The Singapore government has been busy this month. Firstly, after a year of deliberation, the Committee on the Future Economy unveiled its report the steps Singapore will undertake to maintain its sustained economic growth and competitive edge. Then this week The Monetary Authority of Singapore (MAS) proposed to ease regulations for venture capital managers including shortening their application process in a bid to promote financing for startup development. Both announcements sent a profound message – Singapore is out to make things happen, for the benefit of its people and economy.
The MAS consultation paper on venture capital regulation could have far reaching implications on the way early stage investment is conducted in Singapore and around the region. Overall I believe the new regulations presented are a positive step and while some established VC’s in Singapore might not see it that way, the relaxation of legislation will lead to a more diverse pool of VC funds and strengthen Singapore’s position globally. For example, with no requirement to maintain a base capital, it will be easier for smaller fund managers to compete in the market - ultimately making it more competitive, and offering more funding options to early stage companies. Having more VC players will attract high-potential startups to Singapore and consequently lead to a more nurturing environment for them to operate in.
I don’t just agree with the proposed measures, I applaud MAS for being proactive and not just settling for the status quo. The government is taking a long term view on how their current strong economy can be maintained and they’ve concluded that investing in technology and startups will be one of the ways they can achieve this. This forward-thinking, can-do attitude is what sets Singapore apart and further cements its position as Asia’s leading venture capital and startup hub.
ACP is a global venture capital firm, based in Singapore, that continues to benefit from the credibility and transparency that the RFMC regime has brought to the industry in Singapore. Our current deep tech-focused fund has been aided significantly by the Fit & Proper barriers to entry in the current regime but one of the challenges was the high cost of compliance and service providers with respect to the funds under management. We often have to compete with angel investors, incubators and corporate funds that don't have the same compliance and risk management requirements that we have. While this certainly creates barriers to entry based on the robust processes that an RFMC is required to have, it puts us at a disadvantage when it comes to cost of operations and investment. MAS is actively looking to bring in regulatory regime that will level the playing field in terms of cost and complexity of operations and compliance.
Despite the easier entry requirements, we hope that new VC funds entering the ecosystem continue to maintain the high standards of diligence and risk management that sophisticated investors expect from Singapore based financial institutions. Without this, new proposed regulations are fundamentally flawed. Even with the best of intensions, MAS will need to monitor activity and react when required in order to maintain the integrity of Singapore’s strong economic environment.
Our decision to operate from Singapore since 2012 was based on the robust local start-up ecosystem, transparent and efficient government bodies, an enlightened work visa policy and our partnership with Spring SEEDS Capital. As we initiate the process of raising our next regional fund the recently released CFE 2017 report and this proposed rationalisation of the VC regulatory regime, we hope, will make us even more attractive to the institutional and family office investors in Singapore and the region.