MAS to simplify rules to attract more VC funds into Singapore

Mr Tharman was speaking about the MAS review on VC firm rules at yesterday's opening of fintech hub Lattice80, which aims to create an ecosystem for financial technology start-ups.
Mr Tharman was speaking about the MAS review on VC firm rules at yesterday's opening of fintech hub Lattice80, which aims to create an ecosystem for financial technology start-ups.PHOTO: LATTICE80

Public consultation on proposals to be held in January with changes possibly by July

The rules governing venture capital (VC) firms are being reviewed to make it easier for such funds to set up shop here and increase funding opportunities for start-ups.

VCs have a role to play as they support entrepreneurship and innovation in Singapore and the region, said Deputy Prime Minister Tharman Shanmugaratnam yesterday.

He added that the Monetary Authority of Singapore (MAS) review is looking specifically at simplifying and shortening the authorisation process for new venture capital managers.

There have been grouses that starting a VC fund here can take six to 12 months and is a costly process due to the cumbersome administrative and regulatory requirements.

As part of the review, the MAS is looking at exempting these managers from standard business conduct requirements that are now applied to asset managers in general if they already have robust safeguards in place for investors.

LET THEM FOCUS ON DOING DEALS

Most of the venture capitalists tend to be former entrepreneurs or techies, and don't have experience as fund managers. VC firms should also spend time doing deals, not filling out forms for compliance as they are not financial institutions that accept deposits.

SIRIUS VENTURE CAPITAL FOUNDER EUGENE WONG



MAKING IT EASIER

The moves by the MAS will make it much easier for businesses to come and set up their fund here.

LATTICE80 CHIEF EXECUTIVE JOE CHO

A public consultation on the proposals will be held in January with changes possibly introduced by July.

Mr Tharman also said the MAS is studying whether existing incentives that have attracted traditional asset managers here will be suitable for the VC sector. "We recognise that VC funds and fund managers are typically smaller in size and headcount than traditional asset managers. But they contribute in a different way, by supporting entrepreneurship and innovation in Singapore and the region," he noted.

Mr Tharman, who is also MAS chairman, was speaking at the opening of a fintech hub at 80 Robinson Road called Lattice80.

The hub opened with an initial cost of $5 million and aims to create an ecosystem for fintech, or financial technology, start-ups.

It will also offer a cheaper alternative for fintech firms wanting space in the Central Business District where they would be closer to potential clients. Prices start from $250 per desk per month for the first six months, compared with rates elsewhere in the area that start from $400 or $500.

Sirius Venture Capital founder Eugene Wong noted yesterday that making the set-up process simpler could return the sector to a time when VC firms came under the exempt fund manager licence, which restricts firms to marketing funds only to accredited investors.

Mr Wong welcomed the MAS review. He noted that besides the higher set-up costs for VC funds, requirements such as the need to have qualified managers can bog things down.

"Most of the venture capitalists tend to be former entrepreneurs or techies, and don't have experience as fund managers. VC firms should also spend time doing deals, not filling out forms for compliance as they are not financial institutions that accept deposits."

But, he added, some form of regulation is necessary.

Ms Khushi Mehrotra, programme manager at Singapore-based fintech venture capital firm Life.Sreda, told The Straits Times at the Lattice80 opening, that she was looking forward to the proposals to help VCs, especially since the firm just moved here last year.

Lattice80 chief executive Joe Cho said besides dealing with regulatory issues - and Singapore already provides a relatively smooth process - there are other rising costs such as having offices and systems here. "The moves by the MAS will make it much easier for businesses to come and set up their fund here," he noted.

A version of this article appeared in the print edition of The Straits Times on November 11, 2016, with the headline 'Simplify rules to boost VC activity: MAS review'. Print Edition | Subscribe