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The Start-up Enterprise Development Scheme (SEEDS) aims to provide equity financing for start-ups. It is a S$80 million fund administered by the SEEDS Capital Pte Ltd, a wholly owned subsidiary of the Singapore Economic Development Board (EDB). The Scheme aims to foster technopreneurship and innovation activities in Singapore through matching equity financing by the Government.
For every private dollar raised from 3rd party investor(s) by the start-up, SEEDS Capital will match up to a dollar, up to a maximum sum of S$300,000. Both SEEDS Capital and the 3rd party investors will take equity stakes in the start-up, the percentage of which will be in proportion to their respective dollar amount of investment.
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Facts about SEEDS
Funding Principle
The Scheme encourages private sector investments in innovative seed-stage start-ups as a means to stimulate technopreneurship in Singapore.
The start-up and its 3rd party investor(s) jointly apply to SEEDS Capital for SEEDS’ co-funding. If the application is successful, SEEDS Capital will match the 3rd party investor’s investment and take an equity interest in the start-up.
Amount of Funding
SEEDS Capital will match up to a dollar for every dollar of 3rd party private sector cash injection, up to a maximum sum of S$300,000.
The minimum investment by the 3rd party investor(s) shall be S$75,000.
Qualifying companies
- Any legal entity that has secured total debt and equity financing of not more than S$500,000 previously.
- Engaged in the development of new or better products, processes and applications in the manufacturing and services sectors.
- Innovation can be in the form of technology and/or business models.
- Incorporated in Singapore and carry out its core activities in Singapore. For example, if the company globalises, its HQ functions and highest value added functions, such as intellectual property and top management, should reside in Singapore.
- Can be owned by local or foreign shareholders, subject to the provisions of the Companies Act (Cap.50).
- The startup must not have previously received SEEDS funding.
Qualifying 3rd party investor and investors
- Either corporate or individual investor(s) who have no prior interest in the company at the point of SEEDS application.
- For corporate investor(s), it (they) must be legal entities with a minimum paid-up capital of S$500,000. The management of the corporation must also meet the criteria for individual investors, as described below.
- For individual investor(s), he (they) must meet all the following criteria:
- Possess management experience, business contacts or technical expertise that can add value to the startup;
- Not be related to the founder(s) of the startup;
- Not be undischarged bankrupts;
- Declare whether he (they) has (have) been convicted in a court of law, or if there are any pending criminal or civil proceedings against him (them); and
- Maintain arms length transactions with the founder(s)
- On receiving in-principle approval, all 3rd party investor(s) and founder(s) will be required to sign statutory declarations before a commissioner of oaths or a notary public affirming the above. The statutory declaration form will be provided by SEEDS Capital.
- At least one 3rd Party investor or his nominee must take a Board seat in the company and chair its Compensation Committee.
Qualifying business activities
The startup's business activities should have the following characteristics:
- Substantial innovative or intellectual content;
- High growth potential; and
- Scalability for the international market
Excluded business activities
The Scheme does not apply to companies in the following activities:
- Real estate development;
- Gambling;
- Tobacco-related products;
- Other activities which are in violation of law, or against public interest
Disbursements
Upon approval, SEEDS Capital will disburse the funds in the form of paid up capital in 2 tranches, which will be tied to agreed upon business milestones.
Divestment
EDB shall exit from the investment at the earliest of the following:
- Initial Public Offering of the startup; or
- Sales, merger or acquisition of the startup; or
- Such time when a third party cash offer is received by SEEDS Capital for the purchase of its shares prior to the 5th anniversary of SEEDS Capital's investment in the company; or
- If the above exit points have not occurred at the end of the 5 years, SEEDS Capital will review its exit strategies. Should SEEDS Capital choose to divest completely, its shares will first be offered to 3rd party investors, followed by founder(s), followed by existing shareholders. Upon a decision to divest its shares in the start-up, SEEDS Capital will offer a right to both the founder(s) and 3rd party investor(s) to purchase SEEDS Capital's shares based on the proportion of their respective shareholding in the company prior to the divestment.
However SEEDS Capital reserves the right to choose its exit strategy.
Benefits to 3rd Party Investor(s)
On divestment of its shares in the start-up, SEEDS Capital will share up to 1/3 of its net gains above a specified hurdle rate, with the 3rd party investor(s).
Transfer of shares
No founder shall sell, transfer, assign or otherwise dispose of his/her shares for a period of 3 years from the date of the last capital injection by SEEDS Capital
3rd party investor(s) shall not sell, transfer, assign or otherwise dispose of his/her shares without seeking explicit concurrence from SEEDS Capital.
Should the founder and/or 3rd party investor wish to divest their investment, they must first make an offer to the remaining shareholders, subject to the terms of the shareholders agreement described herein.
Shareholders and Subscription Agreements
The founder(s) of the start-up, the 3rd party investor(s) and SEEDS Capital will sign Shareholders and Subscription agreements. The agreements include but are not limited to, the terms and conditions stated in this document.
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Apply for SEEDS
Download the 2 application forms below to apply for SEEDS:
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The startup and its 3rd party investor(s) shall submit the required documents as mentioned below:
- Application form to be completed and signed by applicant(s) and investor(s)
- CV of the applicant(s) and the management team
- CV of the investor(s)
- Evaluation report by investor(s) - one per investor
- Startup company ACRA Business profile reflecting shareholdings and directorship
- Corporate investor (ACRA Business profile reflecting shareholdings and directorship and audited accounts)
- Companies with more than 1.5 years of operation will need to provide audited account statement
- Companies with less than 1.5 years of operation will need to provide a management (pro-forma) financial statement
To find out more about how you can benefit from SEEDS, contact:
Economic Development Board
Technopreneurship & Venture Capital Group
250 North Bridge Road
#28-00 Raffles City Tower
Singapore 179101
Tel: (65) 6832-6832
Fax: (65) 6832-6565
Email: seeds@edb.gov.sg
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