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  • MyPaper Article on The Challenges of Starting-Up in English

    Jan
    21
    posted by JY on Thursday, January 21, 2010 at 1:14pm Categories: Blog

    This post is a translation of an interview conducted by MyPaper, a Mandarin newspaper based in Singapore. Starring Prof. Wong Poh Kam,Vinod Nair, Chua Ziyong and Mohan Belani.

    For the benefit of our non-Chinese readers. Enjoy! :)

    The Challenges of Starting Up

    Although Vinod Nair  was able to obtain government grants and funding from an university for his first startup, ultimately he did not succeed.

    He admits that his failure was due to too much time spent on designing his web page and on developing suitable web technology which resulted in him neglecting his business model.

    “On hindsight, the most important thing about ensuring a startup to be successful is to have a sound business model. You need to plan how the money is going to be earned, and you must have a certain amount of confidence in your idea before investing time and money into your startup.”

    He was then a recipient of a 50k cash grant under the i.JAM scheme under the IDM R&D Programme Office (MDA). Furthermore, the NUS Entrepreneurship Centre Incubator had provided him with a free office space.

    He confessed that the biggest problem he faced was still a lack of money. He says that the 50k cash grant was only enough for his company to design their website, after which he needed to fork out cash from his own pocket to pay for day-to-day operations. He faced many difficulties as local investors were only willing to invest in established companies.

    Vinod Nair has gained valuable lessons and experience from his failure. He has since risen above his failure and, after close scrutiny of the market movement, re-entered the startup market.  With a better business model in mind, he was able to get a loan from a bank to finance his venture and his company was able to break even in a respectable 4 months.

    Where can local tech startups look for funding? Is this funding sufficient? What challenges will they face? Let <MyPaper> answer these questions.

    Starting-Up in Singapore

    Despite there being a substantial number of schemes and enterprise incubators available in Singapore meant to encourage local startups, there is no way any startup can be nanny-ed through every problem they face. Such is the process of entrepreneurship: startups must solve the problems they face on their own.

    MyPaper has interviewed Prof. Wong Poh Kam to find out more about the three main challenges any startup will face and possible solutions to solve them.

    Problem 1: Funding

    Chua Ziyong, the founder of Stream Media, establised his first startup before graduating. He points out that there are channels for startups to obtain seed funding and grants, such as the grant that Stream Media obtained from SPRING Singapore.

    However, just as any company completes its prototype and prepares to release it onto the market, more funds are required and thus most startups face another major roadblock at this stage. This is because as compared to the Silicon Valley scene in the USA, local investors are not as willing to take the risk.

    Prof. Wong Poh Kam says: Singapore lacks funds to see a startup through the period in between initial seed money and venture capital funding. This amount can be anything from 500k to 1.5mil. However the government has recently implemented several schemes such as SPRING, Business Angel Funds and the Technology Incubation Scheme (TIS), which will be able to fill up this chasm of funds.

    Prof. Wong Poh Kam advises that companies who have used up their seed funds and which shows potential should apply for government schemes ASAP and to work with these organizations to come up with sound business plans, and not wait until their funding have dried up to do so.

    Problem 2: Lack of (affordable) talents to hire

    Vinod Nair discloses that because Singaporeans’ starting expectation pay is rather high, many startups have no means to fund their salaries. Outstanding talents expect a higher salary, thus it is difficult for startups to attract such talents.

    Chua Ziyong says: In KL hiring a developer requires RM2000 to 2500, however in Singapore to hire a graduate requires at least SGD 2800.

    Prof. Wong Poh Kam points out that for startups to hire talent, they can consider providing potential employees with stock options. This is an increasingly common scenario.

    Problem 3: Lack of mentors

    A mentor can guide startups from suffering setbacks, which is very crucial.

    Chua Ziyong reckons that the largest challenge any local tech startups face is that there are insufficient opportunities for interaction with good mentors who are well versed in IDM. This is because such a domain is still relatively new in Singapore unlike in the Silicon Valley.

    E27’s Mohan Belani admits this problem is present in Singapore; however he feels that the situation is improving. For example, the TIS scheme will attract mentors who have a wealth of experience such as the well known entrepreneur and investor Joi Ito and Plug and Play Technology Center’s CEO Saeed Amidi etc. Startups can also look overseas for experienced mentors.


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