Hello, More VCs =//= More Entrepreneurship
At last week’s SME Credit Bureau Conference, Minister of State for Finance Lim Hwee Hwa mooted the idea for a private equity investment organization to support the growth of local SMEs. She envisions this organisation to provide financial support and training to companies up to a point where they are ready to launch an IPO.
Ms Lim further explained that startups often have great difficulty getting loans from banks (which is an understatement, since banks only support companies with an established financial track record which startups do not have), and added that “what a lot of startups need is to find these private equity investors who can put in money, take the risk and reap the reward when the startup business becomes a viable business.” Her idea was lauded by many, such as ASME president Lawrence Leow.
OK this sounds nice and warm in theory, but can someone explain to me why this will even work at all? Dear Ms Lim, if I am reading the entrepreneurial scene in Singapore right, the problem is not that there isn’t enough money to go around. The VCs are here in Singapore, Ms Lim, thanks to our government’s aggressive courting for them to set up base here. But why is it that most of them invest in ideas from China and India instead? My guess is there is simplyÂ too few ground-breaking innovative ideas and forward-looking companies here that venture capitalists find worth backing.
Getting a bunch of competitive VCs to sit together and share business opportunities is not only impractical but highly improbable. VCs are in it for the money, Ms Lim. They are responsible to their financial backers – not to the welfare of the Singapore economy and the general well-being of our people.
It absolutely baffles me why the authorities continue to believe that it is purely the lack of access to capital that stymies entrepreneurship in Singapore. It is not. We need to deal with the root of the problem, which is the unfortunate lack of innovation and creativity in our society.
For once, let’s think outside the (yellow) box.
Young Upstarts is a business and technology blog that champions new ideas, innovation and entrepreneurship. It focuses on highlighting young people and small businesses, celebrating their vision and role in changing the world with their ideas, products and services.