The scheme will see the incubator investing 15% for that round and NRF covering the rest of the 85% up to a funding cap of $500,000 in the form of a convertible loan.
Entrepreneur’s Point of View (Interactive Digital Media related projects)
As an entrepreneur, what is interesting is how this might impact the government funding landscape in Singapore, particularly how the TIS entrant might threaten to kill off some iJam incubators. From our viewpoint, the most visible schemes out there today are the iJam scheme under MDA and the YES! program under SPRING Singapore.
For those of you who are not aware, these are the main points with regards to the iJam and TIS funding
1. Funding amount: $50,000 – $55,000
2. Equity: 0-25% (guideline)
3. Project length: 6-12 months (to finish a beta at least)
4. Additional resources: Depending on the iJam incubator the startup is working with.
1. Funding amount: $588,000 (total)
2. Equity: 0-50% (guideline)
3. Project length: Indefinitely
4. Additional resources: Standard set of services a physical incubator offers.
TIS is positioned as the natural progressive step after iJam, obviously to reduce the overlapping areas of the schemes (NRF has generalized the TIS as such). Ideally, all media-related proposals should first apply for iJam, build the product, increase the company valuation then apply for TIS to scale up the company further.
TIS will attract high net worth individuals/investors with startup experience and these incubators all have physical space. Now taking the view as the smart investor, he would want to get into good deals as early as possible. He would be looking at proposals that have quality and an experienced team with a viable idea. He wouldn’t want these teams to get diluted and work under another incubator’s mentor that might have entire different vision for these guys. He can choose to put in $50,000 and keep them in my physical incubator until they scale to a stage that qualifies them under the TIS scheme. Smart agreements can even be crafted to weave in this $50,000 aspect into a “package” like scheme. In this way, as an invested mentor, he will have certain control over the team and the direction of the company and can utilize the leverage that TIS has to offer.
If as estimated by Motochan, that 100 projects might ultimately get supported by TIS, and if some projects are actually seeded by the TIS incubator managers themselves, then the iJam incubators will face some serious competition in Singapore in securing top quality proposals. Afterall, Which aspiring entrepreneur wouldn’t want an opportunity of increasing their chances of getting the TIS round? That in my opinion, poses a threat to some iJam incubators when more quality projects are funded by TIS incubators. Of course, all of this competition is ultimately good news for entrepreneurs.
Additional Notes on NRF TIS Briefing
During the briefing session last Friday, the questions brought up seemed to indicate how the audience viewed the scheme. Here are some notes I took:
1. ‘Using Spring’s Incubator Development Programme (http://www.spring.gov.sg/Content/WebPageLeft.aspx?id=6b026ac2-7870-4ed8-8fa9-8c52a72aa85c) to fund the operating cost for the TIS incubator.’ NRF responded that this will not be allowed as they consider this as double dipping.
2. ‘Raise the 15% investment by the incubator only when needed.’ Again, NRF said they do not wish to see this model happening. Ideally the incubator would have set aside a sum of money for this investment.
3. ‘Provide and charge services to the startup when they are in incubator.’ NRF felt this is the wrong business model for this scheme.
4. Some commented that the ideal incubator manager NRF is looking for, is actually very niche and the scheme does not allow any room for any leeway. NRF responded that, this is the whole point of the scheme – to co-invest and reduce their risk taking for this group of individuals.