The FIVE stages of Singapore Startups
Seed: It is the first official equity funding stage. It typically represents the first official money that a business venture or enterprise raises, the most common being from Angel Investors (see above). This phase seeks the first materializations of a startup.
Series A / Development: Series A financing is primarily used to ensure the continued growth of a company. The common goals in the series A round include reaching milestones in product development and attracting new talent. In this stage of development, a company intends to continue the growth of its business to attract more investors to future rounds of financing.
Series B / Growth: Investors in this stage help startups get there by expanding market reach. While Series A is used to grow substantial user base and market reach of the product, Series B is used to grow the company so that it can meet these levels of demand. This is also the stage where Venture Capitalists and late stage investors usually join in.
Series C / Expansion: During this stage, companies are usually expected to create new products, reach new markets and even make sure that others don’t meet the expectations of comparable new business deals. They may even acquire other startups. As the business is more stable, investment banks, hedge funds and private equity firms show up during this stage.
IPO: This is the stage if the company decides to sell corporate shares to the general public. It is the last stage of a startup, whereby it will be formally transitioned into a listed company.
6 methods of funding Singapore startups
Especially in the initial stages, bootstrapping is the quintessential method every business owner starts out with. This includes borrowing from friends and families as well,
Pros: Minimizing interest rates and providing quicker funding.
Cons: With every business comes risk. You run the risk of your business failing which will put such funds at stake, possibly damaging relationships.
With this option you raise the total amount of funding you need online from the general public. People can either lend you the money (peer-to-peer lending) or take a stake (shares/equity) in your business. This is especially suitable to businesses which can feed well into the social media trend and are excellent at their branding. You may find popular crowdfunding platforms here
Pros: The widespread influx of social media penetration simply means this: There is no cap to your crowdfunding potential.
Cons: There is a possibility of having to pay extra expenses as well as the need to invest your efforts to publicity and branding
3. Angel Investors
Angel Investors are high net-worth individuals who can provide a large amount of funding for startups and small businesses in exchange for a stake in their business. Most Angel investors are likely accredited investors with substantial knowledge of running a business and can provide insightful ideas and advice to grow your business.
Pros: Accompanied with business knowledge, Angel Investors can provide more than simply monetary wealth. Angel Investors may sometimes even be close friends and family, providing crucial liquidity when needed.
Cons: Retaining a full stake in your business is out of the question when it comes to Angel Investors
4. Venture Capitalists
Venture Capitalists and Angel Investors have much in common. Sometimes they may even be used interchangeably depending on the situation. However, the main difference between Venture Capitalists and Angel Investors is the stage in which they invest in. Angel Investors provide funds earlier in the business cycle, making them more susceptible to risk. Venture Capitalists are also known to have larger funds to work with.
Pros: Venture Capitalists oftentimes have a network of contacts and partners that can help develop the business. They also have a large pool of funds that can be used to invest in you.
Cons: Because of the large amount of funds, the stake that you may have to give up in exchange for it will likely be huge, even larger than that of Angel Investors
5. Incubators and Accelerators
While used interchangeably like Angel Investors and Venture Capitalists, Incubators and Accelerators are programs designed to develop and scale start-ups. They provide mentoring and insights to help ambitious start-ups grow their businesses.
Pros: Such programs usually include funding and mentoring
Cons: There is a selection process that a company is required to qualify for, which can take up valuable time and effort. Selection can also be grueling.
6. Government Funding
The Singapore government has put our several initiatives to aid start ups and small businesses in Singapore. Scroll above to read more about initiatives of Startup SG.
Shares 101: Understanding Shares and Stamp Duty in the Singapore context for Startups and Small businesses
The government has put our several initiatives to aid Singapore startups and small businesses. Scroll above to read more about initiatives of Startup SG.
Q: Is there a minimum number of shares to be issued?
The minimum issued capital must be at least SGD$1.00, however there is no minimum paid up capital needed. This means you can start a company by issuing only 1 share worth SGD$1.00. In the future, if your company wishes to issue more shares, ie. Increase paid-in capital, you can choose to do so anytime as companies are free to do so after incorporation.
Q: What is the stamp duty rate in Singapore?
Like many countries, Singapore imposes a stamp duty when buying the shares of a company. Stamp duty is basically a tax on dutiable documents relating to any (immovable) property in Singapore and stocks or shares. In the context of Singapore, stamp duty is 0.2% of the purchase price for share transfer documents.
Q: Methods to pay stamp duty for shares
There are numerous methods to pay stamp duty in Singapore. See below for the full list:
Stamp duty has no installment, it must be paid in full.
Q: Deadlines for Stamp Duty
Document needs to e-Stamp before signing it. No penalties will be charged if the document signed or e-Stamped within the following time frame: