How to Set Up a Venture Capital Fund in Singapore

To set up a venture capital fund in Singapore, you choose a fund vehicle — a Variable Capital Company (VCC) or a limited partnership (LP) — register a manager under the light-touch Venture Capital Fund Manager (VCFM) regime (or appoint an existing licensed manager), draft the closed-end fund terms and carried interest, apply for a tax incentive, and appoint the service providers. A venture capital fund is a pooled, closed-end vehicle that backs early-stage and growth private companies, drawing committed capital over an investment period and returning gains on exits.

Singapore is the natural base for VC investing into Asia — politically stable, well-served, treaty-rich, and offering a manager-licensing regime built specifically for VC. This guide walks through the decisions in order. For the strategy-specific structuring detail, see our venture capital fund page; the manager-licensing detail is on VCFM & the RFMC repeal.

Step 1: Choose the fund vehicle — VCC or limited partnership?

The first decision is the vehicle. The two Singapore options are the limited partnership and the VCC.

The limited partnership is the form many institutional VC LPs know best, mapping onto the familiar GP/LP model with carry flowing through the partnership. The VCC is the corporate alternative purpose-built for funds: it runs closed-end drawdown economics through share classes, pays carried interest, returns capital out of capital, and — being a Singapore company — accesses Singapore's tax exemptions and 90-plus treaties from one onshore base. For a manager planning a programme of funds, the VCC umbrella is especially useful: each fund vintage and any co-investment sleeve can be a separate ring-fenced sub-fund under one umbrella, sharing a single administrator and auditor. Many VC managers also run a VCC alongside an LP, holding the GP and management company in the VCC.

Step 2: Register the manager — the light-touch VCFM route

A VC fund must be managed by a manager that is licensed or regulated by MAS — but VC has its own lighter track, and this is one of Singapore's strongest draws for emerging managers. The Venture Capital Fund Manager (VCFM) regime is a streamlined registration for managers confined to qualifying VC funds (broadly, funds investing in unlisted business ventures, not freely traded securities, with restrictions on redemptions and investor type). Because those investments are illiquid and the investors are sophisticated, MAS applies lighter prudential requirements:

• No regulatory minimum base capital — unlike the S$250k an Accredited/Institutional LFMC must hold.
• No risk-based capital ratio.
• A faster MAS review — around four months, against roughly six for a full LFMC.
• Still at least two Singapore-based professionals and fit-and-proper requirements.

The trade-off is scope: a VCFM may only manage qualifying VC funds and must convert to a full CMS-licensed LFMC to run liquid or retail strategies. If you want to launch even faster, or your strategy might drift beyond VC limits, you can instead appoint an existing licensed Permissible Fund Manager and skip the registration wait — covered on running a VCC without your own licence. Many first-time VC managers launch under a manager, prove the fund, then register their own VCFM for fund II. The VCFM-vs-LFMC detail sits on fund management licence: CMS, LFMC & VCFM.

Step 3: Draft the closed-end mechanics and carry

VC funds share the closed-end structure of private equity: committed capital, capital calls (drawdowns) over an investment period, a defined fund term, and a carried-interest waterfall paying the GP after a hurdle. In a VCC these are written into the constitution and share-class terms — partly-paid shares or a commitment mechanism for drawdowns, distinct share classes for investor and GP carry economics. Singapore's appeal for the team is that it has no separate carried-interest regime and no capital-gains tax, so carry is generally treated according to its character; confirm the treatment of carry to individual professionals with a Singapore tax adviser as part of structuring.

Step 4: Apply for a tax incentive — 13U, 13O, or Section 13H

A VC fund managed by a MAS-regulated manager can shelter its qualifying income from Singapore tax through one of the MAS-administered incentives. There are three relevant routes:

• Section 13U (Enhanced Tier) — for larger VC funds: S$50M in designated investments, three investment professionals (one non-family), and tiered local spending. The usual home for a sizeable VC fund, and extendable across a master-feeder and SPV structure.
• Section 13O — for a smaller or first-time VC fund below S$50M: a S$5M floor and two investment professionals. The common starting point for emerging managers.
• Section 13H — Singapore's dedicated tax incentive for approved venture capital funds. It exempts qualifying income and gains from approved VC investments and is granted on application. It is separate from the mainstream 13O/13U schemes; eligibility, the approval process and conditions are confirmed with MAS, and the terms have been refined over time — so check the current position before relying on it. In practice many VC funds use 13O or 13U because those routes are well-trodden, but 13H exists specifically for the asset class.

Underpinning all three: Singapore has no capital-gains tax, so the gain on a capital-nature exit generally falls outside the tax net regardless of the incentive. The local business spending requirement for 13O/13U is tiered:

The full set of schemes and the 2025 rule changes are on the Singapore fund tax incentives hub.

Step 5: Appoint service providers and incorporate

A VC fund needs a fund administrator, a Singapore-based auditor (a VCC has no audit exemption), fund counsel, and a tax adviser for the incentive application — a leaner provider set than a liquid hedge fund because there is no daily NAV or prime-brokerage layer. The vehicle is then incorporated through ACRA via its service providers and the manager appointed. The provider and incorporation detail is on VCC service providers & ACRA incorporation; the overall sequence on how to start a fund in Singapore.

Why Singapore for investing into Southeast Asia and India?

Most VC capital raised in Singapore is deployed across the region, and the jurisdiction is built for it. A Singapore-resident VCC can use the 90-plus double-tax treaties to reduce withholding tax on dividends, interest and (in some treaties) gains from treaty-partner markets — India, Indonesia, Vietnam and others — relative to an offshore vehicle with no treaty access. Combined with no capital-gains tax, deep local legal and banking infrastructure, and proximity to the region's fastest-growing startup ecosystems, that treaty access is a concrete, recurring advantage for a fund whose portfolio sits in Southeast Asia and India. To claim treaty relief the fund must be genuinely Singapore tax-resident and may need a Certificate of Residence from IRAS.

What does the VCFM let a VC fund do — and not do?

Because the VCFM regime is defined by the funds it manages, it pays to be clear on the qualifying perimeter before you build around it. A VCFM is confined to qualifying VC funds, which broadly means funds that:

• Invest principally in unlisted business ventures — early-stage and growth private companies — rather than freely traded securities;
• Are closed-end in character, with restrictions on investor redemptions during the fund's life; and
• Are offered only to non-retail investors (accredited and institutional).

Stay within that perimeter and the VCFM is the leanest licensed route in Singapore — no base capital, faster approval. Drift outside it — for example, by running a liquid book, opening to retail money, or holding mostly listed securities — and the manager must convert to a full CMS-licensed LFMC. The practical implication for fund design is to keep the mandate clearly within qualifying VC if the VCFM's lighter footing is part of the plan, and to choose the LFMC route from the outset if the strategy is likely to broaden. A first fund run under an existing manager sidesteps the question entirely until you are ready to register your own VCFM for fund II.

Common mistakes when setting up a VC fund in Singapore

• Choosing the VCFM then drifting out of scope. Plan the mandate around the qualifying-VC perimeter, or pick the LFMC route up front.
• Treating treaty access as automatic. The fund must be genuinely Singapore tax-resident (managed and controlled from Singapore) to claim DTA relief on SEA/India income, and may need a Certificate of Residence from IRAS.
• Under-budgeting substance for 13U. The Enhanced Tier needs three Singapore-based investment professionals and tiered local spending — model the team and spend before committing to 13U over 13O.
• Assuming Section 13H is a shortcut. It is a dedicated VC incentive but granted on application with its own conditions; most VC funds still use the well-trodden 13O/13U routes. Confirm the current 13H terms with MAS rather than relying on older summaries.
• Forgetting the audit. A VCC has no audit exemption — an annual Singapore audit is required even for a lean VC fund.

VCC vs limited partnership for venture capital

For a regional VC fund with Asian and European LPs and a Southeast Asia/India portfolio, the VCC's treaty access and onshore substance usually win. A US-led LP base that insists on the partnership form may still point to an LP — or a VCC alongside it.

Frequently asked questions

VCC Singapore is an independent informational resource and is not a regulator, law firm or tax adviser. Manager-licensing routes, the Section 13H/13O/13U incentives and tax thresholds are set by MAS and IRAS and change periodically — confirm the current position with qualified advisers before acting. This page is general information, not legal, tax or financial advice.