Funding Options China & Singapore

Agenda

• Funding in Shanghai, China Funding environment in China Funding options in Shanghai, China

• Funding in Singapore Funding environment in Singapore Funding options in Singapore

• Comparison between the Two Countries

• Funding Options for Our Business Venture

Before 2000, many SMEs and start-up enterprises in China have limited access to government and private finance

Reasons• Most of them face important credit constraints • Under established management• Low end technology

CHINAFunding Environment for SMEs in China

A Gradually Changing Funding Environment In 2000, a nationwide credit assessment system for SMEs was proposed -- “Several suggestions for encouraging the development for SMEs in China”(Chinese Government Document [2000]59)

In 2010, the “Guidelines for propelling the development of finance guarantee agency in Shanghai” was issued (Shanghai Government Document [2010]3)

CHINAFunding Environment for SMEs in China

Government AssistanceGovernment Innovative Funds Government International Market Development FundsFinancial Leasing •Loans •Investors Privately Equity Fund, Angel Capital, Venture Capital

CHINAFunding Options in Shanghai, China

Beneficiary -- High-tech companiesAim -- To support the transformation from high- tech into commercial stage

Three Types- Angel Capital- Venture Capital Guiding Fund (A collaborative investment between government and other

investors) - Credit Risk Compensation Fund

(An uniformed investment platform established by government)

CHINAGovernment Innovative Funds

Beneficiary -- Companies with own intellectual property Aim -- To encourage them to enter the global market, especially in Latin America, Africa, Southeast Asia and Middle East

In Shanghai, this fund is administrated by • Shanghai Foreign Economy and Trade Committee

• Shanghai Finance Bureau

CHINAInternational Market Development Funds

CHINAFinancial Leasing• Also known as Equipment Leasing /Modern

Leasing- Helps start-up companies to rent manufacturing equipment

with a small amount of money

• Shanghai SMEs Services Center (www.pdsc.org) - Function as an intermediary between leasing companies and

SMEs

• Shanghai affiliate of China National Investment & Guaranty Company

- Guarantee leasing activity  (http://www.guaranty.com.cn/about/jtjj_view.asp?id=10275 )

• Attaining commercial bank loan is the first choice for most start-up companies in Shanghai

• Many banks provides convenience - China Merchants Bank: the small enterprise credit loan

center in Shanghai(2009)- Industrial and Commercial Bank of China: the network

revolving loan (a creative way, first be introduced in 2010)- Shanghai Bank: no collateral loan

• A trivial procedure - Applicants need to get associated documents from the

Industry and commerce bureau, the taxation bureau and find guarantee agency

CHINALoans

CHINAPrivately Equity Fund

Privately equity fund is an important part inin Shanghai Capital Market

For small companies it’s a flexible andfast method to get funds

Min Sheng Road, Shanghai–“Privately Equity Fund Street”

CHINAVenture Capital

Venture capital in Shanghai received unprecedented progress since 1998 after the policy “Several suggestions of increasing the development of venture capital in China”

In 2010, the majority of VC in Shanghai goes into technology, energy, healthcare and IT fields

Cheng Siwei, (2008).Venture Capital, Ren Min University of China

“The best place to do business is Singapore”, says a World Bank Index which ranks economies on their ease of doing business. Singapore government has made relentless effort to build a secure and conducive business environment.

SINGAPOREFunding Environment in SINGAPORE

• Government Assistance• Loans• Investors (Angels/VC/Equity Funds)

SINGAPOREFunding Options in Singapore

Beneficiary– – Start-ups of all stagesAim– – Help entrepreneurs to gain access to loans, equity financing and incentives

Two Types of Assistance• Seed Funding for Start-ups

- Business Angel Funds (BAF)- Early-Stage Venture Funding Scheme (EVFS)- SPRING Startup Enterprise Development Scheme (SPRING SEEDS)

• Grants for Start-ups- ComCare Enterprise Fund (CEF) – Social Enterprise- Ideas.inc Business Challenge – First time entrepreneur between 18 to

26 yrs old- Young Entrepreneurs Scheme for Start-Ups (YES! Start-Ups) – Firs time

entrepreneurs below 26 yeas old

SINGAPOREGovernment Assistance

Obtaining a loan from banks and financial institutions will not be easy for startups. Startups will find it easier to apply for working capital loans than any other type.

Three Types of Loan (easier for startups to obtain)• Friendship Loan - From friends or family members• Working Capital Loan - From banks/financial institutions for quick cash • Government Assist Loan - Micro Loan Programme up to $100,000

SINGAPOREBank/Financial Institution Loans

Finding investors is a good option for startups which have little assets to put up as collateral. Startups in different stages may need different type of investors.

Types of Investors• Angel Investors

- Networking Platforms like SCCCI, ASME- Matchmakers like Business Angels Network or ACE- Government agencies like BAF or SEEDS

•Venture Capitalists- Matchmakers like Deal Flow Connections or SVCA- Government agencies like EDBI or I.MATCH

SINGAPOREInvestors

China SingaporeGovernment Grants

•Innovative Funds•International Market Development Funds.•Financial Leasing

Government Grants•Industry specific funding•Startup grants like YES!Startup for individual entrepreneurs.

Commercial Loan•First Choice for startups

Commercial Loan•Tied up with government agencies

Private Equity Funding • Privately equity fund is a relatively new emerging fund comparing with others

Private Equity Funding • Banks, financial institutions,

insurance and investment companies have special funds to invest in businesses.

Angel Investors/VC•VC usually invest in companies with a novel technology or business model in high technology industries.

Angel Investors/VC•Angels are most likely to invest in startup.

Funding Options Comparison

Similarities: • Government grants for startups to encourage commercialization of

innovative products and services.

Differences:• Commercial Loan to Startups is more common in China. Obtaining a loan in

Singapore may not be easy without collateral. • Loan facilities offered by Singapore banks are mainly collaborating with

government agencies like SPRING(e.g. Micro Loan). • Singapore government offers grants/helps to individual entrepreneurs as

well.

Conclusion: Singapore government offer a wide variety of grants and assistance, depending on the industry and stage of the startups.

Funding Options Comparison

Our Options• Angel Investors• Government Seed funding like EVFS• Government Grants – YES! Start-Ups or ideas.inc Business

Challenge

Why?• Startups are often related with high risk due to the instable

income and cash flow. Thus, it is not easy for start-ups to get access to bank loans in Singapore.

• Singapore government has developed a batch of financial programmes to encourage entrepreneurs in starting point like Young entrepreneurs scheme provided by Spring Singapore.

• Angel capital as a flexible way for start-ups.

Funding Options for US

Thank you!