If you’re planning to set up a Venture Capital (VC) fund in Singapore, this step-by-step guide shows you how to navigate licensing, choose the right structure, unlock tax benefits, and get your fund operational.
Why Singapore is the Ultimate Destination for VC Funds
Singapore’s pro-business environment, strategic location, and thriving startup ecosystem make it a premier hub for Venture Capital (VC) firms.
The country has cemented its reputation as one of the most dynamic startup ecosystems in the world, drawing entrepreneurs, venture capitalists, and family offices alike. Its strategic location in Southeast Asia, transparent regulations, and investor-friendly policies make it a natural hub for capital formation.
This didn’t happen overnight. Singapore’s government first laid the foundation back in 1991 through the National Technology Plan, designed to strengthen science and technology capabilities. Since then, initiatives like Startup SG, Enterprise Singapore, and the Economic Development Board (EDB) have expanded access to funding, mentorship, and international networks.
The city-state is also home to accelerators, incubators, and co-working spaces that enable startups to scale rapidly. For venture capitalists, Singapore offers three core advantages:
A predictable regulatory framework that reduces friction for fund managers.
Deep tax treaty networks (DTAs) that minimize withholding tax on cross-border income.
A progressive stance on deep tech and innovation is expected to shape the next decade of growth.
1. Building a Strong Foundation
Team Assembly
Your VC fund’s success hinges on a qualified team. You’ll need a minimum of two full-time employees residing in Singapore with relevant experience. The team should ideally possess a strong understanding of the local startup ecosystem and investment landscape.
Investment Thesis
Develop a clear and concise investment thesis that outlines your fund’s focus. This includes the industries or sectors you’ll target, the investment stage (seed, Series A, etc.), and the ideal characteristics of your portfolio companies. A well-defined thesis attracts investors with aligned interests and helps guide your investment decisions.
Fundraising Strategy
Devise a plan to raise capital for your fund. Identify your target investor pool, which could include high-net-worth individuals, family offices, or institutional investors. Prepare a compelling offering document showcasing your team’s expertise, investment strategy, and track record (if applicable).
2. Obtain MAS Licensing and Ensure Regulatory Compliance
In Singapore, anyone managing venture capital funds must obtain a Venture Capital Fund Manager (VCFM) licence from the Monetary Authority of Singapore (MAS). This ensures that managers meet MAS’ “fit and proper” standards, covering financial soundness, integrity, reputation, and professional conduct. MAS also recognizes that venture capital benefits from diverse backgrounds and entrepreneurial experience.
Registering a Fund Management Company (FMC)
You’ll need to establish a Singapore-registered FMC to operate your VC fund. This company will be responsible for managing the fund’s operations and ensuring compliance.
Secure Office Space
You’ll need to have a permanent physical office in Singapore to operate your VC fund. The office should be dedicated, secure and accessible only to the FMC’s directors and staff.
Obtain the VCFM License
Obtaining a Venture Capital Fund Manager (VCFM) license from the Monetary Authority of Singapore (MAS) is mandatory. This license allows you to manage funds that invest primarily in unlisted startups. The application process involves submitting Form 1V, along with a detailed business plan and supporting documents demonstrating your team’s qualifications and compliance procedures. Consider seeking assistance from a professional service firm specializing in Singapore fund management licensing to ensure a smooth application.
Key requirements under the license include:
Board and Staffing: At least two directors and two full-time staff.
Fund Scope: Only venture capital funds may be managed under this regime.
Use of Service Providers: Any outsourced functions must comply with MAS’ Outsourcing Guidelines.
Establish a Compliance Framework
Establish a robust compliance framework within your firm. This includes implementing anti-money laundering (AML) and know-your-client (KYC) procedures to mitigate financial risks. Staying compliant with MAS regulations is crucial to maintaining your license and operating ethically.
Ongoing obligations include:
AML/CFT Compliance: Adhere to anti-money laundering and counter-terrorism financing standards.
Misconduct Rules: Ensure integrity and accountability.
Conflict Management: Identify and manage potential conflicts of interest.
Investor Disclosures: Provide clear, timely disclosures to all investors.
Traditionally, fund managers handle these steps themselves, but this can be resource-heavy. Nova, a Fund-in-a-Box solution, streamlines the entire process from structuring and licensing to fund operations, helping first-time and seasoned managers launch efficiently.
3. Choose the Right Fund Structure and Legal Documents
Fund Structure
Determine the most suitable legal structure for your fund, such as a Variable Capital Company (VCC) or Pte Ltd (SPV). Consult with legal counsel to ensure the structure aligns with your investment strategy and tax optimization goals.
Singapore VC funds can be set up under several frameworks, but the most widely used today is the Variable Capital Company (VCC), introduced in 2020 for its flexibility and asset segregation benefits.
Here’s a quick comparison of available structures:
Variable Capital Company (VCC): Allows multiple sub-funds under one umbrella, with flexibility in share issuance and redemption.
Unit Trusts: Popular with hedge funds; assets are held by a trustee for investors.
Limited Partnerships (LPs): Common for private equity and VC; partners share profits with varying liability levels.
Private Companies: Traditional corporate vehicle for smaller funds.
Business Trusts: Separate ownership and management, suitable for infrastructure projects or specialized assets.
REITs (Real Estate Investment Trusts): For funds investing directly in real estate portfolios.
Not sure if a VCC or an SPV fits your strategy best? Schedule a call with our expert today and get clarity on the right vehicle for your goals.
Drafting Legal Documents
In collaboration with qualified lawyers, meticulously craft a comprehensive suite of legal documents to govern the operation and investment activities of your VC fund. These cornerstone documents include, but are not limited to:
Supplement to PPM
Private Placement Memorandum (PPM)
Subscription Agreements
Memorandum & Articles of Association (M&AA) / Constitution
Investment Management / Advisory Agreement (IMA/IAA)
Fund Administration Agreement (FAA)
Partner with a Fund Administrator
Partner with a reputable fund administrator to handle the day-to-day operations of your fund, including investor onboarding, accounting, reporting, and valuation. This frees your team to focus on sourcing and managing investments and can be a regulatory requirement depending on the type of fund licence you have.
4. Understand Tax Incentives and Benefits
Singapore’s appeal is further enhanced by its robust tax incentive framework, designed to attract high-value economic activities. According to PwC, “Tax incentive applications are subject to detailed evaluation of an applicant’s business plans, requiring strong commitments to Singapore’s economy.”
It’s important to note that many of Singapore’s headline corporate incentives such as the Pioneer Incentive, Development and Expansion Incentive, and Double Tax Deduction scheme apply primarily to startups or corporates that VC funds may invest in. These do not directly affect the taxation of licensed VC Fund Managers.
For fund managers themselves, the most relevant exemptions fall under Singapore’s Income Tax Act, specifically Sections 13H, 13R, 13O, and 13U:
Section 13H (Venture Capital Funds Incentive): Grants tax exemption on income from funds investing in unlisted Singapore-based companies, with fund managers of approved funds eligible for a 5% concessionary tax rate under the FMI (Fund Management Incentive) scheme.
Section 13R (Onshore Fund Exemption): Applies to Singapore-incorporated and resident funds, offering exemption on specified income from designated investments.
Section 13O (Enhanced Tier Fund Exemption): Applies to onshore Singapore funds, granting tax exemptions on specified gains provided the fund is tax resident in Singapore, managed locally, and meets business spending conditions.
Section 13U (Enhanced Tier Fund Incentive for Large Funds): Grants tax exemptions on income from designated investments like stocks, bonds, and derivatives, for funds managed in Singapore with a minimum size of SGD 50M.
5. Launch and Operationalize Your Fund
Build Your Track Record
Your track record reflects your past performance as an investor, including the types of investments you’ve made, why you made them, and the returns you’ve generated. Limited partners (LPs) evaluate key performance metrics such as:
Total Value to Paid-In (TVPI)
Multiple on Invested Capital (MOIC)
Internal Rate of Return (IRR)
If you’re a first-time fund manager without prior fund metrics, you can establish credibility through:
Angel investing: Building a personal investment portfolio with smaller checks, typically under $100K.
Special Purpose Vehicles (SPVs): Pooling capital for single-company deals, giving your network access to investment opportunities.
Warehousing investments: Making early investments before officially forming your fund, then transferring them into the fund after close.
Partner with the Right People
While it’s possible to launch a VC firm solo, partnering with someone whose skills complement your own strengthens credibility. For example, an operator with a COO background might team up with someone experienced in finance or technical expertise.
Fundraise and Form the Fund
Raising a VC fund involves pooling capital from external investors who become limited partners. This step is crucial in demonstrating your ability to attract backers who believe in your strategy.
Operationalize Your Fund
To run smoothly, your VC fund needs the right service providers. From fund administration and legal structuring to compliance support, outsourcing operational tasks ensures efficiency and investor confidence.
Conclusion
Establishing a VC fund in Singapore is a rewarding but intricate process. By following this comprehensive guide and leveraging professional expertise, you’ll be positioned to launch and manage a successful fund.
Launch Your Venture Capital Today with Auptimate
Are you looking to establish a VC fund, Angel Syndicate, or SPV? At Auptimate, we make it easy and affordable to design, launch, and manage market-leading SPVs.
Don’t wait—consult an expert today! Let Auptimate guide you every step of the way. Book a Call now or email us at info@auptimate.com to get started on your journey to success.
