Why Singapore Lags on Venture Capital

Jo-Ann Huang of ChannelNewsAsia.com looks into the 2011 Global Entrepreneurship and Development Index (GEDI) and wonders why Singaporean venture capital lags that of other nations. From Huang:

However, when it comes to availability of venture capital, Singapore falls behind Hong Kong, Australia and the US.

On a scale of 1.0, the US scores 0.765 for access to venture capital, Hong Kong and Australia have ratings of 0.568 and 0.505 respectively, while Singapore stands at 0.417.

Analysts said this is because investors in Singapore are distracted by a myriad of other opportunities that earn a high return.

Pierre Hennes, managing partner, Extream Ventures, said: “We are seeing a lot of competing investment opportunities, whether it is … public equity markets, currencies or real estate, so these are all things that compete for investor’s dollars.

“Venture capital itself is an asset class that requires a lot more time and it certainly has a high return potential, but it’s a lot longer time frame to lock up the cash.”

Market experts said there are fewer than 20 pure-play venture capital funds focusing on Singapore companies. VC funds typically buy into early-to-mid-stage companies that have a commercially viable product and a management team in place. Such companies typically take 6 to 10 years to produce any returns for investors.

Any thoughts? Does the assessment offered in the article conform or diverge from your experiences?

via Venture capital industry needs more support – Channel NewsAsia.