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News  18, Nov 2009

Grants And More Grants, Do We Really Need Them?

govt_grantsThroughout all the e27 and networking events which Singaporeans and foreigners have attended, we noticed that anyone local, looking for funds for starting up, will initially tend to look towards the government assistance schemes aka G-RanTS! Singaporeans love engaging the government to get their hands on any kind of monetary assistance possible. Based on my interactions with some foreigners, they on the other hand look at things differently. They hear about all the wonderful tax breaks, starting up grants, rental subsidies, grants to buy computer equipments, grants to make your employees happy etc. and try to set up base here. Makes me wonder, do we (as a startup community) need such grants?

Do Startups Need Grants?
Startup grants were heavily discussed during unConference 2009 during the morning panel session where Dr Lai Kok Fung (Founder, CEO BuzzCity) mentioned that the startup team should focus on the product, get some private money, then hire a full time person to apply for such grants. Reasoning also, that if your proposal does not have a 100% fit into the obvious & not-obvious criteria, it will require guts, effort, time and resources waiting to get that seed money you think you desperately need at the start.

Start of discussion on government grants

More discussion on general incubator/investment topics

Startups Are Overly “Grant Focused”
I have seen business proposal submissions, that are willing to change just about everything (except the team itself) just to fit the criteria for such grants. Instead, we should be more focused on getting the startup some traction, getting the right team, doing rapid prototyping & iteration (technical co-founder is a MUST [read article on "How to pick co-founder" by VentureHacks, Naval Ravikant, Twitter Series A]), getting users, getting bugs squashed, getting attention & only when the time is right, getting the funding as well. Be self sufficient before looking for investors. As Paul Graham puts it, “Investors like it when they can help a startup, but they dont like startups that would die without that help”. There is more value creation since these entrepreneurs self learn everything at the start and retain such knowledge and skills for their second startup or share the knowledge back with the community.

When Grants Are Good
On the other hand, grants such as WoW! grant (Work-Life-Works!) is a good example where the government grant schemes works the best. The grant basically helps the company employees manage and balance their work-life responsibilities by subsidizing work-from-home infrastructure & equipment support. It does not delude the startup team into perceiving that the grant has to be obtained before anything can be done/started.

Government initiatives work best by providing side/fringe support & services and kudos to the various agencies helping to push for such schemes. However, there needs to be a change among general Singaporean mindset that most of these grants are good-to-have but definitely NOT a must-have! Who knows, perhaps without all these grants, there might be more investment vibrancy from the angel and VC community here.

Update: I feel the need to clarify here that, my statement above “Who knows, perhaps without all these grants, there might be more investment vibrancy from the angel and VC community here.” was meant to be an open-ended question rather than implication.

Thaddeus Jitsiong Koh

Thaddeus Jitsiong Koh

Thaddeus graduated with a degree in Mechanical Engineering from National University of Singapore. He is also an NUS Overseas Colleges Silicon Valley alumni. Our very own Chief Operations & Finance Director, he loves analyzing new startups and creating new start-up focused community programs. Jit Siong Thaddeus Koh is also a diving, swimming, jogging, cycling and snowboarding enthusiast.

  • http://twitter.com/E27sg E27sg

    Grants and more government grants..do we really need them? http://bit.ly/2LTSb4
    This comment was originally posted on Twitter

  • http://twitter.com/E27sg E27sg

    Grants and more government grants..do we really need them? http://bit.ly/2LTSb4

    This comment was originally posted on Twitter

  • http://twitter.com/hlth hlth

    Enough already! RT @E27sg
    Grants and more government grants..do we really need them? http://bit.ly/2LTSb4
    This comment was originally posted on Twitter

  • http://twitter.com/hlth hlth

    Enough already! RT @E27sg

    Grants and more government grants..do we really need them? http://bit.ly/2LTSb4

    This comment was originally posted on Twitter

  • Pingback: Tweets that mention Grants And More Grants, Do We Really Need Them? » e27 – Discovering Web Innovation in Asia -- Topsy.com

  • http://twitter.com/bleongcw bleongcw

    RT @E27sg: Grants and more government grants..do we really need them? http://bit.ly/2LTSb4
    This comment was originally posted on Twitter

  • http://twitter.com/bleongcw bleongcw

    RT @E27sg: Grants and more government grants..do we really need them? http://bit.ly/2LTSb4

    This comment was originally posted on Twitter

  • Bi Ying

    Great article, Jit Siong, but where else are Singaporean startups supposed to look for money? And what can we do to get more VC attention here?

  • Bi Ying

    Great article, Jit Siong, but where else are Singaporean startups supposed to look for money? And what can we do to get more VC attention here?

  • http://twitter.com/GarryHuang GarryHuang

    I’ve got no issues with free money :) RT @E27sg: Grants and more government grants..do we really need them? http://bit.ly/2LTSb4
    This comment was originally posted on Twitter

  • http://twitter.com/GarryHuang GarryHuang

    I’ve got no issues with free money :) RT @E27sg: Grants and more government grants..do we really need them? http://bit.ly/2LTSb4

    This comment was originally posted on Twitter

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  • http://www.homecamera.com Varun

    “Who knows, perhaps without all these grants, there might be more investment vibrancy from the angel and VC community here.”

    Sorry, but that’s just B.S.. There is no causal link here. What’s MORE likely? That there’ll be fewer startups, given that we’re largely a risk-averse society with few home-run startups to adequately “light the way” and be a compelling alternative to a job with an MNC or a GLC. And those few of us that do have any traction still have a long way to go (notwithstanding the success of MuVee, which, while appearing to be nicely successful, isn’t quite yet an out-of-the-ballpark consumer brand story). If it takes grants to give people the additional confidence to get started, then God speed to the grants.

    And btw, we’re not the only country with grants. Israel does it. Finland does it. Even the US does it – to the tune of US$ 2.5 billion in the last quarter alone. (See http://www.fastcompany.com/article/government-funding-startups-really-does-exist-uncle-sam-ponies-25b-q3?1258522601 )

    And don’t even get me STARTED on the ABSURD valuations that some of the local “Angels” (and even “early stage VCs”) try to stick you with. If it takes grants to get you further along the way so that you can raise money at a valuation that doesn’t completely take away ownership of the company and disincentivize you from the get-go, then so be it.

    Until we get a few of those “out of the ballpark” companies and until the local Angel investment scene matures (I do see THAT as a causal link, btw), these grants play a very useful role. Let’s not knock them.

    - V.

  • http://www.homecamera.com Varun

    “Who knows, perhaps without all these grants, there might be more investment vibrancy from the angel and VC community here.”

    Sorry, but that’s just B.S.. There is no causal link here. What’s MORE likely? That there’ll be fewer startups, given that we’re largely a risk-averse society with few home-run startups to adequately “light the way” and be a compelling alternative to a job with an MNC or a GLC. And those few of us that do have any traction still have a long way to go (notwithstanding the success of MuVee, which, while appearing to be nicely successful, isn’t quite yet an out-of-the-ballpark consumer brand story). If it takes grants to give people the additional confidence to get started, then God speed to the grants.

    And btw, we’re not the only country with grants. Israel does it. Finland does it. Even the US does it – to the tune of US$ 2.5 billion in the last quarter alone. (See http://www.fastcompany.com/article/government-funding-startups-really-does-exist-uncle-sam-ponies-25b-q3?1258522601 )

    And don’t even get me STARTED on the ABSURD valuations that some of the local “Angels” (and even “early stage VCs”) try to stick you with. If it takes grants to get you further along the way so that you can raise money at a valuation that doesn’t completely take away ownership of the company and disincentivize you from the get-go, then so be it.

    Until we get a few of those “out of the ballpark” companies and until the local Angel investment scene matures (I do see THAT as a causal link, btw), these grants play a very useful role. Let’s not knock them.

    - V.

  • jitsion

    @Bi Ying I wouldnt exactly say not to go for government grants, but when the startup is at the right stage and with the right motivations.

  • http://www.facebook.com/people/Bjorn-Lee/214870 Bjorn Lee

    @ Varun, i agree on the ABSURD valuation that local self-proclaimed angels and VCs stick startups with. there needs to be an angel camp similar to what Paul Graham did with AngelConf (http://bit.ly/47ckZD ) last year. Even with so many angels in the Valley, the existing angels left nothing to chance and brought together the vets and big guns to train the younger generation amongst them. locally, we do not have a critical mass of savvy angels, and again kudos to the public sector for plugging the private gap. Prof Wong Poh Kam of NUS/ BAF Spectrum is putting together the Asia Biz Angel Conference in Q1 2010, so hopefully that will help galvanize the few angels we have today and correct malpractices while creating more community links among the group for co-investing and learning from their more experienced counterparts.

  • jitsion

    @Bi Ying I wouldnt exactly say not to go for government grants, but when the startup is at the right stage and with the right motivations.

  • http://www.facebook.com/people/Bjorn-Lee/214870 Bjorn Lee

    @ Varun, i agree on the ABSURD valuation that local self-proclaimed angels and VCs stick startups with. there needs to be an angel camp similar to what Paul Graham did with AngelConf (http://bit.ly/47ckZD ) last year. Even with so many angels in the Valley, the existing angels left nothing to chance and brought together the vets and big guns to train the younger generation amongst them. locally, we do not have a critical mass of savvy angels, and again kudos to the public sector for plugging the private gap. Prof Wong Poh Kam of NUS/ BAF Spectrum is putting together the Asia Biz Angel Conference in Q1 2010, so hopefully that will help galvanize the few angels we have today and correct malpractices while creating more community links among the group for co-investing and learning from their more experienced counterparts.

  • http://www.facebook.com/people/JitSiong-Koh-Thad/227700151 JitSiong Koh Thad

    @Varun Grants are important and complete the funding eco-system in providing certain groups of people the know-hows and the money to get their startups up. But my point is that it seems like the government is overly focused on providing grants to plug the funding gap as the only way to do a startup. It’s also getting private investors more up to speed in investing in high tech startups, Kudos to the upcoming iMatch 2009 Launchpad event. (http://idek.net/g4T)

    There should be equal if not more efforts on educating that grants are not the sole path to entrepreneurship. They celebrate successful startups under their funding grants but do not highlight bootstrapped startups. Because in the long run, we will be seeing startups who mould themselves specially just to hit the next grant’s criteria.

  • http://www.facebook.com/people/JitSiong-Koh-Thad/227700151 JitSiong Koh Thad

    @Varun Grants are important and complete the funding eco-system in providing certain groups of people the know-hows and the money to get their startups up. But my point is that it seems like the government is overly focused on providing grants to plug the funding gap as the only way to do a startup. It’s also getting private investors more up to speed in investing in high tech startups, Kudos to the upcoming iMatch 2009 Launchpad event. (http://idek.net/g4T)

    There should be equal if not more efforts on educating that grants are not the sole path to entrepreneurship. They celebrate successful startups under their funding grants but do not highlight bootstrapped startups. Because in the long run, we will be seeing startups who mould themselves specially just to hit the next grant’s criteria.

  • Arpit Rai

    Government grants are good. I’m not sure about the type of companies that the Singapore government has put money into but the very fact that there are sources of funding available at such early stage is a great thing.

    Especially so when you look at countries like India where investment at seed or pre-seed stage is simply non-existent. VCs act like PEs and PEs act like banks. Angels are pretty much non-existent. And there is hardly any support from the Government in terms of grants or promoting the startup eco-system. I’m not a proponent of sourcing for funding without having a prototype or a basic working model in place, but these grants really help in bridging the gap and chugging along once you’ve started.

    If these grants result in a few massive hits from Singapore, I’m sure you’ll see some developments in the Angel/VC system in Singapore.

  • Arpit Rai

    Government grants are good. I’m not sure about the type of companies that the Singapore government has put money into but the very fact that there are sources of funding available at such early stage is a great thing.

    Especially so when you look at countries like India where investment at seed or pre-seed stage is simply non-existent. VCs act like PEs and PEs act like banks. Angels are pretty much non-existent. And there is hardly any support from the Government in terms of grants or promoting the startup eco-system. I’m not a proponent of sourcing for funding without having a prototype or a basic working model in place, but these grants really help in bridging the gap and chugging along once you’ve started.

    If these grants result in a few massive hits from Singapore, I’m sure you’ll see some developments in the Angel/VC system in Singapore.

  • http://twitter.com/andreasbrenner andreasbrenner

    Feed: Grants And More Grants, Do We Really Need Them? http://bit.ly/1PLeW2
    This comment was originally posted on Twitter

  • http://twitter.com/andreasbrenner andreasbrenner

    Feed: Grants And More Grants, Do We Really Need Them? http://bit.ly/1PLeW2

    This comment was originally posted on Twitter

  • Guyi

    @jitsiong, I don’t think that changing the initial idea is that much of a problem, a good entrepreneur will always be changing and adapting the company based on market feedback anyway, so the starting point(which is what the grant givers are looking at) is not as important as the end point, which MUST look quite different.

    @Bi Ying, try bootstrapping:)

  • Guyi

    @jitsiong, I don’t think that changing the initial idea is that much of a problem, a good entrepreneur will always be changing and adapting the company based on market feedback anyway, so the starting point(which is what the grant givers are looking at) is not as important as the end point, which MUST look quite different.

    @Bi Ying, try bootstrapping:)

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