Capital Raising In Singapore
The biggest challenge for any start-up is to
raise capital so as to set the business off the ground. Commonly, entrepreneurs
turn to their friends and families or personal savings for the initial rounds
of financing but a time comes when they need more capital for further growth and
expansion of the business. Thankfully, entrepreneurs in Singapore have,
currently, ample options to boost their start-ups as the city-state is attracting
more and more foreign private investors to boost its start-up ecosystem.
Capital raising in Singapore has become
much easier now with the launch of many government aided and private equity
firms which have realized the growing potential of the Southeast Asian start-up
markets. Here are some of the best options for private equity financing in
Singapore that businesses, often, tend to approach.
Angel
Investors
Angel investors are private investors who
are most wealthy people looking to invest in high-risk start-ups in exchange
for an equity share in the company. They work either individually or as a network
of angels to invest in start-ups and seed stage businesses. The wealthy
individuals referred to as the angel investors form a significant part of
capital raising in Singapore.
The angel investors typically invest in
those high-potential start-ups that deal with a business that they are familiar
with. Apart from offering capital, the investors also share their knowledge and
offer valuable guidance especially on finance and management.
Venture
Capitalists
Compared to the US and Europe, the venture
capital industry is still new in Singapore. Venture capitalists, although quite
similar to the angel investors slightly differ in their operations. While they
are also in search for high-potential start-ups, the return is they expect is,
however, much more than what the angel investors expect. Usually, they expect a
return of more 25% percent for each year’s investment.
Venture capital is the most popular option
for capital raising in Singapore. Not only do they offer guidance and
mentorship along with capital, they even offer the maximum amount of financing
required by a start-up to grow and expand. The VCs are mostly interested in
sectors like IT, manufacturing, services, biotechnology, medicine, etc.
Private
Funds
The third private equity option for
start-ups is the private fund. Banks, financial organizations and investment
companies are the main sources of private funds. Unlike the angel investors and
the venture capitalists, the private funds neither invest in the seed-stage or
growth-stage not get involved in the investee company’s business. They just
await a good return on their investment which is why they are usually
considered ideal for the established businesses.
Conclusion
For start-ups planning for capital raisingin Singapore, options are many but they have to ensure that they have a sound
business plan with a sizable and scalable market. Convincing the private
investors is quite a tough job; it might take several rounds of meetings and pitch
preparations to ultimately find a suitable investor. For best results, it is highly
advisable for start-ups to become a part of a network that drastically reduces
the time required to find the right investor. Such a popular network is the Merger
Alpha, based in Singapore that performs the task of bringing together buyers,
sellers, investors and advisers under a single roof. For more information on the network or capital
raising in Singapore, feel free to visit http://mergeralpha.com/
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