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Funding Options . China & Singapore. Agenda. Funding in Shanghai, China Funding e nvironment in China Funding options in Shanghai, China Funding in Singapore Funding e nvironment in Singapore Funding options in Singapore Compar ison between the Two Countries

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funding options

Funding Options

China & Singapore

agenda
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

china
CHINA

Funding Environment for SMEs in China

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
china1
CHINA

Funding 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)

china2
CHINA

Funding Options in Shanghai, China

  • Government Assistance

Government Innovative Funds

Government International Market Development Funds

Financial Leasing

  • Loans
  • Investors

Privately Equity Fund, Angel Capital, Venture Capital

china3
CHINA

Government Innovative Funds

Beneficiary -- High-tech companies

Aim -- 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)

china4
CHINA

International Market Development Funds

Beneficiary -- Companies with own intellectual property

Aim -- To encourage them stepping into the global market, especially in Latin America, Africa, Southeastern Asian or Middle East area

In Shanghai, this fund is in administrated by

  • Shanghai Foreign Economy and Trade Committee
  • Shanghai Finance Bureau
china5
CHINA

Financial Leasing

  • Also known as Equipment Leasing /Modern Leasing
    • Helps start-up companies which lack of monetary capital to rent the manufacturing equipment with a small amount of money
  • Shanghai SMEs Services Center (www.pdsc.org)
    • Function as an intermediary between the leasing companies and SMEs
  • Shanghai affiliate of China National Investment & Guaranty Company
    • Guarantee the leasing activity
  • (http://www.guaranty.com.cn/about/jtjj_view.asp?id=10275 )
china6
CHINA

Loans

  • 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 commercebureau, the taxation bureau and find guarantee agency
china7
CHINA

Privately Equity Fund

Privately equity fund is an important part in

in Shanghai Capital Market

Forsmall companies it’s a flexible and

fast method to get funds

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

china8
CHINA

Venture Capital

Venture capital in Shanghai received unprecedentedly 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

singapore
SINGAPORE

Funding Environment in SINGAPORE

“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.

singapore1
SINGAPORE

Funding Options in Singapore

  • Government Assistance
  • Loans
  • Investors (Angels/VC/Equity Funds)
singapore2
SINGAPORE

Government Assistance

Beneficiary– –Start-ups of all stages

Aim– –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
singapore3
SINGAPORE

Obtaining a loan from banks and financial institutions will not be easy for startups. Startups will find 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

Bank/Financial Institution Loans

singapore4
SINGAPORE

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 investor.

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

Investors

funding options comparison1
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 for us
Funding Options for US

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 flexibleway for start-ups, we will also consider.