SINGAPORE : Singapore aims to encourage the creation of small, innovative, high-tech start-ups as part of its push to further develop entrepreneurship in the country.

Chairman of the National Research Foundation, Dr Tony Tan, said the venture capital industry must continue to grow in order for entrepreneurship to thrive.

Some S$19 billion in venture capitalist funds are now managed out of Singapore. This is almost double the S$10.2 billion when Singapore first started its technoprenuership scheme in 1999.

At the same time, the number of local venture-backed companies has more than doubled from 375 in 1999 to 943 in 2006.

Dr Tan said it is still early days in the journey to bring about a pervasive technoprenuerial culture in Singapore. The Foundation will do more to bring innovation and entrepreneurship in Singapore to the next level and turn the economy into a knowledge-based one.

However, he said Singapore can take heart that the Technoprenuership 21, or T21, initiative has prepared the country well to deal with challenges in the future. The T21 initiative was launched in 1999 by Dr Tan when he was the Deputy Prime Minister.

Dr Tan said 3 big 'O's will dominate this century - biO or biotechnology, nanO or nanotechnology, and infO or information technology.

In the last 8 years, T21 has helped develop an eco system for technopreneurship focused on four elements - education, facilities, regulations and financing.

From 2004 to 2006, the number of incubators - of space for fledgling companies to conduct their business at an affordable cost - grew from 85 to 114. Of these, some 40 were from foreign countries.

To develop a pro-enterprise environment that is supportive of young start-up companies, the Technopreneurs Home Office Scheme was expanded into the Home Office Scheme in 2003.

This allows home owners to conduct a wide range of small-scale businesses in their homes. To date, some 31,000 applications under the Home Office Scheme have been approved.

As of June this year, the government has invested some S$40.7 million to support 151 companies through the Start-up Enterprise Development Scheme - or SEEDS - where the government co-shares some of the risks in 'seed' funding of start-ups.

Going beyond T21, Dr Tan said Singapore will now focus on growing more small, innovative, high-tech start-ups.

He said: "As institutes of higher learning have the greatest capacity for knowledge creation, it is important to infuse a culture of academic entrepreneurship in our universities and polytechnics so that academics will carry out... research and play an active part in exploiting their research results for societal good.

"The National Research Foundation will be implementing initiatives to do this together with other agencies. "We lack the small, innovative, high-tech start-ups needed to complete the mix. This is what we now need to focus on.

"We need to deepen and broaden the nexus between academia and the technopreneurial community of start-up and venture capitalists. We want to encourage the formation of small and nimble high-tech start-ups built upon technologies created at the institutes of higher learning."

The biggest financial commitment by the government to T21 was the US$1.3 billion Technoprenuership Investment Fund in 2000. TIF Ventures, which was set up to manage this fund, has helped to stimulate the venture capitalist industry in Singapore.

However, the government recently decided that the TIF Ventures had fulfilled its mission of developing Singapore's venture capital industry, and that the TIF would not be making any further investments. Existing TIF portfolio, however, will be managed until the end of fund life.

The issue of government funding for start-ups dominated the dialogue with venture capitalists.

Mr Ong Sang Bin, Executive Director, Enspire Capital, said: "We need to sustain the development effort in venture capital." With the government playing a key role in helping to support, or provide some of the continued funding in this area, when we, as a venture capitalist, go raise money in the market, we can say the government is supporting us and other investors will follow, he added.

"And with the money that we raise we can then invest in the company and make sure that we continue with some of the work that we're doing with some of these start-up companies. They're usually in the expansionary stage where they actually need more money to bring the product to the market."

But it is not just about funding. Participants at the forum say what is lacking in Singapore is an eco-system, where there is expertise in selling a bright idea, where there is mentoring of its innovators, and some hand-holding to see ventures through from their inception to success.

Dr Tan agreed that the discontinuation of investment in the Technoprenuership Investment Fund Ventures makes it harder to raise venture capital funds and sponsor equity funds. He added that he will discuss the issue with the Trade and Industry Ministry. - CNA/ch