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NRF to allow more Investors to benefit from Successful Tech Incubator Scheme
14 October 2011NRF TO ALLOW MORE INVESTORS TO BENEFIT FROMSUCCESSFUL TECH INCUBATOR SCHEME• The 7 technology incubators selected under NRF’s Technology Incubation Scheme (TIS) have invested in 31 start-up companies since Aug 2009, creating much vibrancy in Singapore’s entrepreneurial environment• NRF will now open up the application process to allow more qualified investors to set up technological incubators under the TISHave a great idea that you think can be turned into a killer application? The NationalResearch Foundation (NRF) can help you to take the first step. Since Aug 2009, itsTechnology Incubation Scheme (TIS) has seen 7 Technology Incubators invest in 31start-ups and provide them with systematic management guidance and mentorship.The success of the scheme has prompted the NRF to bolster the pool of incubatorsby inviting more experienced investors and entrepreneurs to join the TIS.Under the umbrella of the National Framework for Innovation and Enterprise (seeAnnex A), the main aim of the TIS is to help start-ups improve their chances ofturning innovative ideas into commercial businesses (see Annex B). The current TISIncubator Managers were chosen by NRF to provide mentorship and guidance tohigh tech start-ups during the most vulnerable seed stage of their development. TheIncubators are also required to invest in their incubatees as well as help them securefurther funding after incubation.The selected TIS incubators comprise both local and foreign managers. Theseinclude the successful Plug and Play Incubator from Silicon Valley and incubatorsset up by Brad Greenspan, internet entrepreneur and founder of social networkingcompany MySpace and angel investor Joiichi Ito, who was recently appointeddirector of the famed MIT Media Lab in the United States.Announcing the open application process for TIS at Techventure 2011, Dr FrancisYeoh, CEO of NRF, said: “We are pleased that the TIS scheme has created quite abuzz in the entrepreneurial eco-system in Singapore. The incubator managers havebeen actively making their investments in a good number of high quality start-ups,with many more in the pipeline. The TIS scheme provides very good leverage forincubator managers, allowing them to invest in more companies because of NRF’sco-funding. However, there is a very important principle in the TIS implementation –all funding goes to the start-up and all efforts are directed to make the start-upsucceed. In this way, the objectives of all parties are aligned to ensure the start-up’ssuccess, because no one benefits otherwise.” 1
Mr Bill Liu, Chairman & Managing Partner at TIS Incubator Stream Global Pte Ltd,said, "Being part of the TIS scheme enables us to leverage on the risk sharingplatform provided by NRF. The seven partners of Stream Global who are allexperienced ex-CEOs of listed and non-listed companies can give the incubateesgood advice especially in the ICT and digital media sector. We are looking to helpentrepreneurs with innovative ideas and passion to realize their dreams throughworking with us."Mr Chua Zi Yong, CEO of Stream Media, a start-up invested by Singtel’s Innov8 andStream Global, commented: "Branding and credentials are very important in the B2Bbusiness, especially when the clients and partners are foreign companies andMNCs. The TIS scheme lends us credibility and enables us to leverage on theSingapore brand overseas, in addition to financial resources to scale our operationsand sales activities. We have since sealed agreements with companies like LenovoChina and MOL and will be entering the Chinese market later this year."Mr Reza Behnam, CEO of Adzcentral, an advertising platform company incubatedunder TIS incubator Neoteny Labs, added, “China and India have been receiving alot of attention from technology investors and venture capitalists (VCs) because oftheir market size. Singapore, however, is an ideal location to start up a company andschemes like the TIS just make it even more attractive. NRF’s co-investment not onlyhelped us start up but also helped attract further investments into the company.”Experienced investors and entrepreneurs who are interested in joining the TISscheme are encouraged to approach the NRF. The same terms enjoyed by thecurrent incubators will apply as will the obligations and expectations. NRF willevaluate the applications and admit those who are able to meet the criteria of theTIS. Prospective Incubator managers are invited to submit an application (form ofexpression of interest attached as Annex C) to the National Research Foundation firstname.lastname@example.orgEncl: Annex A – NFIE Factsheet Annex B – TIS Factsheet Annex C – TIS Expression of Interest__________________________________________________________________The National Research Foundation (NRF)The National Research Foundation (NRF), set up on 1 January 2006, is adepartment within the Prime Ministers Office.The NRF sets the national direction for research and development (R&D) bydeveloping policies, plans and strategies for research, innovation and enterprise,funds strategic initiatives, builds up R&D capabilities and capacities throughnurturing our own and attracting foreign talent, and coordinates the research agendaof different agencies to transform Singapore into a knowledge-intensive, innovative 2
and entrepreneurial economy. It provides secretariat support to the Research,Innovation and Enterprise Council (RIEC), chaired by the Prime Minister.The NRF aims to: • Transform Singapore into a vibrant R&D hub that contributes towards a knowledge-intensive, innovative and entrepreneurial economy; and • Make Singapore a talent magnet for scientific and innovation excellence.For more information, please visit www.nrf.gov.sg.For media queries, please contact:Ms Cheryl LohHead, Corporate CommunicationsNational Research FoundationDID: 6684 2928; Mobile: 9880 5507E-mail: Cheryl_Loh@nrf.gov.sg 3
ANNEX AFACTSHEETNational Framework for Research, Innovation and Enterprise (NFIE)The National Framework for Innovation and Enterprise (NFIE) aims to growinnovation and entrepreneurship and strengthen the entrepreneurial eco-system inSingapore.NFIE was approved by the Research, Innovation and Enterprise Council (RIEC),chaired by Prime Minister Lee Hsien Loong on 28 March 2008. The framework willencourage institutes of higher learning (IHLs) – universities and polytechnics – topursue academic entrepreneurship and turn their R&D results into commercialproducts for the market place. It will also help entrepreneurs to start up technology-based companies.The NFIE has been reviewed and updated since it started. The current budget of$360m supports the following initiatives:Scheme SchemeEarly Stage Venture Fund (ESVF) Proof-of-Concept Grants (POC)The NRF invests $10 million, on a 1:1 This grant of up to $250,000 is formatching basis, to seed 6 venture capital technology proof-of-concept(VC) funds that are required to invest in development projects. NRF administersSingapore-based early stage high-tech the scheme for IHL-linked researchers while SPRING Singapore (thecompanies. As an incentive, the VCs are government agency responsible for smallgiven an option to buy out NRF’s share businesses) manages a parallel schemeof the fund within 5 years by returning for companies.NRF’s capital with a nominal interest.Disruptive Innovation (DI) Incubator Technology Incubation Scheme (TIS)This scheme supports a business The NRF co-invests up to 85% (cappedincubator which invests in Singapore- at S$500,000) in Singapore-based start-based start-ups with disruptive up companies that are incubated by the selected Technology Incubators. Ininnovation. The methodology is based on return, these incubator operators providethe work of Harvard professor and their investee companies with physicalinnovation guru Clayton Christensen. space and systematic guidance. As an incentive, the incubator operators are given an option to take over NRF’s stake in the start-up companies within 3 years by repaying NRF’s investment with a nominal interest. 4
Scheme SchemeTranslational R&D Grants for University Innovation Fund (UIF)Polytechnics (TRD) This provides funding to the 3These development grants of up to universities for approved innovation-$500,000 are given to researchers in the related activities. Each university mustpolytechnics to carry out translational set up a high-level Enterprise Board toresearch using intellectual property (IP) oversee and manage the fund.from the universities and researchinstitutes.National Framework of IP Principles Innovation and Enterprise Institute (IEI)This is a framework to speed up the The proposed Institute’s objective is tolicensing of IP from the universities and help develop the innovation andresearch institutes to industry. enterprise (I&E) eco-system by providing the necessary information, research methodology and relevant networks to galvanise I&E activities in Singapore.Global Entrepreneur Executives (GEE) Innovation Vouchers SchemeThis is a scheme to get high-growth andhigh-tech venture-backed companies This is a scheme where local enterpriseswith Global Entrepreneurial Executives 1 are given vouchers that are redeemable for R&D and technical services from the(GEEs) in ICT, medtech and cleantech to IHLs and public research institutes. Thisrelocate to Singapore. NRF will invest scheme has since been transferred toup to US$3m in matching funding to SPRING Singapore.eligible companies through 2 SingaporeVCs, in the form of convertible notes.1 GEEs refer to entrepreneurs with significant operating experience and track records (in a leadership capacity)in the growth of successful start-up companies. Specifically, they should have played a leadership role in acompany’s growth from start-up to at least US$100 million in revenue or company valuation. 5
ANNEX BFACTSHEETNRF’s Technology Incubation Scheme (TIS)Under its Technology Incubation Scheme (TIS), NRF has selected 7 IncubatorManagers to nurture early stage high tech start-up companies in Singapore.These 7 incubators are: • Clearbridge Accelerator • I2G Tech Accelerator • Neoteny Labs • Plug & Play • Social Slingshot • Small World Group • Stream GlobalThe TIS, modeled after Israel’s Technological Incubator Programme, provides up to85% (capped at S$500,000) of funding for each start-up company identified by theIncubator Manager, with the latter making up the rest of the investment. As anincentive, the Incubator Manager has the option to buy out NRF’s share in theinvested start-ups within 3 years of investment by repaying the capital plus interest.In this way, the government shares the risks of investment while providing theIncubator Manager with the upside of success in return for its efforts in nurturing thestart-ups.The TIS call for proposal on 25 August 2009 received 32 submissions from local andforeign incubator managers. Seven incubators were eventually chosen on the basisof their ability to provide suitable mentorship, the extensiveness of their networksand their commitment to link start-ups with customers and investors for subsequentfunding. Under the guidance of Incubator Managers, the chances of start-ups turningtheir ideas into viable businesses are greatly enhanced.Including Innosight Ventures2, which was separately approved under the DisruptiveIncubator Scheme, there are now 8 NRF-supported technological incubators.2 Innosight Ventures is an incubator under NRF’s Disruptive Innovation Incubator Scheme. This incubator,based on the disruptive innovation methodology of Prof Clayton Christensen, has been set up to identifycompanies that have the potential to disrupt a current industry and create new ones. 6
ANNEX CExpression of Interest in the Technology Incubation SchemeBackground of Technology Incubation Scheme (TIS)1. The TIS comes under the umbrella of the National Framework for Innovation & Enterprise (NFIE), which was formulated in 2008 with a $360 million budget to advance R&D-based innovation in Singapore with a view to commercialization. NFIE encourages institutes of higher learning (IHLs) – universities and polytechnics – to engage in innovation and academic entrepreneurship to turn their R&D results into commercial products for the market place.2. Under the TIS, the National Research Foundation (NRF) will co-invest with the chosen technology incubators in Singapore-based high-tech start-ups. Incubators have the option to buy out NRF’s equity share within 3 years of investment.3. NRF invites suitable parties to submit proposals to operate such technology incubators. These incubators should have the means to select high-quality start-ups, the resources to invest in them, the physical space to house them, and the ability to support them via mentorship, access to customers and the securing of follow-on funding etc.Eligibility4. Interested parties with experience in start-up incubation, venture funding orhigh-tech entrepreneurship may apply.Terms of the Technology Incubation SchemeCO-INVESTMENT TERMSFunding Quantum Co-funding of up to 85% of total investment for each company (or a maximum of S$500,000 per investment). The incubator manager provides the rest of the investment.Eligible Investee High-tech start-up companies based inCompanies Singapore.Equity Stake NRF and the incubator manager’s equity in the investee company will be at the same valuation and in accordance with their investments. NRF’s equity will be in the form of a convertible bond.Maximum Share of As a general rule, the investment in the 7
Investee Company 3 investee company should not dilute the founders’ share to less than 50%.Buyout Option NRF will offer an option for its share in the investee company to be bought out, at a price of 1.1 times capital in the first 2 years, and 1.15 times capital in the third year.REQUIREMENTS OF INCUBATORSIncubator Manager There should be at least one full-time incubator manager to provide active mentoring to investee companies.Link to Institutes of Higher It would be desirable for incubators to haveLearning (IHL) some linkage to institutes of higher learning.Physical Space The incubator should have a suitable space to house the investee companies.Operating Expenses Operating expenses for the incubator will not be funded by the scheme.Selection Process5. NRF’s panel of experts will select the incubators based on the merit of theirproposals.Proposal Submission6. Interested parties can submit their proposals to NRF with the following details: • Description of Incubator: Organisation structure, operations, staffing • Incubator Managers: Bio-data and track record of incubator managers • Description of Incubation Process: Process for selection and nurturing of start-up companies; plans to help incubatees secure follow-on funding after incubation. • Funding: Proposed mechanism to fund the set-up and operation of the incubator.7. All proposals should be submitted by email to email@example.com. Pleasetitle your email as follows: “Technology Incubation Scheme - <Incubator Name>”.3 This is to ensure that the founders remain committed to the success of their company. 8