Wednesday, May 25, 2011

(Note: An extended version of this will appear as a chapter in a forthcoming book on Angel Investing in Asia, edited by John Lo)

1.  Overview of Angel Investing in Singapore

As in other newly industrialized economies in Asia, business angel investing in early stage start-up companies has been relatively new in Singapore.  This is due to the fact that the phenomenon of high tech start-ups is itself relatively new in Singapore, having really taken off only since the late-1990s as the Singapore economy began its shift towards a knowledge-based, innovation-driven economy (Wong and Singh, 2008).  While business angel investment deals are known to have existed in the 1980s and early 1990s, they were mainly in the traditional trading and manufacturing sectors, as was found in a study of 29 angel investors by Hindle and Lee(2002).

While there are no reliable statistics on the number of business angel investors and their contribution to venture investing in Singapore, some indicative figures can be culled from the annual Global Entrepreneurship Monitor (GEM) study on Singapore that the author conducted for the period 2000-06 (Ho and Wong 2005; Wong and Ho 2007).  

As can be seen in Table 1, based on the Global Entrepreneurship Monitor (GEM) study, the prevalence of informal investment[1] in Singapore appears to have increased over 2000-06, with the informal investment rate rising from 1.3% of the adult population to a high of 3.5% in 2005, before falling slightly to 3.0% the following year.  Nevertheless, this was still below that of advanced economies such as USA and other Asian NIEs such as Taiwan, China and Korea (Wong and Ho 2007).  Table 1 also shows that the informal investment rate is somewhat correlated with the rate of entrepreneurial activity in Singapore, as measured by the total entrepreneurial activity (TEA) rate[2].  

Table 1  Rate of Informal Investing in Singapore 2000-06
Informal Investment Rate (% of Adult Population)
Total Entrepreneurial Activity (TEA) Rate (% of Adult Population)
Source: Wong et. al., GEM Singapore Reports, 2000-06

Several studies of advanced economies (see e.g. Wetzel 1983; Bygrave et al 2002) have estimated that the total amount of informal investment is several times the size of the formal venture capital (VC) industry.  Based on GEM estimates, Singapore is no exception.    The relative size of the informal investment market in Singapore is estimated to be several times larger than the market for formal VC investments.  Although informal investment as a proportion of GDP has fallen over time, from 2% of GDP in 2000 to just over 1% in 2006, it nevertheless far outweighs the amount of venture capital (VC) investment, which has generally been less than 0.2% of GDP from 1999 to 2005.
The GEM data suggest that the majority of informal investments in Singapore were based on social ties.  About 42% of informal investors in Singapore were related to the investees, with another 52% being social acquaintances (work colleagues, friends or neighbours), leaving only 6% to be socially unrelated (strangers or others). If we regard this last category to be true business angel investors, then the incidence of such business angel investors is probably in the range of 1 in 1000.      

2.  Development of the Business Angel Investment Community: From Individuals to Groups and Networks

2.1  The Early Growth of Business Angel Investment

While there are no reliable data on the emergence and growth of business angel investors in Singapore, anecdotal evidence suggests that the first major wave of angel investment in technology companies emerged in the mid-1990s, after a number of indigenous technology/manufacturing companies successfully went IPO.  Some of these successful entrepreneurs subsequently became business angel investors, funding the next wave of technology-based start-ups that emerged in Singapore as part of the global boom.  For example, the three co-founders of Creative Technology, arguably the first successful home-grown high tech firm in Singapore (having pioneered PC soundcard and became the global market leader), had all engaged in angel investment activities after the company went IPO in 1994, with one of them (Chay Kwong Soon) establishing a formal investment fund (Enspire Capital) to do so.  Other examples of successful technology entrepreneurs-turned angel investors in the late 1990s include Gay Chee Cheong and Tommy Goh.  After leading a contract manufacturing firm, JIT Electronics, to successful IPO and subsequent acquisition by Flextronics in the late 1990s, they co-founded a venture investment fund, 2G Capital, to invest in technology start-ups and growth companies. 

Besides entrepreneurs-turned-angel investors, a number of prominent angel investors in this first wave included senior executives of global MNC subsidiaries in Singapore or government-linked corporations (GLCs).  For example, Mr. Koh Boon Hwee, an ex-Hewlett Package senior executive and later chairman of a number of GLCs such as Singapore Telecom and Singapore Airlines, had been known to play the role of “Arch-angel”, syndicating deals that were co-invested by other senior executives who had worked with him.  Another example is Ng Hock Ching, a senior vice-president of another GLC, Natsteel Electronics, who became an angel investor in several technology-based companies after Natsteel Electronics went IPO in 1998.   

As a result of the crash in early 2000, the number of high profile angel investment deals appeared to have dwindled.  In their place, a number of new business angel investors emerged, doing smaller-sized deals and focusing on early stage high tech start-ups, including spin-offs from local universities and public research institutes.  As we will detail below, there was a trend towards the formation of angel groups and networks

2.2  Formation of Business Angel Network (Southeast Asia) (BANSEA)

The Business Angel Network (Southeast Asia) (BANSEA) was established in Singapore in 2001 by a group of Singapore-based angel investors, with loose network connections to investor groups in Thailand, Malaysia, Vietnam and Indonesia.  Inspired by the professionalism of angel groups like the Band of Angels in Silicon Valley and the Tech Coast Angels in Southern California, BANSEA’s vision is to foster the development of a vibrant, professional angel investment community in Singapore by providing a platform for knowledge-sharing and deal-syndication among investors as well as a platform for matching start-up deals with investors.   Recognizing the nascent stage of angel investing in Singapore, the founding group of angel investors decided to organize BANSEA in the form of a Public Company limited by guarantee, with membership open to all bona-fide angel investors upon recommendation by an existing member.    A board of directors is elected annually from among the members to govern the operation of the non-profit company.

The core activities of BANSEA consist of monthly/bi-monthly networking lunches, where 3-4 start-ups are pre-selected to pitch to members of BANSEA, who could also invite other investment professionals as guest to join the lunch and networking.   BANSEA focuses on early-stage companies seeking investment ranging from $100,000 to $1 million.   Interested start-up entrepreneurs can apply to pitch to the network by either submitting their business plan executive summaries to the BANSEA website, or through the introduction of an existing member.    Applicants who are not selected to make a business plan pitch may still opt to have their plans circulated to members online. 

In the early years, BANSEA took a more inclusive approach, and allowed not just bona-fide angel investors with investment track records to become members, but also rookies interested in learning to do their first deal, as well as some investment professionals such as investment brokers, consultants and deal lawyers.  This led to an increase in membership to more than a hundred.  In more recent years, BANSEA shifted towards greater professionalism, and instituted a two-tier membership (chartered members and ordinary members), with more stringency in membership qualification criteria and an increase in membership fees.  This resulted in a reduction in membership to around 50+ who are more serious investors.  

In recognition of its growing professionalism and catalytic role in the venture ecosystem of Singapore, the Singapore government agency in charge of promotion of start-ups  (SPRING Singapore) offered public funding support to BANSEA since 2007.  Under a scheme called the Incubator Development Program (IDP), SPRING provided funding for up to 70% of the qualifying cost of BANSEA operations.  This public funding support enabled the organization to employ a full-time executive director who could organize activities professionally and provide services to members to generate income.   

As part of the professional upgrading, BANSEA introduced a Start-up Mentorship Program, whereby a pool of BANSEA chartered members offer to provide face-to-face mentoring service to start-up entrepreneurs in return for an honorarium.  In addition, BANSEA also organizes training workshops for entrepreneurs and angel investment forums for members.  BANSEA also participates in various activities fostering the development of the entrepreneurial ecosystem in Singapore, with members serving as judges in various business plan competitions and providing inputs to government policy making.  BANSEA also successfully organized the Inaugural Asian Business Angel Forum (ABAF) in Singapore in March 2010, attracting more than 200 participants.

As part of the move towards professionalization, BANSEA also began compiling investment data among members since 2007.  While admittedly incomplete, the data collected by BANSEA shows that a total of 53 investment deals in the period 2007 to first half of 2010, with a total investment of S$14.5 million (BANSEA website).  The majority of the funded deals appeared to be in internet technologies, interactive digital media, info-communication technologies (ICT) and biomedical devices.   

2.3       Formation of Other Angel Groups and Networks

Besides BANSEA, a number of loose angel networks has also emerged in Singapore in recent years.  This includes an angel investment club established by the Hewlett Packard Alumni Society, and another angel network for Alumni of the Nanyang Technological University (NTU).  Unlike BANSEA, however, these loose networks tend to have less regular activities, and no statistics are available on the volume of deal flow generated through them. 

More significant is the emergence of a number of angel groups that were facilitated by various government support schemes, including the angel groups funded by BAS and TIS. We will discuss these in the next section.    

3.  Government Support Schemes for Angel Investing in Singapore

Recognizing that the venture financing system in Singapore – especially early-stage financing – has been relatively weak compared to more advanced high tech economies like Silicon Valley and Israel, the Singapore government has introduced a number of support programs in recent years to address these weaknesses.  With regards to angel investment, these programs can be classified into two groups: those that directly promote angel investment; and those that more indirectly encourage angel investment through the provision of early-stage venture capital

3.1  Government schemes that directly promote angel investment
The most established of these programs directly promotes angel investing through a co-investment scheme to leverage private angel investors who are taking the risk themselves.  The Startup Enterprise Development Scheme (SEEDS) was introduced in 2000 by the Economic Development Board (EDB), but the administration of the program was subsequently transferred to SPRING.  SPRING co-invests with third-party investors who are not related to the start-ups, with a minimum investment of S$75,000 required of the private investor.  Initially providing a 1:1 co-investment between S$75K to S$300K; the co-investment was increased over 2009-10 to 1.5:1 and S$750K (cumulative) in response to the financial crisis.  In the initial years, the scheme provided an upside incentive to the third party investors when there was a positive exit: After recovering its initial investment plus accrued interest, the Scheme offered one-third of any remaining surplus gains to be given to the third-party investors.  In more recent years, this upside incentive has been withdrawn.  As of the end of 2010, over 150 start-ups have been funded under SEEDS (SPRING Singapore, 2010).

A related government scheme seeks to promote the formation of business angel groups.  The Business Angel Scheme (BAS), also administered by SPRING, was introduced in 2005 and co-funds investment by pre-approved Business Angel groups.  Under BAS, SPRING would co-invest S$10 million with at least three experienced angel investors who collectively commit to invest at least S$10 million over five years.  The scheme provides for a 1:1 co-investment of S$1 million per deal, with an option for investors to buy out SPRING’s investment within five years at 1.25 times the original investment value.  As with SEEDS, the co-investment terms were improved over 2009-10, to 1.5:1 up to a maximum of S$1.5 million per deal.  Three angel groups have been co-funded under the BAS program so far: Sirius Capital; BAF Spectrum; and AccelX.  The BAS and SEEDS complement each other, so that start-ups that have already received funding under SEEDS can still apply under BAF for follow-on investment up to a maximum of $1.5 million (SPRING Singapore 2010).  As of the end of 2010, close to 20 ventures have been funded by the three angel groups supported by the BAS. 

It should be noted that the introduction of the SEEDS and BAS support programs has been the result of consultation between the government and BANSEA leadership.    

3.2   Government schemes that indirectly support angel investment through the provision of early-stage VC

Angel investment depends on the availability of follow-on VC investment funds to take the start-ups to the next (growth) stage.  Although Singapore has attracted a significant amount of venture capital funds to base their operations in Singapore, these funds are predominantly later-stages funds, and invest mostly outside Singapore.  Thus a large proportion of the US$1 billion TIF fund-of-fund established in 1999 has gone to US-based VC funds, with extremely limited investment activities in Singapore.  Moreover, most members of the Singapore Venture Capital Association (SVCA) do not invest in early-stage start-ups.  In order to fill this gap, the Singapore National Research Foundation (NRF) has in recent years established two VC support schemes.

The first of these is the Early-Stage Venture Funding Scheme (ESVF) which was launched in 2008 and seeks to catalyze the formation of early-stage VC funds.  Under the scheme, selected VC firms receive co-funding from NRF to invest in locally-based early-stage technology start-ups. Selected VC firms must raise at least $10 million from third-party investors, and NRF matches $1 for every $1 invested.  To-date six funds have been selected for such co-funding: BioVeda Capital II; Nanostart Asia; Raffles Venture Partners; Tamarix Capital; Upstream-Expara; and Walden International (NRF 2008).

The second NRF scheme is the Technology Incubation Scheme (TIS).  Launched in 2009 and modeled on Israel's Technological Incubator Programme, TIS aims to encourage local and foreign technology incubators to invest in early-stage high-tech start-ups based in Singapore, nurturing them and preparing them to raise funds from VCs.  Under TIS, NRF co-invests in Singapore-based high-tech startups accommodated in the selected technology incubators.  As of 2010, seven incubators have been funded under TIS: Clearbridge Accelerator; I2G Tech Accelerator; Neoteny Labs; Plug and Play; Social Slingshot; Small World Group; and Stream Global.  It is interesting to note that five out of these seven TIS were helmed by foreign investors, who were enticed to set up their incubation operations in Singapore because of the generous co-funding provided by the government.  As of the end of 2010, about 11 ventures have been incubated by the various TIS. 

In addition to the above NRF funding schemes, the National University of Singapore (NUS) has also contributed to the availability early-stage venture financing.  The NUS Entrepreneurship Centre (NEC) secured commitment from senior management of NUS to provide a S$5 million seed-fund to invest in promising NUS-related spin-offs that it incubates at its incubator (the NUS Enterprise Incubator or NEI), with matching funding from a number of government schemes, including the SEEDS fund and SPRING’s Young Entrepreneurs Scheme for Start-ups (YES! Start-ups) scheme (previously known as ETDF).  NEC also helps start-ups to apply for various government support schemes such as the EDB Cleantech incubator grant scheme, the SPRING Technology Enterprise Commercialisation Scheme’s Proof of Concept (POC) and Proof of Value (POV) grants, Media Development Authority’s micro-funding scheme, the NRF POC grants, and the NRF ESVF and TIS funds.  NEC also maintains close contacts with BANSEA to introduce promising start-ups to BANSEA, SEEDS and BAS investors.  Indeed, a disproportion of the investment deals by the ESVF and TIS so far have been in NUS-related spin-offs.  Similarly, a number of notable deals by SEEDS and BAS investors which have attracted significant follow-on VC investment or corporate acquisitions were also NUS-related spin-offs.  More details about NUS’ role in facilitating angel investment in Singapore can be found in Wong, Ho and Singh (2011).  

4.         Concluding Remarks

In line with Singapore’s increasing shift towards a knowledge-based, innovation-driven economy, the business angel investment community in Singapore has evolved dynamically in recent years, with greater professionalism and sophistication.  The development of the business angel investment community has been driven by both government support policies as well as the emergence of a nascent class of tech-savvy investors comprising of successful entrepreneurs, experienced senior executives from high tech MNCs and local firms, and entrepreneurially-minded academia with connections to Silicon Valley.  The cosmopolitan nature of Singaporean economy, with the government pursuing an open policy to attract foreign talents, also facilitated an inflow of foreign angel investors, thus adding to the diversity and vibrancy of the angel investment community in Singapore. 

 Going forward, a key challenge – and opportunity -- for the further development of Singapore’s angel investment community is to develop stronger global links with angel investors and VCs in leading high tech hubs in the world.    Because of the small domestic market, young start-ups in Singapore need to learn to go global quite early, so the angel investors who back these start-ups need to become more savvy in helping them to globalize as well.  


BANSEA Website (

Bygrave, W.D. (2002). “A Study of investing in 29 nations composing the Global Entrepreneurship Monitor”, paper presented at the Babson-Kauffman Entrepreneurship Research Conference, Boulder, Colorado, 6-8 June, 2002

Hindle, K. and Lee, L. (2002). “An exploratory investigation of informal venture capitalists in Singapore”, Venture Capital 4(2): 169-177

NRF (2008).  “NRF seeding six venture funds with S$10 million each to
Invest in Singapore-based early-stage start-ups”, NRF Press Release, 31 July 2008, downloaded from, accessed 30 April 2010.

NRF (2009).  “Seven technology incubators providing mentorship and networking to be set up to boost the growth of high tech start-ups in Singapore”, NRF Press Release, 30 December 2009, downloaded from, accessed 30 April 2010.

SPRING Singapore (2010). “Financing Schemes for Start-Ups”, downloaded from accessed 1 Dec 2010

Wetzel, W.E. (1983). “Angels and Informal Risk Capital”, Sloan Management Review, 24, pp. 23-34

Wong, P.K. and Ho, Y.P. (2003). “Business Angels in Singapore”, Singapore Venture Capital & Private Equity Directory 2004, SVCA, Singapore, pp. 36-42

Wong, P.K. and Ho, Y.P. (2007). “Characteristics and determinants of informal investment in Singapore”, Venture Capital, 9(1): 43-70.

Wong, P.K. and A. Singh.  (2008). “From Technology Adopter to Innovator: The Dynamics of Change in the National System of Innovation in Singapore”, chap. 3 in C. Edquist and L. Hommen (eds.), Small Economy Innovation Systems: Comparing Globalization, Change and Policy in Asia and Europe, Elgar, 2008, p. 71-112

Wong, P.K. Ho, Y.P. and Singh, A. (2011). “Towards a Global Knowledge Enterprise: The Entrepreneurial university Model of National University of Singapore”, chapter 7 in Wong, P.K., Y.P. Ho and A. Singh (eds), Academic Entrepreneurship in Asia: The Role and Impact of Universities in National Innovation Systems, Edward Elgar, 2011

Wong, P.K. (2000-2006).  Global Entrepreneurship Monitor (GEM) – Singapore Report, various years (2000-2006)

[1] Informal investors are defined as those who have in the past three years invested in an entrepreneurial business venture started by someone else, excluding the purchase of publicly traded shares or mutual funds
[2] The Total entrepreneurial rate (TEA) rate measures the proportion of a nation’s adult population that is engaging in entrepreneurial activities in one of two ways: in the process of starting up a business or running a newly formed business less than 3.5 years old with significant ownership (Wong and Ho 2007).

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