Analysing the Singapore lure for startups
Less than 6,000 km away from India, there is the small island country of Singapore with a population less than Bangalore but a startup ecosystem that has been rated as the best in Asia and seventh in the world. So what makes this country, which is around 700 sq km, so special and why are numerous companies from India and around the world looking to register or move operations to Singapore?
The obvious reasons that come to mind are the ease of doing business, transparency, lack of bureaucracy and one of the friendliest tax regimes in the world. Various Indian startups have relocated or now co-locate to Singapore due to these reasons. Here are some examples:
- Milaap: A social crowd funding and micro finance startup based out of Singapore with an office in Bangalore. Founders were able to get SGD 10,000 grant from the National University of Singapore and were able to set up their company within 24 hours in Singapore.
- AdNear: This location intelligence platform for advertisers started out in Bangalore but is now headquartered in Singapore. Backed by Sequoia, it has raised more than $25 million in the last two years. The key reason for the shift in base seems to be the strategic location for the South East Asian market and high smartphone penetration.
- Mobikon: A cloud-based customer engagement platform for the hospitality and retail sector seems to have shifted base to Singapore after a $2.5 million round by Singapore-based Jungle Ventures and Spring Seeds Singapore.
These startups have benefitted tremendously from the shift, so here are the most important points for anyone looking to shift their headquarters
- Incorporation
Incorporation in Singapore takes less than 24 hours and can be done online or with the help of corporate services firms. Singapore does not have any minimum capital requirement if one of the directors is a local. If the company does not have a local director, there are services to help you fulfill this requirement; this service is called Nominee Director. GuideMeSingapore and FutureBooks are two such firms that provide useful guidance when it comes to setting up a company as a foreigner.
2. Taxation and Immigration
Singapore has one of the friendliest tax regimes in the world. It has a tax rate of only 8.5 per cent on corporate profits up to SGD 300,000 (approximately INR 1.5 crores). Not only this, there is absolutely no tax when it comes to capital gains. In terms of work permits and immigration, Singapore has been startup friendly when it announced the launch of the Entrepreneur or EntrePass to help entrepreneurs migrate easily to commence work. There are certain requirements to be fulfilled that can be found here.
3. Singapore Ecosystem
Last year, The Economist covered the startup scene in Singapore and this is what it had to say about Block 71 which houses close to 150 startups.
“It is the world’s most tightly packed entrepreneurial ecosystem, and a perfect place to study the lengths to which a government can go to support startup colonies.” Full article can be found here.
There are numerous incubation and funding schemes that the government runs and promotes. Early stage startups having local ownership can secure more than $100,000 in funding from schemes administered by SPRING, ACE, IDM. In addition to this there are terrific accelerator programs like JFDI, co-working spaces like PlugIn@Blk71 and venture funds like Golden Gate Ventures.
Last year July, I helped BizEquity, a US startup expand into Asia- the registration process was smooth and was able to obtain incubation at Block 71. Not only this, it is an extremely tight knit community and within weeks I was able to connect with key stakeholders for the business. Having experienced it first hand, I can definitely confirm Singapore is a heaven for anyone setting up a new business.