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14 October 2011 NRF TO ALLOW MORE INVESTORS TO BENEFIT FROM SUCCESSFUL TECH INCUBATOR SCHEME

• The 7 technology incubators selected under NRF’s Technology Incubation

Scheme (TIS) have invested in 31 start-up companies since Aug 2009, creating much vibrancy in Singapore’s entrepreneurial environment

• NRF will now open up the application process to allow more qualified

investors to set up technological incubators under the TIS

Have a great idea that you think can be turned into a killer application? The National Research Foundation (NRF) can help you to take the first step. Since Aug 2009, its Technology Incubation Scheme (TIS) has seen 7 Technology Incubators invest in 31 start-ups and provide them with systematic management guidance and mentorship. The success of the scheme has prompted the NRF to bolster the pool of incubators by inviting more experienced investors and entrepreneurs to join the TIS. Under the umbrella of the National Framework for Innovation and Enterprise (see Annex A), the main aim of the TIS is to help start-ups improve their chances of turning innovative ideas into commercial businesses (see Annex B). The current TIS Incubator Managers were chosen by NRF to provide mentorship and guidance to high tech start-ups during the most vulnerable seed stage of their development. The Incubators are also required to invest in their incubatees as well as help them secure further funding after incubation. The selected TIS incubators comprise both local and foreign managers. These include the successful Plug and Play Incubator from Silicon Valley and incubators set up by Brad Greenspan, internet entrepreneur and founder of social networking company MySpace and angel investor Joiichi Ito, who was recently appointed director of the famed MIT Media Lab in the United States. Announcing the open application process for TIS at Techventure 2011, Dr Francis Yeoh, CEO of NRF, said: “We are pleased that the TIS scheme has created quite a buzz in the entrepreneurial eco-system in Singapore. The incubator managers have been actively making their investments in a good number of high quality start-ups, with many more in the pipeline. The TIS scheme provides very good leverage for incubator managers, allowing them to invest in more companies because of NRF’s co-funding. However, there is a very important principle in the TIS implementation – all funding goes to the start-up and all efforts are directed to make the start-up succeed. In this way, the objectives of all parties are aligned to ensure the start-up’s success, because no one benefits otherwise.”

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Mr Bill Liu, Chairman & Managing Partner at TIS Incubator Stream Global Pte Ltd, said, "Being part of the TIS scheme enables us to leverage on the risk sharing platform provided by NRF. The seven partners of Stream Global who are all experienced ex-CEOs of listed and non-listed companies can give the incubatees good advice especially in the ICT and digital media sector. We are looking to help entrepreneurs with innovative ideas and passion to realize their dreams through working with us." Mr Chua Zi Yong, CEO of Stream Media, a start-up invested by Singtel’s Innov8 and Stream Global, commented: "Branding and credentials are very important in the B2B business, especially when the clients and partners are foreign companies and MNCs. The TIS scheme lends us credibility and enables us to leverage on the Singapore brand overseas, in addition to financial resources to scale our operations and sales activities. We have since sealed agreements with companies like Lenovo China and MOL and will be entering the Chinese market later this year." Mr Reza Behnam, CEO of Adzcentral, an advertising platform company incubated under TIS incubator Neoteny Labs, added, “China and India have been receiving a lot of attention from technology investors and venture capitalists (VCs) because of their market size. Singapore, however, is an ideal location to start up a company and schemes like the TIS just make it even more attractive. NRF’s co-investment not only helped us start up but also helped attract further investments into the company.” Experienced investors and entrepreneurs who are interested in joining the TIS scheme are encouraged to approach the NRF. The same terms enjoyed by the current incubators will apply as will the obligations and expectations. NRF will evaluate the applications and admit those who are able to meet the criteria of the TIS. Prospective Incubator managers are invited to submit an application (form of expression of interest attached as Annex C) to the National Research Foundation at corpcom@nrf.gov.sg Encl: Annex A – NFIE Factsheet

Annex B – TIS Factsheet Annex C – TIS Expression of Interest

__________________________________________________________________ The National Research Foundation (NRF) The National Research Foundation (NRF), set up on 1 January 2006, is a department within the Prime Minister's Office. The NRF sets the national direction for research and development (R&D) by developing policies, plans and strategies for research, innovation and enterprise, funds strategic initiatives, builds up R&D capabilities and capacities through nurturing our own and attracting foreign talent, and coordinates the research agenda of different agencies to transform Singapore into a knowledge-intensive, innovative

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and entrepreneurial economy. It provides secretariat support to the Research, Innovation and Enterprise Council (RIEC), chaired by the Prime Minister. The NRF aims to:

• Transform Singapore into a vibrant R&D hub that contributes towards a knowledge-intensive, innovative and entrepreneurial economy; and

• Make Singapore a talent magnet for scientific and innovation excellence. For more information, please visit www.nrf.gov.sg. For media queries, please contact: Ms Cheryl Loh Head, Corporate Communications National Research Foundation DID: 6684 2928; Mobile: 9880 5507 E-mail: Cheryl_Loh@nrf.gov.sg

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ANNEX A

FACTSHEET

National Framework for Research, Innovation and Enterprise (NFIE) The National Framework for Innovation and Enterprise (NFIE) aims to grow innovation and entrepreneurship and strengthen the entrepreneurial eco-system in Singapore. NFIE was approved by the Research, Innovation and Enterprise Council (RIEC), chaired by Prime Minister Lee Hsien Loong on 28 March 2008. The framework will encourage institutes of higher learning (IHLs) – universities and polytechnics – to pursue academic entrepreneurship and turn their R&D results into commercial products for the market place. It will also help entrepreneurs to start up technology-based companies. The NFIE has been reviewed and updated since it started. The current budget of $360m supports the following initiatives: Scheme Scheme

Early Stage Venture Fund (ESVF)

The NRF invests $10 million, on a 1:1 matching basis, to seed 6 venture capital (VC) funds that are required to invest in Singapore-based early stage high-tech companies. As an incentive, the VCs are given an option to buy out NRF’s share of the fund within 5 years by returning NRF’s capital with a nominal interest.

Proof-of-Concept Grants (POC) This grant of up to $250,000 is for technology proof-of-concept development projects. NRF administers the scheme for IHL-linked researchers while SPRING Singapore (the government agency responsible for small businesses) manages a parallel scheme for companies.

Disruptive Innovation (DI) Incubator This scheme supports a business incubator which invests in Singapore-based start-ups with disruptive innovation. The methodology is based on the work of Harvard professor and innovation guru Clayton Christensen.

Technology Incubation Scheme (TIS) The NRF co-invests up to 85% (capped at S$500,000) in Singapore-based start-up companies that are incubated by the selected Technology Incubators. In return, these incubator operators provide their investee companies with physical space and systematic guidance. As an incentive, the incubator operators are given an option to take over NRF’s stake in the start-up companies within 3 years by repaying NRF’s investment with a nominal interest.

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Scheme Scheme

Translational R&D Grants for Polytechnics (TRD) These development grants of up to $500,000 are given to researchers in the polytechnics to carry out translational research using intellectual property (IP) from the universities and research institutes.

University Innovation Fund (UIF) This provides funding to the 3 universities for approved innovation-related activities. Each university must set up a high-level Enterprise Board to oversee and manage the fund.

National Framework of IP Principles This is a framework to speed up the licensing of IP from the universities and research institutes to industry.

Innovation and Enterprise Institute (IEI) The proposed Institute’s objective is to help develop the innovation and enterprise (I&E) eco-system by providing the necessary information, research methodology and relevant networks to galvanise I&E activities in Singapore.

Global Entrepreneur Executives (GEE) This is a scheme to get high-growth and high-tech venture-backed companies with Global Entrepreneurial Executives1

Innovation Vouchers Scheme

(GEEs) in ICT, medtech and cleantech to relocate to Singapore. NRF will invest up to US$3m in matching funding to eligible companies through 2 Singapore VCs, in the form of convertible notes.

This is a scheme where local enterprises are given vouchers that are redeemable for R&D and technical services from the IHLs and public research institutes. This scheme has since been transferred to SPRING Singapore.

1 GEEs refer to entrepreneurs with significant operating experience and track records (in a leadership capacity) in the growth of successful start-up companies. Specifically, they should have played a leadership role in a company’s growth from start-up to at least US$100 million in revenue or company valuation.

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ANNEX B FACTSHEET NRF’s Technology Incubation Scheme (TIS) Under its Technology Incubation Scheme (TIS), NRF has selected 7 Incubator Managers to nurture early stage high tech start-up companies in Singapore. These 7 incubators are:

• Clearbridge Accelerator • I2G Tech Accelerator • Neoteny Labs • Plug & Play • Social Slingshot • Small World Group • Stream Global

The TIS, modeled after Israel’s Technological Incubator Programme, provides up to 85% (capped at S$500,000) of funding for each start-up company identified by the Incubator Manager, with the latter making up the rest of the investment. As an incentive, the Incubator Manager has the option to buy out NRF’s share in the invested start-ups within 3 years of investment by repaying the capital plus interest. In this way, the government shares the risks of investment while providing the Incubator Manager with the upside of success in return for its efforts in nurturing the start-ups. The TIS call for proposal on 25 August 2009 received 32 submissions from local and foreign incubator managers. Seven incubators were eventually chosen on the basis of their ability to provide suitable mentorship, the extensiveness of their networks and their commitment to link start-ups with customers and investors for subsequent funding. Under the guidance of Incubator Managers, the chances of start-ups turning their ideas into viable businesses are greatly enhanced. Including Innosight Ventures2

, which was separately approved under the Disruptive Incubator Scheme, there are now 8 NRF-supported technological incubators.

2 Innosight Ventures is an incubator under NRF’s Disruptive Innovation Incubator Scheme. This incubator, based on the disruptive innovation methodology of Prof Clayton Christensen, has been set up to identify companies that have the potential to disrupt a current industry and create new ones.

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ANNEX C Expression of Interest in the Technology Incubation Scheme

Background of Technology Incubation Scheme (TIS)

1. The TIS comes under the umbrella of the National Framework for Innovation & Enterprise (NFIE), which was formulated in 2008 with a $360 million budget to advance R&D-based innovation in Singapore with a view to commercialization. NFIE encourages institutes of higher learning (IHLs) – universities and polytechnics – to engage in innovation and academic entrepreneurship to turn their R&D results into commercial products for the market place.

2. Under the TIS, the National Research Foundation (NRF) will co-invest with the

chosen technology incubators in Singapore-based high-tech start-ups. Incubators have the option to buy out NRF’s equity share within 3 years of investment.

3. NRF invites suitable parties to submit proposals to operate such technology

incubators. These incubators should have the means to select high-quality start-ups, the resources to invest in them, the physical space to house them, and the ability to support them via mentorship, access to customers and the securing of follow-on funding etc.

Eligibility

4. Interested parties with experience in start-up incubation, venture funding or high-tech entrepreneurship may apply.

Terms of the Technology Incubation Scheme

CO-INVESTMENT TERMS

Funding Quantum Co-funding of up to 85% of total investment for each company (or a maximum of S$500,000 per investment). The incubator manager provides the rest of the investment.

Eligible Investee Companies

High-tech start-up companies based in Singapore.

Equity Stake NRF and the incubator manager’s equity in the investee company will be at the same valuation and in accordance with their investments. NRF’s equity will be in the form of a convertible bond.

Maximum Share of As a general rule, the investment in the

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Investee Company3 investee company should not dilute the founders’ share to less than 50%.

Buyout Option NRF will offer an option for its share in the investee company to be bought out, at a price of 1.1 times capital in the first 2 years, and 1.15 times capital in the third year.

REQUIREMENTS OF INCUBATORS Incubator Manager There should be at least one full-time incubator

manager to provide active mentoring to investee companies.

Link to Institutes of Higher Learning (IHL)

It would be desirable for incubators to have some linkage to institutes of higher learning.

Physical Space The incubator should have a suitable space to house the investee companies.

Operating Expenses Operating expenses for the incubator will not be funded by the scheme.

5. NRF’s panel of experts will select the incubators based on the merit of their proposals.

Selection Process

Proposal Submission

6. Interested parties can submit their proposals to NRF with the following details:

• Description of Incubator: Organisation structure, operations, staffing • Incubator Managers: Bio-data and track record of incubator managers • Description of Incubation Process: Process for selection and

nurturing of start-up companies; plans to help incubatees secure follow-on funding after incubation.

• Funding: Proposed mechanism to fund the set-up and operation of the incubator.

7. All proposals should be submitted by email to corpcom@nrf.gov.sg. Please title your email as follows: “Technology Incubation Scheme - <Incubator Name>”.

3 This is to ensure that the founders remain committed to the success of their company.