If you stay or work in Singapore, you would have noticed that Singapore’s startup scene is booming. According to data from Hong Kong-based Asian Venture Capital Journal, venture capital invested in Singaporean tech firms by funds in 2013 totaled $1.71 billion, bringing local investments ahead of big players such as Japan, South Korea, and Hong Kong.This has earned Singapore the speculation of its becoming the “Silicon Valley of Asia”.
However, with this exponential growth of startups in Singapore comes the darker side of entrepreneurship, with problems such as predatory incubation by inexperienced startups, and abuse of government grants fostering a dangerous handout culture.
That’s where Angel’s Gate Advisory comes in.
Originating from the Angel’s Gate media platform that gave enterprisers the chance to pitch their dream business ideas to some of Asia’s most successful investors, AGA was founded a little over two years ago by a team of Singaporean businessmen and with backing from Khattar Holdings. These businessmen comes from various backgrounds, from traditional hospitality, consultancy, education, enterprise solutions, finance, F&B to those who successfully exited their startup tech companies.
To date, AGA has advised, funded and mentored easily over 50 startups since 2013. It is also an appointed iJAM incubator which have access to a government grant where startups are aided to build their product.
“We also realised that many startups lack the ability to grow to be better companies due to lack of experience.” said Christopher Quek, Director and Resident Mentor at Angel’s Gate Advisory. “Hence our vision, “Entrepreneurs building entrepreneurs”. We want to support Singaporean startups by imparting our knowledge and wide range of experiences to the next generation of business people.”
Quek also shares that AGA works on a “pay it forward” ideology, a unique concept for any player in the industry. This means that they contribute and invest time and energy freely into startups, believing that when they grow and become profitable, they too will contribute and invest time and energy into the next generation of startups. That is why they provide free clinic advisory sessions for all Singapore startups seeking advice on how to progress further in their business.
The Startups guided by AGA include SeriouslyMan, an online asian men’s magazine that just won best topical blog at Singapore Blog Awards 2014; Blimp, an intelligent B2B web platform that helps firms in the design and construction industry source for materials; Kungfu Math, a game-based learning platform for kids to learn Mathematics an enjoyable way; and Clinicea, a cutting-edge medical software for Doctors, Clinics & Hospital OPDs.
The Dark Side Of The Startup Scene
When there is progress, there will also be some emerging flaws. With the quick growth of Singapore’s startup ecosystem, people are starting to take advantage of the influx of wealth in this scene, either from targetting budding entrepreneurs or from entrepreneurs themselves.
“This is a topic we feel strongly against,” says Ko Tze Shen, Co-founder of Angel’s Gate Advisory. “We are now seeing many more examples of “predatory” incubation where mentors or investors demand sweat/free equity in companies before helping the entrepreneurs in any way.”
Ko goes on to explain a real example of a mentor that valued a company at 200,000 SGD. He invests
10,000SGD and helps the entrepreneur get 50,000SGD of grants. A deal is struck such that the investor leverages on government grants to get equity of 30% (60,000SGD), a far cry from the 5% investors usually get.
This could undermine the very spirit of innovation, especially in an ecosystem where most entrepreneurs lack the experience to protect themselves, and risk giving up a large portion of their business before they even get started.
However, predatory incubation isn’t the only problem. On the flipside, entrepreneurs may take advantage of the wealth of resources available to them for their own profit, also known to the AGA founders as “Grantepreneurship”.
“Too often we meet potential entrepreneurs who have great ideas and skillsets but refuses to start their business because they are unable or it takes too long to get a government grant,” says Ko. “Sometimes, we are even approached by entrepreneurs who declare that they do not need advisory but just “free” money from the government.”
“Our hope is to promote a culture where entrepreneurs become entrepreneurs because of their passion and love for their business not because they are able to subsidize the risk with a grant. Its a tough challenge in the generally risk adverse culture of Singapore but we feel heartened by recent growth and success of homegrown entrepreneurs. We will press on.”