Singapore is one of the best places in the world for starting a business, according to the World Bank.
The process to incorporate a company in Singapore is fast and affordable, however, some entrepreneurs make the mistake of not thinking about the long term finances of their newly set up company in Singapore.
Many startups run the risk of failing due to inconsistent financing or lack of capital, and this forces many companies to stop their business operations and even declare bankruptcy. Having a sound financial plan takes your business from ground level to great heights of growth, and proper financial preparation helps your business to weather any storms that drains your company resources.
There are many different financing options that entrepreneurs can adopt in order to grow their newly set up company in Singapore. Sometimes, these forms of finance can be secured even before you incorporate a company in Singapore, which improves the likelihood of your business idea succeeding. In this article, we will be going through 3 different financing options for startups in Singapore.
1. Seed capital
If you want to set up a company in Singapore, the first option that you can try is seed capital. This type of funding comes from your savings or from close family members. Seed capital money can help in doing market research, feasibility studies, and developing prototypes and services that your business needs, which are vital for any newly set up company in Singapore.
One advantage is that it is not difficult to get in relation to other types of funding. If you are starting out and finding it difficult to get an external source of funding such as investors, try using seed capital.
Another advantage is fewer formalities that you go through in getting this funding. Unfortunately, it will come at a personal risk as you will be losing your own money if the business does not do well. Do consider carefully if you have enough funds to utilize seed capital after you incorporate a company in Singapore.
2. Finding an equity financier
Equity financiers receive and own some shares in your start-up or company, and in return they give you money that you need. Equity funding comes at a lower cost compared to getting financing from the bank, as bank financing comes in the form of a loan. This loan has to be serviced and repaid, no matter what your business is going through.
The good thing about this type of funding is that even if the business makes losses, it does not become a liability to your business, thus reducing risks. As a result, this option is preferable among entrepreneurs looking to start a business in Singapore.
Equity financing or funding is the right option for startups because you don’t need creditworthiness or collateral. However, it is crucial to keep in mind that you have to convince this type of investor of the potential growth in your business. You will need to search for an investor and pitch to them your business ideas before you incorporate a company in Singapore.
Luckily, there are many online resources that allow you to connect with investors. WLP Group is a consultancy firm in Singapore and their professionals can help to connect young entrepreneurs to investors. Contact them to find out more about their financing and Singapore company registration fees.
3. Government funding
This is a viable option for startups that have completed the process of company registration and are in industries that are of interest to the Singapore government, such as technology. If this is the case, you can seek to apply for grants offered by Enterprise Singapore, which is a government agency aimed at growing businesses in Singapore.
In the past, the Singapore government has provided a considerable number of financing schemes and platforms in a bid to promote and encourage entrepreneurs within the country. These funding schemes include subsidies, grants, loans with minimal interest rates which focuses on different markets or industries.
Funding for startups is now readily available and easy to access. Therefore, you should not be afraid of getting into business in fear of lack of funding. Before you incorporate a company in Singapore, make sure to do your due research on what types of financing options are suitable and available for your startup. This will ensure that your business will continue to grow and thrive in the dynamic business environment in Singapore.