A Simple Guide to Sources of Capital Raising in Singapore
In this article, we aim to offer a simple guide to different sources of funds in Singapore that businesses can tap on for raising capital to fund their growth or expansion plans.
Other than family members, relatives and friends, there is a group of investors whom are keen in businesses that are in the very early stage. This group of angel investors provide “seed” money in exchange for some equity ownership of the company. The seed money is used to support business operations until the business is able to generate cash flow and prepare for the next stage of fundraising.
P2P (Peer-to-Peer) lending achieves financing objective through the use of small amounts of capital raised from a large number of individuals via the P2P lending website.
Government Financial Schemes
Singapore government has placed a high priority on helping to finance businesses. Programmes such as Temporarily Bridging Loan Programme, Enterprise Financing Scheme, Loan Insurance Scheme, and Internationalisation Finance Scheme are some examples.
Bank loans are the most common instrument used by businesses in Singapore to finance their growth. There are various products, such as business term loans, invoice financing, commercial property loan, equipment loan, etc.
Related: Business Term Loans in Singapore
Business Incubators and Accelerators
An incubator is an organization that assists and fosters early-stage companies through different developmental phases until the companies have sufficient resources to function on their own. They provide working office environment, administrative services, mentorship, idea generation, and access to investors. Some incubators also inject capital into some of the businesses under their incubation.
Venture Capitalists (VC)
Venture capital, a type of private equity and a type of financing where investors provide to startup companies and small businesses that are believed to have exceptional growth potential. Venture capital funds are typically from wealthy investors, investment banks, and other financial institutions. Venture capitalists also provide technical and managerial expertise.
Private Equity (PE)
Private equity offers an alternative form of financing where investors directly invest in companies or engage in buyouts of such companies. Private equity can take on different forms, from leveraged buyouts to venture capital. Private equity offers liquidity for businesses through alternative funding such as private loans or buyouts.
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