As everyone knows that Singapore is considered one of the most preferred destinations in Asia, it is one of the most chosen destinations for all foreign entrepreneurs and investors to play, work, and live. Now Singapore government is planning to turn Singapore into the World’s first truly “Smart nation”.
The Infocomm Development Authority of Singapore (IDA) is one of the primary Organisation of the government specially built for the technical and technological sector, who are currently working to turn Singapore into an innovation-driven company where technology business entity startups can play a vital role in contributing towards the economy and bring the necessary vibrancy and innovation into the tech ecosystem.
In today’s generation, people are moving more towards technology. Since technology has turned into it one of the most common aspects in every individual’s life. It is considered the hub for the high-tech industry and is one of the countries of Asia mainly focusing more on the tech industry’s development at a more incredible place.
As of now, Singapore has gathered several professionals to work on the tech industry development, i.e. venture capitalists, engineers, magnates of the technology sector who are working together on developing Singapore into the most tech futuristic countries and cities worldwide. This is why the Singapore government is attracting a large number of foreign individuals to set up a trading company in Singapore. As per the reports, Singapore is considered as one of the best ventures in terms of a tech company in 2016.
This is the reason why Singapore has turned into home-grown tech start-ups, which are planning to take the tech industry globally and generate a number of job opportunities for all people.
People are usually confused between Subsidiary Company & Branch Office in Singapore, but there is a huge difference between them.
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Incorporating a company in Singapore is now an easy task. So if you have acquired expertise in the industry and looking to take your business to a greater extent and want to make its presence in Singapore, before you take any decision, it’s better to check the considerations, what additional points you need to keep in mind, and what steps you need to follow to set up a tech company in Singapore successfully.
Below we have covered the complete guide on opening a company in Singapore.
Steps to open a Tech Start-Up company
After considering all the key points when you have decided to open up tech company in Singapore, then follow the below-given steps diligently.
Step 1-Approach a company incorporation specialist
The very first step involved in launching a tech company in Singapore is to visit the company incorporation expert to discuss the intervention and the few ways to protect intellectual property in Singapore. The incorporation specialist will also help you in guide in choosing to open a tech company in Singapore is good option or not. And if it is a reliable option, then among all the five options in Singapore which kind of business entity you should go with is also important thing that you need to consider with the incorporation expert.
Step 2 – File patent application
With the help of the incorporation expert, you can also submit the patent application on the invention prior to it become public. However, the critical asset of the tech company is intellectual property; ignoring this step might affect your company’s profitability in the future.
Step 3 –Create a network with entrepreneurs
The other step is to develop a network with like-minded entrepreneurs, survey the ideas with the investors intending to invest in your business, and determine all the commercial aspects with the targeted customers.
Step 4 –Plan your business details
The next step involved in the opening of Tech Company in Singapore is to start planning for your business in detail by getting a complete understanding of the competition in the market, need of the funds, profitability, and a roadmap of the productization.
Step 5 –Negotiate the license or option agreement
In case the start-up is managed by the rehearsal Centre, which is funded either by the private entities or government, always ensure to negotiate about the option or license agreement.
The license agreement is one of the most important documents when starting up a business in Singapore. This agreement grants the company the entire right to use the intellectual property, including patent or copyright, commercially; in comparison, the option agreement grants the company a limited time right to acquire the complete license agreement operating the option to acquire the license.
Step 6 –Pursue the funding
The final step to establish a trading company in Singapore is to pursue the funding as commercializing technology which usually requests external capital. Besides, several other fund-raising options used by several business start-ups worldwide include angel investors, private financing, venture capitalism, and equity fundraising. In addition, there are a number of government financial institutions schemes options available for the tech company in Singapore.
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Singapore Specific Aids for Tech Start-ups
Accelerator
The accelerator scheme offers notable tech business start-ups with the targeted advice and intensive mentoring from a group of successful entrepreneurs, investors, and domain specialists. It winds up in a demo day where the founders of the company get an opportunity to meet the investors and CEOs who are looking for the excellent business startup inform IDA.
IDA Labs
The next initiative taken by the Singapore government is IDA Labs; it is the physical lab space for all the business entities, individuals, and government agencies to develop new ideas, test new concepts, collaborate, and promote new technologies to take the business to greater heights.
Accreditation@IDA
The third and final initiative taken by the IDA is called the Accreditation@IDA, the primary aim behind this specific aid is accrediting innovative Singapore-based tech companies to build the credentials and arrange them as eligible contenders to government and large enterprises buyers.
Technology Enterprise Commercialization Scheme (TECS)
Technology enterprise commercialization scheme (TECS) is a good initiative by SPRING Singapore whose primary aim is to assemble the growth and formation of the tech company based on substantial intellectual property and a scalable business model. According to this, SPRING offers quick funding for research and development efforts towards the commercialization of proprietary technological ideas.
IP registration
The Singapore Government offers a scheme to allow IP in-licensing costs incurred to reduce.
Important Note for Future Technopreneurship
Shareholders agreement
Usually, tech experts when planning to launch a tech company and enter completely into the tech world, most of the individuals skip the most critical aspect of the tech company startup, i.e. Shareholder’s agreement.
Shareholders’ agreement states the relationships among the shareholders and their respective obligations and rights. This agreement not only makes sure about the management of the company but also outlines the guidelines for probabilities like dividend policy, breach of obligation by shareholders, death of key shareholder, protection of the minority, fundraising (like shareholder loan) and dilution, etc. One of the essential points in the shareholder’s agreement is managing the overall rights and responsibilities of the company.
It’s always recommended to secure your interest and understand the controlling rights and responsibilities of your company if you are the only person behind the ideas. The reliable option is to get in touch with a company incorporation expert in Singapore to get a clear view of how it can be done.
However, when the number of shareholders exceeds two or when there is a minority shareholder, the restricting management provision can be the essential protection mechanism for those individuals who can be termed as outvoted. Generally, the shareholder’s agreement states that several conclusions might require consistent approval and others specified percentage of more than 50%.
Additionally, you also need to ensure that the shareholder agreement provides separate provisions. It means that if a shareholder performs an act or omission, it will be termed as a breach of agreement and therefore results in special category rights being consulted to some other shareholders.
One of the most unusual and ideal examples of the shareholder’s agreement for the tech company is what happens with Mark Zuckerberg, currently, the founder and CEO of Facebook was stuck with some investors during the time of social networking early years.
An ideal but unusual example of a shareholders’ agreement for tech start-ups is what Mark Zuckerberg, founder of Facebook and CEO, got struck with some key investors during the social networking giant’s early years.
Before Facebook came into the limelight several years ago, Mark Zuckerberg managed most of its voting rights while holding more than 28.2% of its shares. This happened because several dominant shareholders surrendered their voting rights to the mark Zuckerberg by providing him with an irrevocable proxy”.
As per the Facebook securities and exchange commission filing in the United States in 2012, the additional shares that were associated to the voting proxy provided more than 30.6% of the voting rights to the mark Zuckerberg which in total turn into 56.9% of the shareholder voting rights with him and also he become the absolute decision-maker of the company.
Usually, this is the thing that each tech startup company should look for.If not, you will have to face the circumstances that Singapore’s most famous tech genius faces, Firdaus Akber, the founder of streetdirectory. It was the online Web mapping and business directory service in 2000
After three years of establishing a business, when all the activities were going fine, the company’s sales were reaching Heights, and then he decided to expand the business to Malaysia and Indonesia, at that time Akber was voted out from the streetdirectory. The reason behind his removal was that the company board analyzed that Akber was not contributing enough to the company.
But luckily, after a year, he again joined the company when one of the company’s co-founders decided to sell his shares and move to some other business entity. However, then Akber purchased the percentage of co-founders and returned to the board. Thus, it was his luck that he returned to its initial stage. That’s why it is highly recommended to protect the interest during the initial stage of your company incorporation, as not everyone will not be as lucky as Akber.
Do note that the shareholder agreement is one of the essential parts of Company incorporation as it is not only cost-effective but is an efficient way to solve disputes among the shareholders, including future investors.
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The information in the above article is sufficient enough to help you understand the procedure and things to consider before opening a tech company in Singapore. By reading the above article must have cleared all your doubts related to opening a tech company.
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