Ministry of Trade and Industry of the Republic of Singapore

11/07/2023 | Press release | Distributed by Public on 11/08/2023 00:33

Written reply to PQ on Impact of High Interest Rates on Local Startups


Mr Melvin Yong Yik Chye: To ask the Minister for Trade and Industry (a) how the current high interest rate environment has affected funding and borrowing for local startups; and (b) whether the Ministry will consider providing startups with more support to help them service their debts and continue to grow while they are still in their infancy stages of growth.

Written Answer by Minister for Trade and Industry Gan Kim Yong

1. A combination of factors, including the current high interest rate environment, macroeconomic uncertainties and geopolitical tensions, have resulted in lower equity funding for local startups. For the first 9 months of 2023, the deal count for Singapore-based startups declined by 21%, compared to the same period in 2022.

2. To support our startups' funding needs, we will continue to catalyse private sector investment through equity co-investment under the Startup SG Equity scheme, which aims to stimulate private sector investments into innovative, Singapore-based technology startups with intellectual property and global market potential.

3. Startups could also leverage the Enterprise Financing Scheme (EFS) to meet their various financing needs, such as for working capital, mergers and acquisition, and fixed assets. In particular, the EFS - Venture Debt Programme, which was recently enhanced in March 2023 to support venture debt loans backed by Redeemable Convertible Preference Shares, allows startups with irregular cashflows to have more flexibility with loan repayments.