Recommendation 3.3: Catalyse the private sector to provide more growth capital

102. For enterprises based here to scale up, more smart and patient growth capital — long-term capital which brings along ideas and expertise — is needed. We should encourage a variety of private sector funding sources, including banks, VC funds and PE funds. Where appropriate, the Government can partner these funds to invest for growth.

I like the long-term and patient capital. I think Singapore has done an amazing job getting the scene going over the years with the easier early capital and all the matching. As Singapore grows up the capital also needs to grow up.

We should:

a. Enhance the financing ecosystem for the next generation of startups. The VC ecosystem should be further strengthened through a simpler regulatory framework for VC firms. Crowd funding should be facilitated as an alternative source of financing. We should widen the network of angel investors in Singapore to offer startups a more diverse support structure, and the possibility of syndicated deals.

I am not sure if crowdsourcing is the answer but no harm in trying. Good to see, and I know where that one came from, an emphasis on the angel networks and there importance in the ecosystem. Angels providing capital and experience is a big thing. Good to also see the call out on making it somewhat easier on the VC when it comes to regulations.

b. Increase supply of financing for Singapore-based firms. The Government should consider how to encourage PE players to invest more growth capital into Singapore-based firms looking to regionalise. Loans remain a key financing channel for SMEs. We should review the regulatory framework for finance companies to enhance their role as SME lenders.

Reading between the lines here. Seed and series A have a lot of capital and are deploying more than ever. B and C and exit is hard. So for Singapore to make a mark the Singaporean startups will need to go big and in order to do that they will need more capital. For the bigger goals to be realized – the reality is we don’t have enough capital.

c. Enhance the financial market infrastructure to facilitate sourcing of deals between Asian enterprises and investors. For unlisted companies, the Government should facilitate the creation of a private market platform to enable Asian enterprises to access financing from a wider network of investors. For listed companies, the Government should permit dual class share (DCS) structures while instituting appropriate safeguards to promote market transparency and mitigate governance risks. DCS listings are increasingly being considered, for example, in industries such as information technology and life sciences. DCS should be permitted for companies seeking a listing on the Singapore Exchange (SGX) while instituting appropriate safeguards to promote market transparency and mitigate governance risks.

Need even more capital but also need exits to pay it back. As Singapore continues to grow it would make sense to use the SGX to help with these issues.

d. Strengthen access to cross-border project financing for Singapore-based enterprises that are expanding overseas. The Government should build on the ESC’s efforts, such as Clifford Capital, to address long-standing challenges in cross-border project financing for infrastructure projects while ensuring that risk decisions remain in the hands of the private sector. This is for areas where there are clear gaps in market financing, such as project financing in emerging markets, and for Singapore-based small and medium infrastructure enterprises. We should also deepen our capabilities in the provision of critical supporting services, to strengthen Singapore’s competitive advantage as a regional hub for the infrastructure cluster.

Singapore has the talent and know-how to help other major cities. If this is going to get bigger, more capital is needed for specific cases. Clifford Capital is an example of the goverment putting money to work to aid in the late stage and for growth capital to expand.