Starting an Online Business in Singapore Part 5: Funding & Financial Assistance

The following article is part 5 of GuideMeSingapore’s five-part guide on starting an online business in Singapore and provides an overview of the various funding and financial assistance schemes that are available to e-commerce businesses in Singapore. Please note that this is neither a comprehensive compilation of information nor a professional advice but a broad overview of the schemes applicable to e-commerce business in Singapore.

With the explosion of the Internet over the past few years, more and more entrepreneurs and businesses are building a web presence and beginning to sell their products and services online. However, setting up and operating an e-commerce business can be an expensive undertaking that involves various costs such as website development fees, merchant account fees, website hosting fees, domain registration fees, marketing costs, inventory costs etc. E-marketplaces have tremendous growth potential. As result, investors are excited about the opportunities represented by the Internet and e-commerce and are willing to fund promising e-commerce start-ups. Furthermore, the Singapore government is actively encouraging people to adopt this new business paradigm and has implemented initiatives in order to transform the country into a key e-commerce hub in the region. These range from deploying island-wide broadband infrastructure to offering incentives and assistance programs to local enterprises.

Business Loans

Debt financing is one of the ways e-retailers can gain start-up funding to kick-start their e-commerce venture in Singapore. By opting for debt financing, e-merchants get to retain ownership over the business as compared to equity financing. However, the downside is that you are indebted to your lender regardless of whether your business takes off or not. Hence,  you risk losing your personal investment. Moreover, it is not always easy to secure debt finance from banks and financial institutions unless you convince them with a very strong business plan. Often, the major sources of debt-finance are (a) friendship loans borrowed from friends and family, and (b) commercial loans from banks and financial institutions.

For information on sources of private debt finance for startups including various debt-financing products that are offered by financial institutions in Singapore and useful tips on how to secure debt-finance, refer to our guide on Private Debt Financing for Singapore Startups.

Angel Investing and Venture Funding

An alternative to debt financing is private equity funding where private investors offer capital in exchange for a share in the company. This is a good source of finance if you do not have sufficient collateral for traditional loans. The advantage of equity financing is that in case your business fails you don’t owe any money to your investors. The drawback of course is that you have to give up a stake of your business to your investors. However, remember that securing equity financing is not an easy task as investors are only interested in businesses that demonstrate high probability of success and high growth potential. Venture capitalists and business angels are the two major sources of private equity capital. Other sources include banks, investment companies and financial institutions.

The guide on Private Equity Financing for Singapore Startups provides up-to-date information on the Singapore’s equity financing landscape and surveys the major sources of equity funding in Singapore including private equity firms, business angels, venture capitalists, and the popular investment networks in Singapore.

Government Funding and Assistance Schemes

The Singapore government has rolled out several initiatives to enable both start-ups as well as established industry-specific businesses to gain access to funding. The Government Funding and Assistance Schemes for Singapore Startups is a detailed guide that provides information about the various government funding initiatives such as cash grants, government equity financing schemes, business incubator schemes, debt financing schemes, and tax incentives for Singapore-based startups including those in the e-commerce segment.

In addition, you can tap into specific government schemes that are targeted at the infocomm (note that in Singapore the term “infocomm” is often used interchangeably with IT, internet or e-commerce) industry in Singapore. Some of these initiatives include:

  • Infocomm Local Industry Upgrading Programme (iLIUP): The iLIUP facilitates  mutually beneficial partnerships between infocomm local enterprises (iLEs) and multinational corporations (MNCs). The qualifying infocomm enterprises will receive priority access to the MNC partners’ cutting-edge technologies; gain access to technical expertise and specialised training from MNC partners; be able to tap on MNC partners’ marketing and distribution networks. For more information, click here.
  • iSPRINT (Increase SME Productivity With Infocomm Adoption & Transformation): The iSPRINT scheme encourages infocomm adoption among SMES by providing subsidies of up to S$20,000 for technology purchases to qualifying Singapore incorporated SMEs. It covers improvements through packaged solutions, such as for accounting and payroll, to more complex customized solutions for areas such as customer relationship management and supply chain management. For more information, see iSprint scheme.
  • ISO 27001 Certification Grant Scheme: ISO 27001 is an international standard that helps an organization to implement a high level of security to protect its critical systems against security threats. It provide its stakeholders and customers with independent third party view of the diligence in security management and adherence to information security best practices. Under the scheme, a Singapore-registered business can get a grant of up to 50% of the ISO 27001 certification cost, capped at S$20,000. To know more, click here
  • Critical Infocomm Technology Resource Programme (CITREP): CITREP is a grant that covers up to 50% (in some cases, 70%) of the cost of training courses or certifications that train qualifying infocomm and key non-infocomm professionals in critical, emerging and specialised infocomm technologies such as IT services and business management, data integration and information management, software development, infocomm security etc. For more information, please click here.

The start-up costs associated with an e-commerce business can vary from a few hundred dollars to several thousands of dollars depending upon the scale and level of service that an e-commerce site plans to offer. Finding the financial resources to kickstart an ecommerce venture is a challenge for any aspiring entrepreneur. The funding challenge becomes even bigger as the business begins to grow and mature. However, as is evident from the above mentioned financing options, there are several resources that Singapore-based online enterprises can tap into for capital infusion. For instance, Singapore-based cosmetic e-commerce startup, Luxola, recently raised US$590,000 from WaveMaker Labs, an Approved Technology Incubator under the Singaporean government’s National Research Foundation. Similarly,, a Singapore-based e-commerce group selling luxury goods across Asia that received a sizable investment from global investment organization Intel Capital is another example of an e-commerce business that can attract funding from investors.

To learn more about setting up an e-commerce business in Singapore, refer to the following other articles in our five-part guide: