Singapore has been developing its ecosystem to enable the growth of startups, to attract innovators and to attract entrepreneurs. One of the strategic ways is to enable policies to facilitate the ease of setting up a venture capital fund or VC fund in short.
Below is a quick guide to figuring out how to setup a VC fund in Singapore.
1. Build a team
As of today, the team needs at least 2 directors and 2 investment professionals to apply for the VCFM licensing in Singapore.
The ideal team consists of a managing director, a fundraising partner, Vice President and an investment analyst.
In order for the team to agree to work together in the long run, it is best to engage a reward management consultant to design the carry in addition to setting the salary benchmark. You can consider using Hay Group (Korn Ferry), Mercer and McLagan (Aon).
2. Develop an investment thesis
The investment thesis dictates the investment processes that the VC fund invest. This is the core value proposition of the VC fund.
The investment thesis will cover the following:
1. What are the current trends?
2. What are the investment opportunities that are not being discovered by the existing VC funds?
3. Why is this the team that can discover these opportunities?
4. What are the value add that this team can provide to the startups in addition to investing?
5. What is the investment criteria?
6. What are the investment processes?
7. What are the risk control measures?
8. What are the asset liquidation processes?
3. Seek partners in the following order
In Singapore, you will need to apply for a license and one of the best way is to engage a compliance consultant. You can consider Duff & Phelps, Primus , RHT.
Thereafter, you will need to find fund administrators. You can consider Vistral, Alter Domus, Augentis , Apex Fund, SS&C.
Following that you can seek a tax counselor. You can consider PwC, Ernst & Young or Withers Wong. Next, you can seek a external auditors. You can consider PwC or Ernst & Young. Sometimes you can ask for a package deal.
Thereafter, you can seek a Singapore onshore legal counselor like Alen & Glenhill , Rajah & Tan or Simmons & Simmons.
You would also need an offshore legal counselor like Global Walkers or Harney [Harney Westwood & Riegels].
For investigation or background checks for AML and KYC, you can consider using the following companies: Kroll, FTI consulting, Mintz Group, Hakluyt.
Having spoken and work with these existing vendors, I learned that alot of first time VC founders can make mistakes that incur significant costs along the way. Some costs are financial costs which can add up. Other costs are time cost which can affect the time to fund raise and the time to market their VC fund.
If you are a first time VC founder and wish to seek help to launch a fund in Singapore, please feel free to contact me. :)