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What would you do with the funds you raise if you were a business owner?
We can easily think of a few things right off the bat – to buy new equipment, invest in new hires, upgrade the business, and keep it operational.
Money is the lifeblood of a business – and for good reason.
In this article, we discover the different ways companies can raise funding in Singapore!
Why Do Firms Need to Raise Capital?
Why must companies look for means to raise funds? The money raised can be used in different ways:
- To grow the business
- To take advantage of market opportunities
- To invest in new products or services
- To put plans into action
Related Read: Funding Options for Singapore Startups »
What Are 8 Ways to Raise Funding in Singapore?
Singapore is a business-friendly destination that makes business funding accessible for companies of all sizes. There are several known ways to raise funding in the city-state. Here are some of them:
An angel investor is a private individual like a successful businessman who usually invests capital, business knowledge, and expertise.
They are also called seed investors and may receive a substantial stake in the business in return.
These investors typically work in networks to review proposals before deciding to invest. They may also offer mentoring and other business advice.
Massive companies, government bodies, and high-net-worth (HNW) individuals may choose to establish venture capital firms for these reasons:
- Business-friendly policies
- Attractive tax incentives
They are also known as venture capitalists, professional investors who use venture capital funds to invest in early-stage companies with great potential. They may also do so when there is an initial public offering (IPO) or acquisition.
In exchange, they are offered a relatively hands-on position and, therefore, may offer more than just venture funding support. Mentorship, operational, and profitability advice may be provided.
Related Read: Top 23 Venture Capital Firms and Angel Investors in Singapore »
Equity crowdfunding allows you to fund your business without incurring debt. You must find investors to contribute funds to your business in exchange for a financial stake in it or the sale of securities – hence the term ‘equity’.
In essence, you obtain small sums of money from a large number of private investors. It’s a suitable business capital method for startups and small and medium enterprises (SMEs).
Related Read: Everything to Know About Crowdfunding in Singapore »
Crowdfunding is slightly different than its equity counterpart. For example, crowdfunding platform Kickstarter does not offer equity or financial returns to its backers.
Instead, it is rewards-based, although there is no monetary guarantee. One similarity both funding methods share is that they both strive to serve those with massive potential but cannot get help from big players.
Singapore’s supportive government has implemented different grants to assist businesses financially. Some of these available grants are:
- Startup SG Founder: It offers mentorship and a capital grant of S$50,000 to startups established by first-time entrepreneurs with innovative business ideas. These startups must also put in S$10,000 as a co-matching fund
- Productivity Solutions Grant (PSG): This grant is designed for SMEs and offers them financial assistance to create new technologies and productivity solutions. Businesses can apply for grants for financial relief of up to 70% of costs for applicable products
- Enterprise Development Grant (EDG): This grant supports Singapore companies’ growth and transformation through projects that help to enhance the business, innovate, or go overseas. It funds applicable project costs like software and equipment expenses
- Energy Efficiency Grant (EEG): The EEG is specifically meant for retail, food manufacturing, and food services firms. It co-funds investments in more energy-efficient equipment in predetermined categories to help them manage increasing energy costs
- Market Readiness Assistance Grant (MRA): The MRA grant helps SMEs obtain global enhancement to take their businesses overseas with monetary support for up to 70% of eligible costs per company per new market overseas
Related Read: 16 Singapore Start-Up Grants and Schemes »
Banks tend to offer either a working capital loan or funding for businesses.
Here are the differences:
|Working Capital Loan||Funding|
Incubators and Accelerators
An incubator is fundamentally different from an accelerator. An incubator is a funding system that partners with firms in the initial stage of development and want to take off.
It provides businesses with equipment, networks, and training. Incubators can also collaborate with Startup SG Accelerator which supports startup enablers and in-market programmes created.
On the other hand, an accelerator helps a business that is ready to start operating or wishes to make a big step by venturing into a different market or exploring an overseas presence.
P2P platforms link the public to companies that require funding, similar to a marketplace. Public investors can loan funds to these companies and get returns dependent on interest rates when their loans are repaid.
Firms can choose this financing type if they are unable to get capital from the usual financial proxies. They may also receive a better interest rate than what the bank offers.
Raise Funding With Rikvin
We understand that fundraising efforts can be monumental for startups, SMEs, and even MNCs. Our consultancy services are aimed at helping you tap into our wide network of funding sources to get the capital you need.
- You can do so in these ways:
- Incubators and accelerators
- Government grants
- Donation-based crowdfunding
- They may do so for these reasons:
- Business growth and expansion
- To capture market opportunities
- Donation-based crowdfunding, P2P lending, and government grants may be more accessible to smaller firms.
Leverage on our network of funding opportunities!
Let Rikvin help you get started on raising capital for your business today!