Parliamentary Speech, Committee of Supply Debate, Fortitude Budget, 5 Jun 2020
Second Supplementary Estimates of Expenditure
Share this content In Parliament on Friday (Jun 5), Speaker of Parliament Tan Chuan-Jin proceeded to deal with the…
I would like to declare my interest as an impact investor and also founder of social enterprise Hush TeaBar and A Good Space Co-operative. Both are start-ups.
The Deputy Prime Minister announced that $285 million will be set aside to support “promising start-ups”. I appreciate that this is a longer term view to maintain our attractiveness and robustness as one of the top start-up eco-systems in the world. However, start-ups are inherently risky and identification of “promising start-ups” is often a hit-and-miss endeavour. I know this as an investor and an entrepreneur. Economic downturns often sift the wheat from the chaff, leaving the most resilient ones behind. By intervening in the sifting process, is there a danger of the Government artificially propping up ailing start-ups and distorting market forces? Moreover, an inability to adapt to the changing economic landscape by continuing to rely on Government financing seems to go against the spirit of start-ups.
What was the reason behind dedicating $285 million to support “promising start-ups”, which can also tap into the many support schemes for SMEs, over other areas of spending, such as extending greater support to struggling households like public rental waivers? Which immediate concerns or areas of national priority will the $285 million be used to address, for example, climate change? What are the checks and balances in place to ensure that the $285 million will be effectively utilised?
The Senior Minister of State for Trade and Industry (Dr Koh Poh Koon): Mr Chairman, start-ups play an important role in our economy. They contribute to the development of new technologies and the rejuvenation of traditional industries. We have set aside $285 million in the Fortitude Budget to provide financing support for promising start-ups. Ms Anthea Ong asked why our start-ups need more help and how we intend to identify the promising ones. In fact, the answer is in her question. The keyword here is “promising”.
Start-ups, especially those that work on cutting-edge technologies, need to be nurtured with long-term patient capital. COVID-19, unfortunately, has sharply curtailed the availability of such capital. The Special Situation Fund for Startups is intended to fill this gap. Other countries like the UK and France have introduced similar measures.
Without help from the Government, many high potential start-ups will likely scale back their innovation activities or even cease prematurely. That will be a loss to our eco-system. This would certainly have a detrimental impact on Singapore’s innovation eco-system, which we have painstakingly built up over the years. By helping promising start-ups sustain their growth momentum, we want to maintain the vibrancy of our eco-system and maximise the value of our innovation-related investments.
To impose market discipline, the scheme will operate on a co-investment basis with private sector investors that have expertise in assessing the value and viability of start-ups. This will also help ‘“crowd in” more private capital. These co-investors can also offer industry insights, networks and even mentorships to help our start-ups to succeed better.
Mr Chairman, the COVID-19 pandemic presents many immediate challenges. But even as we address the immediate ones, we must not forget to put in place plans for our future, so that Singapore, our companies and Singaporeans can emerge stronger post COVID-19. Start-ups are a critical part of these plans.
The Chairman: Any clarifications?
Ms Anthea Ong: Thank you, Mr Chairman. I thank the Senior Minister of State for the response. I am very happy to hear that we will be co-investing in these start-ups. Could I ask the Senior Minister of State if there is a plan in this co-investing to take equity or is that in the form of grants? And if, once the start-ups are on their way to growth, would we then ask for a clawback of the initial investment or grant?
The Chairman: You have eight seconds.
Dr Koh Poh Koon: Mr Chairman, I thank the Member for the question. Under this scheme, the Government will co-invest in the selected start-ups, together with the private sector, on a one-to-one basis via convertible bonds. A convertible bond is of one of the most expedient instruments to invest into a company in this current COVID-19 situation as discussions on equity valuation can be deferred to later on at the next funding round, hopefully, when the economic situation is better.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Anthea Ong is a Nominated Member of Parliament. (A Nominated Member of Parliament (NMP) is a Member of the Parliament of Singapore who is appointed by the President. They are not affiliated to any political party and do not represent any constituency. There are currently nine NMPs in Parliament.)
The multi-sector perspective that comes from her ground immersion of 12 years in different capacities helps her translate single-sector issues and ideas across boundaries without alienating any particular community/group. As an entrepreneur and with many years in business leadership, it is innate in her to discuss social issues with the intent of finding solutions, or at least of exploring possibilities. She champions mental health, diversity and inclusion — and climate change in Parliament.
She is also an impact entrepreneur/investor and a passionate mental health advocate, especially in workplace wellbeing. She started WorkWell Leaders Workgroup in May 2018 to bring together top leaders (CXOs, Heads of HR/CSR/D&I) of top employers in Singapore (both public and private) to share, discuss and co-create inclusive practices to promote workplace wellbeing. Anthea is also the founder of Hush TeaBar, Singapore’s 1st silent teabar and a social movement that aims to bring silence, self care and social inclusion into every workplace, every community — with a cup of tea. The Hush Experience is completely led by lovingly-trained Deaf facilitators, supported by a team of Persons with Mental Health Issues (PMHIs).
Follow Anthea Ong on her public page at www.facebook.com/antheaonglaytheng