Singapore's first venture capital fund was established in 1983. Recognizing the catalytic role of venture capital in developing local entrepreneurship and innovation, the Economic Development Board ( EDB), a sponsor of Next Wave Singapore, set up the EDB Venture Capital Programme in 1985 and introduced tax incentives to promote the growth of industry in Singapore. Since then, EDB has continued to develop the venture capital industry as an important means to promote innovation and enterprise development.
The venture capital industry grew from SG$48 million in 1983 to SG$11.5 billion at the end of 2000, of which some SG$8.5 billion has been committed to 2200 projects worldwide. In 2001, the industry raised about SG$13.7 billion in funds. In the same year, more than 630 businesses in Singapore received venture capital funding. At present there are more than 110 venture capital businesses using Singapore as their regional base. These businesses employ about 420 investment professionals. Besides the substantial increase in investment activities, there are many new developments in the venture capital industry. More new players, both local and foreign, have set up offices here. In addition, several existing corporations have set up dedicated venture capital divisions.
EDB's venture capital programme adopts a two-pronged approach that involves the promotion and development of industry as well as venture capital investment activities through its investment arm, EDB Investments Pte Ltd. (EDBI).
EDBI's portfolio companies in the various industries include chemicals, electronics and precision engineering, biomedical sciences, services and information technology, and funds. Biomedical sciences feature prominently on EDB's agenda because it is a highly knowledge-intensive field, in line with EDB's economic blueprint.
Life Sciences Investments (LSI) Pte Ltd., a coinvestment fund of the EDBI, was formed in October 1998 to spin-off companies based on technologies in research institutes and universities. It manages a fund that complements two other coinvestment funds at EDB: the PharmBio Growth Fund and Singapore Bio-Innovations.
Lily Chan, Ph.D., is the general manager of LSI. Chan, who has about 18 years of industry experience, joined LSI in 1998. She studied biology at Agnes Scott College in Atlanta, Georgia, United States, and obtained a Ph.D. in microbiology and immunology from the University of Illinois Medical Center in Chicago, Illinois, United States. Chan started her career as a research scientist in the Department of Medicine at the National University of Singapore. In 1984, she joined Singapore Biotech Pte Ltd. as quality control/technical manager and was involved in hepatitis B vaccine manufacturing. From 1986 to 1987 she was a research associate at Tufts University in Boston, Massachusetts, United States. Following this, Chan returned to Singapore and worked as product research and development manager for Diagnostic Biotechnology Pte Ltd.
Despite Chan's prominence, it is not common to find someone with her wide scientific expertise in Singapore's venture capital industry. According to Guy Heathers, Ph.D., M.B.A., there are only about five such persons in the biotechnology industry in Singapore. Heathers, who works closely with scientists and venture capitalists, is the CEO of Biotech Research Ventures (BRV), a technology transfer and business development organization based in Singapore. In addition to providing business development services to research institutes and biotechnology companies, BRV provides these services to venture capital companies, including early-stage investment opportunities.
Heathers has been instrumental in the completion of a number of successful business development projects, both in Singapore and in the United Kingdom. His strong scientific background and wide industrial experience have been crucial in facilitating technology transfer from research scientists to industry. Heathers obtained his Ph.D. in cardiovascular research from the University of Bath, United Kingdom, and completed postdoctoral research at Washington University Medical School in St. Louis, Missouri, United States. He then moved into the commercial sector by joining Hoffmann-La Roche as a senior scientist in the cardiovascular drug discovery department in New Jersey. After almost 7 years with the company, he moved into the business development arena starting with the Cancer Research Campaign Technology Ltd. in London in 1995. He helped establish the biotechnology start-ups Cyclacel Ltd. and KuDOS Pharmaceuticals Ltd., as well as a subsidiary company, Cancer Research Ventures (CRV) Ltd. in 1998. After moving to CRV as its chief operating officer, Heathers helped establish two more biotechnology start-ups, Crusade Labs Ltd. and Qugen Therapeutics Pte Ltd.
In 2001, CRV joined forces with the National Cancer Centre of Singapore and Double Helix to form BRV in order to bring professional business development expertise and services to Singapore and the Asian region. In July 2001, Heathers moved from CRV to become BRV's CEO. In Singapore, under Heathers's management, BRV's business has expanded significantly.
According to Heathers, venture capital businesses with an interest to invest in the biotechnology industry will benefit by having scientists on their teams. Unlike employees with a financial or a business background, a scientist can understand the underlying technology and will be in a position to evaluate the potential of the technology. He says that unfortunately there is a gap between "curiosity-driven scientific research" and commercialization of that research into products in many countries, including Singapore. The presence of scientists in venture capital industries can help fill the gap.
Heathers says that although funding for research in Singapore is substantial, the amount allocated to develop and commercialise that research is inadequate. Scientists at research institutes and universities in Singapore are carrying out valuable and world-class research, but they might not be in a position to convey the potential of their discovery to a venture capitalist, unless the venture capitalist has a scientific background or at least access to someone on the team who does.
"Technology transfer is an excellent way for scientists to get into the venture capital industry. In technology transfer, scientists can learn about, and get hands-on experience with, all the elements that need to be brought together to create a successful business enterprise," says Heathers.
According to Heathers, the role of a scientist becomes even more important when the venture capital firm is keen to invest in early stage technologies, where the degree of risk involved is much higher but the potential returns are also much greater. Venture capital firms have to evaluate early stage technologies carefully and understand the technology in order to estimate its commercial value. This is in contrast to late-stage technologies, which are close to the market. For late-stage technologies, if the venture capital business needs some scientific backing, it can consult its scientific advisory board (if any) or engage the services of a consultant.
Given the current emphasis on biomedical sciences by the Singapore government, one can expect investments in biomedical sciences to increase. Thus, the need for scientists with relevant expertise in the venture capital industry will also increase. The Biomedical Sciences Investments (BMSI) team under EDBI is one of the leading investment groups in biomedical sciences in Singapore. Investments are made by the BMSI management team, which comprises individuals with Ph.D., M.D., M.Sc., or M.B.A. degrees. BMSI has allocated SG$25 million under the Biomedical Sciences Innovate 'N' Create scheme, which provides initial funding of SG$250,000 and up to a maximum of SG$2 million per project. BMSI aims to encourage, support, and inspire a new generation of scientists: those who are not only good in science but also have the entrepreneurial spirit to convert research ideas from the laboratory into commercially viable products or services. With the increasing presence and appropriate nurturing of such scientists, Singapore's venture capital industry can expect to achieve even greater heights.