Mr Lee Yi Shyan at the Award Ceremony of the Emerging Enterprise Award 2011, 23 June 2011

SPEECH BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE & INDUSTRY AND NATIONAL DEVELOPMENT AT THE AWARD CEREMONY OF THE EMERGING ENTERPRISE AWARD 2011 ON THURSDAY, 23 JUNE 2011 AT 7PM AT SHANGRI-LA HOTEL, ISLAND BALLROOM

Mr David Conner, CEO, OCBC Bank,

Mr Patrick Daniel, Editor-in-Chief, Singapore Press Holdings

Mr Alvin Tay, Editor, The Business Times,

Ladies and Gentlemen,

Good evening.

Introduction

Thank you for inviting me to the 4thEmerging Enterprise Awards (or EEA for short). The organizers told me that they received twice as many applications this year. Congratulations to the OCBC Bank and The Business Times.

I think the growing popularity of the Award reflects well both the prestige and tangible values the award brings to the aspiring companies.

Consider the example of KAI Square, an EEA Winner in 2010. Kai Square provides innovative solutions for surveillance and monitoring. Currently, the company is developing a real-time monitoring system for hospital’s Accident and Emergency (or A&E) services. The system enables hospitals to receive live data feed of patients while being transported to hospital in ambulances. The real time system will improve the timeliness of diagnosis and patient care upon arrival. Winning the EEA has certainly helped distinguish KAI Square from its competitors. It has also enabled the company to attract potential business partners, both locally and in the region.

Another 2010 winner was MAJ Aviation. Since winning the Award, the company has established a hangar infrastructure at the Seletar Aerospace Park. I am pleased to note that they have become the first in Singapore to cater to the maintenance, repair and overhaul needs of smaller aircrafts. Again, the capability development support provided by SPRING Singapore and the loan facility by OCBC bank have been helpful to MAJ in achieving its milestones.

KAI Square and MAJ Aviation are two fine examples of local enterprises defining their market niches and achieving growths by being resourceful and innovative. I hope that more local enterprises will be inspired by their single-mindedness and quest for breakthroughs.

Grooming the Next Wave of Emerging Enterprises

There are 154,000 SMEs in Singapore. Statistics shows that only 5% of companies in the services and manufacturing sector have revenue of more than $10 million. While small, start-ups and small companies in Singapore continue to generate most of the jobs at any given time. Many of the large enterprises we know today were once small start-ups too. It is therefore important that we continue maintain a conducive environment for small businesses to flourish.

A business environment that is conducive

In delivering a business-friendly and supportive environment for small businesses and start-ups, SPRING Singapore works with a group of partners to enhance the eco-system for entrepreneurship. We believe in the partnership approach, in leveraging the discipline and dynamism of the private sector, and the resources of the public sector, in creating a winning formula and nurturing environment for businesses to thrive and succeed.

The business angel community is one such group. Business Angels bring smart money. Besides availing initial equity, angel investors add their business skills, industry knowledge and business contacts to start-ups. To catalyze more angel investments in Singapore, SPRING launched the Angel Investors Tax Deduction Scheme last year. This is in addition to another program called SEEDS launched earlier. The SEEDS program matches the investment dollars of independent private sector investors by 1:1 to multiply the capital injection for start-ups.

The important role of business incubators

Another group of key partners is the incubator. Incubator houses start-ups in their early stages. It provides a range of value-added services, including shared business services, advisories in technology, access to financing, formulation of growth strategies and mentorship. In short, it helps start-ups to build up the first revenue stream.

In the United States, incubation began in the 1980s and took off in a big way in the late 1990s.According to a report by the National Business Incubation Association published in 2008[1], incubators in America have helped more than 27,000 start-ups which on average, generated revenue of US$620,000 and 3.7 jobs each.

Some of the successful companies that trace their roots to incubators in the USA include HP, Xerox and eBay. These are the results of 40 years of incubation efforts.

Recognizing the roles of incubators, Spring Singapore launched the Incubator Development Programme (or IDP) in 2008 to enhance the start-up landscape.Since then, IDP has provided $20 mil in funding support for 11 incubators and venture accelerators to build up their infrastructure and capacity which in turn would groom many more innovative start-ups.

IDP has produced good results. In the short span of three years, our IDP partners have incubated some 300 start-ups which in turn generated some $40 mil revenue and over 500 jobs.

More than 50 of these start-ups have drawn the interest of business angels and venture capitalists by receiving more than $22million of equity investments from them. Most of these start-ups are still in their early stages of development. I believe their best is yet to be.

Some of us might have heard about McAfee’s multimillion dollar acquisition of our local start-up, ten Cube, last year. Actually, ten Cube was incubated by the NUS Enterprise Incubator. This goes to show that our incubators do produce good “incubates” of international standard.

Another startup, Smoov recently raised some $2 million in funding from local investors. Today, Smoov employs more than 50 employees. Again, Smoov received incubation support from NTU Ventures and equity funding from SPRING.

For a two-year old startup, Smoov’s journey has been remarkable.

Other start-ups “graduated” from their “incubation homes” as they gained operational and financial independence. Cadi Scientific, another startup from the NUS Enterprise Incubator and investee of SEEDS, developed a revolutionary RFID system to help hospitals enhance patient care and reduce nurses’ workload. Their products are now deployed in the hospitals of Singapore, Hong Kong, China and Malaysia, benefiting more than 500,000 patients. It has even helped Singapore General Hospital clinch an award for “Best Use of Clinical Records – Inpatient” last year. With a growing outreach, Cadi Scientific has already raised more than $6million through private sector investments.

Conclusion

Ladies and gentlemen, the great examples we have just discussed are but some of the most promising and innovative enterprises emerging from the entrepreneurship landscape of this country. Compared to 10 or even 5 years ago, our environment for entrepreneurship today is far more nurturing and supportive, aided by a set of value-adding partners that are specialized in their offerings and sophisticated in their skills. As our emerging enterprises take on the many opportunities a globalized market now offers, the challenge of an entrepreneur will be complex, and his work unending. Just as they charge forward with new ideas and business models, we would, as their partners, cheer them on with our support and resources.

It is my pleasure therefore to congratulate all the 15 finalists and many participants to this years’ Emerging Enterprise Award, for taking on the world with their niches and unique value propositions. I wish all of them every success in their endeavors now and in the years ahead.

 [1]Linda Knopp, 2006 State of the Business Incubation Industry. Athens, Ohio: National Business Incubation Association, published August 2008.