Singapore Eases Regulations Over Venture Capitalists

Singapore is changing its rules on venture capital in an effort to support economic growth, reports said this week.

According to Bloomberg, the Monetary Authority of Singapore published a new consultation paper that revealed new and existing venture capitalists will no longer be subject to the same rules that apply to fund managers overall, including capital requirements and business conduct regulations. The agency did note, however, that it will deal with “errant VC managers” on a case-by-case basis and continue to retain its powers to regulate venture capitalists.

Singapore’s central bank will no longer require venture capital managers to appoint directors that have at least five years of fund management experience as they have been. Risk-based capital requirements will no longer apply, either, while VC managers will also no longer be subject to independent valuation and audits.

Reports said the paper follows recommendations by a government committee exploring how to sustain Singapore’s overall economic growth at an average of 2–3 percent. Analysts say easing startups’ access to venture capital follows efforts to ease companies’ access to innovative financial technologies.

“The holding values of startup portfolios are just like mid-term marks,” said Paul Santos, manager at Singapore venture capital firm Wavemaker Partners, in an interview. “Nobody makes any money from these mid-term marks. The only time these values are real are when the companies are wound up or are sold or listed.”

He told reporters that the central bank’s latest move is “very encouraging” for the industry.

According to reports, the nation hosts 153 venture capital firms, citing data from Preqin, which have provided $3.5 billion in venture capital and private equity in 2016 alone. The Monetary Authority of Singapore will open its paper for public consultation until March 15, reports said.

Singapore is reportedly a contender to overtake the U.K. and other markets in terms of FinTech industry growth as other markets face regulations that could curtail their FinTech industries’ expansions. Analysts cited Singapore’s FinTech-friendly regulatory efforts for the trend.

Last year, Singapore introduced reforms to promote FinTech innovation and consolidate existing payments systems rules.