of paulsynnott