How the new Enhanced Entrepass Scheme will Benefit Global Entrepreneurs

The Enhanced EntrePass scheme came into effect immediately from 3 August 2017.

Here we explore 6 important points to take note of.

1. Broader Evaluation Criteria

The qualifying criteria for EntrePass application have now been broadened in order to attract promising foreign entrepreneurial talents. New evaluation criteria have been added to the earlier four qualifying criteria. Applicants are required to meet at least one of the minimum qualifying criteria.

The newly added criteria are entrepreneurial and investment track record, business network and key achievements in the applicant’s areas of expertise.

Prior to the enhancement, applicants had to: (i) have funding/investment from a government-recognised venture capitalist or business angel; or (ii) hold intellectual property or (iii) have a research collaboration with an institute of higher learning or research institution in Singapore; or (iv) be an incubatee at a government-recognised incubator/accelerator. 

Subsequent to the enhancement, the applications for Enhanced EntrePass will be evaluated based on the following criteria.

How Does it Benefit Foreign Entrepreneurs?

The newly added criteria would be specifically helpful for early stage startups and innovators who are in the exploratory stage. The earlier criteria were in favor of entrepreneurs and innovators who had already secured a foothold in Singapore in the form of funding and research collaborations but precluded foreign entrepreneurs and innovators in the early stage of setting up their business. 

Invariably, foreign entrepreneurs, innovators and investors despite their track record and achievements overseas, would not find potential funding or research partners straight away and would require some time to explore, network and demonstrate the merit of their projects and to evaluate the value of the collaborating partners.
 
In order to evaluate the viability of their business and to get the project running they would have to stay in Singapore and it would not be possible without a work visa that allows their uninterrupted stay during its validity. Even if they had already tested the viability of their business models they would need time to set up their company and get it off the ground to demonstrate their legitimate commitment to their potential partners and investors. This requires a work visa however most often such entrepreneurs, innovators and investors would not have the requisite educational credentials to qualify for a standard Employment Pass.  The earlier EntrePass criteria were too stringent for this category of entrepreneurs who had the expertise and experience but lacked educational qualification. The broader evaluation metrics now widens the point of entry for such applicants. 

2. Removal of Paid-Up Capital 

Previously EntrePass applicants were required to have a paid-up capital of S$50,000. In the Enhanced EntrePass Scheme this requirement has been abolished. Like all other companies, potential EntrePass holders can now incorporate a company with a paid-up capital of S$1. 

How Does it Benefit Foreign Entrepreneurs?

Applicants need not commit capital early on in the venture. Entrepreneurs and innovators looking to set up business in Singapore hail from all countries and some of the applicants may have felt the S$50,000 capital requirement prohibitive. With the capital commitment criteria removed, now it would be easy for such applicants. They can now pool in the capital after securing the EntrePass or eventually at a point of time when they are confident about the viability and scalability of the business. 

3. Validity of EntrePass

The validity period of each EntrePass will be extended from one to two years after the first renewal to provide more certainty for global entrepreneurs in scaling up their businesses. An EntrePass, when first issued will be for a duration of 1+1 years, and the foreign entrepreneur will have to demonstrate progress at the end of the first year before he/she is granted the extension for another year. Thereafter, subsequent EntrePass renewals will be valid for 2 years.

How Does it Benefit Foreign Entrepreneurs?

Prior to the enhancement, the EntrePass was renewed for a period of one year each time. This was cumbersome for the entrepreneurs who felt pressured to meet the renewal criteria and focus on renewal formalities and compliance measures year after year rather than focusing on their business. With the enhancement to the validity of the pass, entrepreneurs would now feel assured of their stay thus can focus on building and growing their business further. 

4. Changes to the Renewal Criteria 

Post changes introduced under the Enhanced EntrePass scheme, the total business spending is substantially reduced. For example, the total annual business spending required in order to obtain a renewal at the end of year two is now S$100,000 only; previously it was S$150,000. However, it must be noted that by the sixth year in business the applicant’s company must employ at least 9 locals on a full-time basis; earlier, only 10 full-time local employees were required for applicants after five year or more.

How Does it Benefit Foreign Entrepreneurs?

Companies in the growth stage, especially small companies try to control costs. Previously, the need to meet the minimum business spending criteria contradicted the business principle of many entrepreneurs. The markdown comes as a welcome relief for entrepreneurs who can now focus on allocating their capital towards more revenue generating schemes. 

The headcount was a drawback for some businesses that run on lean staff model.  Some startups may actually not need that many employees until they reach a certain size or milestone. It must be noted that the government has responded to this concern by introducing the PMEs category in the headcount, whereby one PME is equal to three FTE. Henceforth, the category of workers will be taken into account rather than just the numbers. For instance, an EntrePass holder whose pass is up for renewal at the end of year would comfortably exceed the headcount requirement of 4 local fulltime employees if his company employs just two PMEs. 

5. Changes to Dependents Pass (DP) Criteria

EntrePass holders can qualify for DPs for their spouses/children upon meeting Year 2 renewal criteria. Earlier EntrePass holders were allowed to apply for DPs only after the end of first year and upon meeting the criteria of local employees and minimum business spending. The process will take an estimated 16 weeks in total.

How Does it Benefit Foreign Entrepreneurs?

EntrePass holders can now bring their family early on and need not wait until the end of the first year. Having their family close to them would be a great comfort for some entrepreneurs who are probably going through toughest challenges during the formative years of their business. Some may feel having family close to them as a distraction though. For those who wish to have their family near them, as long as they meet the year two criteria, it is no longer a vault over the wall but just a hop over the hurdle. 

6. Extension of EntrePass to more partner agencies:

In addition to SPRING Singapore, the enhanced EntrePass scheme will see the inclusion of two new partner agencies: the Infocomm Media Development Authority (IMDA) and the National Research Foundation (NRF), supported by SGInnovate. Together, these agencies will work with MOM to evaluate the applications in their respective sectors 

How Does it Benefit Foreign Entrepreneurs?

This enhancement expands the variety of sectors where the entrepreneurs could become eligible. More importantly bringing on board these additional agency partners to evaluate the applications would provide a comprehensive assessment of the applicant’s business and its value potential to the Singapore economy.