Published February 16, 2009

Incubators get to tap $30m govt grant

IDP scheme aimed at helping them improve services to innovative startups

By CHEN HUIFEN

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BUDDING entrepreneurs can now look forward to greater help from supporting incubators, with the launch of a $30 million Incubator Development Programme (IDP).

Mr Lee: 'We can nurture young companies by making resources readily available to them'

The scheme will help incubators and venture accelerators improve their services to innovative startups here by providing them with up to 70 per cent in grant support.

Incubators can apply for the funding support if they have a unique proposal that will enhance the services they provide to startups. For instance, the suggested proposal may help a particular group of startups in product development, financing, or market access.

To be administered by Spring, the programme will offset up to 70 per cent of the operating costs, including transportation, training, and marketing expenses. Incubators may also use the funding to hire mentors for the startups under their wings.

The aim is to improve the success rate of startups, said Minister of State for Trade and Industry Lee Yi Shyan, who launched the programme last Friday.

'Incubation speeds up the development of startups, especially in their formative years,' said Mr Lee. 'We can nurture young companies by making resources readily available to them, allowing them to grow strong and healthy.'

Spring has already roped in five incubators/venture accelerators to the programme. They are NUS Enterprise Incubator, NTU Nanofrontier, iAxil Venture Accelerator Centre, Business Angel Network Southeast Asia, and Microsoft Innovation Centre. The five, which are receiving $3-5 million each over two to three years, support about 200 incubator firms in all.

Historical data on company formation did not give a clear trend on whether entrepreneurship level rises with declining economic conditions, but Spring aims to seed and nurture 500 innovative startups through IDP over the next three years.

'In this period, I think because the impact on PMETs is wide ranging, so we would assume that it's logical to think that some of the PMETs may become freelancers,' said Mr Lee. 'They may want to work on their own as consultants. And then some would take it one step further to start their company and start doing business from there.'

But converting them from employees to business owners will require some handholding, and Mr Lee urged these budding entrepreneurs to look to incubators for guidance.

'I think the PMET sector is a possible source of entrepreneurship, but the conversion is not straightforward,' he added.

'In other words, it's not like today you leave your job, tomorrow you start a business. I think you have to have some skills, some specialised expertise. And then you also need some cross functional skills in starting a company.'

While acknowledging that demand for goods and services will be affected by the ongoing recession, Mr Lee is of the view that there are still opportunities out there if startups are able to grasp the shift in consumer patterns.

'So if you are in the basic non-frills sector, you actually can do well in this situation,' he added. 'And yet there are sectors and products that will help people become more efficient, consolidate their positions, that haven't yet been imagined or produced.'