Innovators will continue to get support but they should come up with genuinely new concepts and products instead of the copycat ideas that often get pitched to investors.
Ms Yong Ying-I, permanent secretary of the National Research Foundation and the Public Services Division, told a gathering on Tuesday: "I see a variety of funding proposals from start-ups and I do worry that many are pursuing 'me-too' ideas in highly competitive spaces."
She singled out two companies that turned fresh ideas into new solutions.
YFind developed an indoor positioning technology that lets mall owners monitor shopper movements while Digify created a new way for companies to store their documents securely in the cloud.
While Singapore's small size is a disadvantage, it can pull together all the different parties to unify policy, technology and industry, said Ms Yong.
There is also support from various government agencies in the form of $1 billion in funding between 2011 and 2015 to back innovation.
Ms Yong was speaking at the one-day Google Big Tent at Chijmes, an event aimed at promoting innovation. About 150 people were at the event, which has also been held in nations such as Poland and South Africa.
Speakers said Singapore's business-friendly environment led them to found start-ups here but they also highlighted its risk-averse culture and the preference for high salaries over accepting equity as part-payment.
Ms Yong also said the Infocomm Development Authority (IDA) will foster innovation by giving people hands-on time to tinker with new products to see how they can be improved for office use. The IDA Labs, which will be in the IDA offices in Pasir Panjang, will involve local tech companies showcasing new products, and staff, students, professionals and industry partners will be invited to try them out.
Ms Yong, who is also IDA's chairman, said the Labs aim "to encourage everyone, regardless of age or roles, to try tinkering with technology to test things, make things yourself right within the office space".
The move is intended to help build the credibility of local firms and "spur greater adoption of their technology".
The Labs initiative will also involve industry figures so standards and guidelines for new technology developments can be drawn up, she added.
Mr Chak Kong Soon of local venture capital firm Stream Global backed the Labs idea. He said: "The problem with start-ups has been their inability to get projects from local companies.
"This is one way to give them more credibility. But I hope the Labs will also showcase products for business use and not only for consumers."
He thinks students who spend time at the Labs will become passionate about technology enough to study in an IT-related field at the tertiary level.
Tinkering as a way to foster innovation has been given a big push by the "maker culture", a movement which started in the US around 2005.
It is a technology-based extension of do-it-yourself culture with typical interests in robotics, 3D printing and other engineering-oriented pursuits.
Ms Yong said IDA is strengthening the tech infrastructure on two fronts to get ready for the big data era and the accompanying innovations.
It is looking into creating a nationwide sensor network to complement the fibre broadband system. When it is completed, Singapore will have the ability to gather data for use in new innovations.
"This will provide invaluable information and insights into how things can be improved for the benefit of businesses and citizens."
IDA will work in partnership with industry to develop tech professionals with the skills needed to "know what to do with data coming out of a national sensor network", Ms Yong added.