Mr Lee Yi Shyan at the Singapore Venture and Private Equity Association (SVCA) Gala Dinner, 30 Sep 09

Speech by Mr Lee Yi Shyan, Minister of State for Trade & Industry and Manpower and Minister In Charge of Entrepreneurship at the Singapore Venture and Private Equity Association (SVCA) Gala Dinner 2009 on Wednesday, 30 September 2009 at7.45pm at the Singapore Marriott Hotel

Mr Eugene Wong, Chairman, SVCA Executive Committee and Founder

Ladies and Gentlemen,

Good evening,

Introduction

I am pleased to join you at this evening’s SVCA gala dinner.

This year began on a very challenging note. The financial markets were in turmoil and credit was tight. The world was in the throes of its worst recession since the great depression. Now, confidence seems to be returning gradually. At the G20 meeting in Pittsburgh, there was a joint call for the stimulus packages introduced in the various countries not to be withdrawn in haste. Clearly, there remains substantial downside to the current nascent and fragile recovery.

While we continue to work on the necessary short-term measures to stabiles the economy and ensure liquidity in the market, we must not lose sight in building long term resilience and competitiveness in our firms. Ultimately, only strong and competitive firms would prevail in the longer time.

Singapore’s Entrepreneurship landscape

This is the reason why we have a deliberate strategy to develop entrepreneurship in

Sing ingenious

A number of ingredients are crucial to create an entrepreneur-friendly environment. Access to finance and market is one such critical ingredient for start-ups.

Role of VCs and the transformation of the industry

SVCA’s gathering today is particularly timely in addressing the issue of nurturing start-ups from the angle of managing financial resources, connecting to the markets and accessing to management expertise's.

There is no question that Venture Capital (VC) and Private Equity (PE) form part of the financial eco-system that fire up start-ups. Between 1997 and 2008, VCs invested more than $20 billion in over 350 companies in Singapore.

Looking ahead, as China and India grow, we can anticipate a good increase in VC and PE activities within the region. In fact, the Straits Times reported last week that PE investment in the Asia-Pacific region in the second quarter rose to US$12.1billion – up on the US$10.3billion in the first quarter.

The VC landscape has been undergoing fundamental changes since the dot-com days. A recent study by Deloitte reported that more than three-quarters of the 725 VC Firms surveyed globally believe that the levels of investments will decrease or at best stagnate. In another report, the Kauffman Foundation projected that the shrinking of the VC industry was imminent. These studies serve to highlight that VC models must change and adapt too, just like all businesses. I am sure all of you would have many deliberations on the “how to” of your business models.

Strengthening the VC Environment

The government is ready to play an active role in strengthening the VC environment. Favorable tax conditions for Funds and Fund Managers, such as the Section 13H incentive, have benefitted over 70 companies since 1998, generating over S$800 million worth of investible capital for Singapore startups and enterprises.

We continue to encourage private sector investments in seed-stage enterprises to plug a market gap in seed-financing. SPRING SEEDS Capital offers a co-investment platform with private investors for promising startups and has invested more than $45 million in 170 companies since 2001.

To further enhance the VC industry, the government has launched the Early Stage Venture Funding Scheme, to support six new venture funds with $10million each. The scheme is also part of the government’s efforts to commercialize technologies developed in Singapore.

We are also working with industry associations who want to take the lead in developing drive key capabilities in their industries. SPRING and SVCA are currently in discussion on a three-year project under the Local Enterprise and Association Development or LEAD programme to enhance the VC and PE industry. It will focus on four areas: corporate governance, research and education, industry promotion and media and publications. Such efforts will upgrade the VC community and help transform Singapore into a regional VC hub.

Conclusion

To conclude, let me encourage you, the VC community to continue to play your important role in raising start-ups to be successful enterprises. Your value add would come from not just financial resources, but your abilities to connect start-ups to the markets, management expertise and growth opportunities. We have succeeded in producing many enterprises in the past two decades. I am confident that when we look back in the year 2030, of the kinds of decisions we take in terms of promoting and development entrepreneurship, we will conclude that we have done the right thing.

Thank you for being a valuable partner in this journey of creating a more entrepreneurial Singapore.