VENTURE CAPITAL FUND FOR TECHNOPRENEURS (Criteria for eligibility)

The following Question stood in the name of Mr Zulkifli bin Baharudin -

Mr Zulkifli bin Baharudin: To ask the Minister for Trade and Industry, in respect of the Venture Capital Fund for technopreneurs, (a) what are the criteria for eligibility; (b) whether there are any other schemes to help technopreneurs have better access to loans; and (c) whether there are plans to have more liberal policies to deal with problems of business failures and bankruptcies.

Mr Simon Tay: Question No. 5, Sir.

The Second Minister for Trade and Industry (BG George Yong-Boon Yeo): Venture capital is smart money. All venture capital funds will subject projects seeking their investment to careful analysis. They will assess the value of the intellectual property, the risk involved and the expected rate of return on investment. Ultimately, the success of the funds will depend on their willingness to assess industry potential and take calculated risks.

Government venture capital funds must also be governed by the same principles of risk-return. Through EDB and NSTB, the Government helps to provide seed funding for new start-ups. Projects invested by these funds are subject to standard 'due diligence' analysis.

The Technopreneurship 21 Committee will consider other schemes to help technopreneurs gain better access to loans. Our support of technopreneurs should extend beyond financial assistance. It is equally important to give adequate support in other areas, such as providing business guidance and developing market intelligence. To illustrate, NSTB's recently launched $10 million Technology Incubator Programme not only provides seed funding for technopreneurs, it also engages individuals and companies as incubator managers to nurture local start-up companies. Our technopreneurship development strategy must be comprehensive, covering not just financing but also education, facilities and regulation.

One of the most important requirements in building up a technopreneurship sector in Singapore is a change in mindset. We need a culture rich in innovation and enterprise. We need to reduce our social cost of failure and encourage those who fail to try again. In this respect, our rules and regulations will be reviewed under the T21 initiative, with a view to removing the obstacles for risk-taking. A private sector committee has been set up to review our existing rules and regulations in order to facilitate technopreneurship. The initial recommendations of the Committee would be announced by the third quarter of this year.

Mr Simon Tay: May I ask the Minister, when speaking about standard due diligence, does this mean that the fund will do exactly the same as the banks and other financial institutions do and therefore what advantage is there in Government setting aside a special fund for technopreneurs?

BG George Yong-Boon Yeo: It is important we adopt the best practices which obtain in Silicon Valley and in America. The purpose of starting this new fund is to help create an indigenous venture capital sector in Singapore. Mr Inderjit Singh told me that he once had a project which could not be funded in Singapore and that he had to go to Taiwan where there was so much expertise in this area to get the financing. We should have such a developed sector in Singapore so that those who are starting start-ups here would be able to get local financing.