Steps to set up a venture capital fund in Singapore

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.

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.

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 is 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 ways is to engage a compliance consultant. Thereafter, you will need to find fund administrators. Following that you can seek a tax counselor. Next, you can seek an external auditor. You can consider PwC or Ernst & Young. Sometimes you can ask for a package deal. Thereafter, you can seek Singapore onshore legal counselors. You would also need an offshore legal counselor. For investigation or background checks for AML and KYC, you can consider using the corporate intelligence companies.

Conclusion

Having spoken and worked with these existing vendors, I learned that a lot 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 fundraise and the time to market their VC fund.

To get more details on this post, please refer to this original blog at [Guide to setting up a VC fund in Singapore]