MAIN THRUSTS
Developing a funding scheme that offers sustainable help to firms and a unique market-entry strategy
WHY THE POLICY SUCCEEDED
SBA allowed 2 sources of funding
Saturn Electronics & Engineering Inc's SBA funding came thru the SBIC program and the Minority Enterprise Development program, now known as the 8(a) and SDB Business Development. However, it is noteworthy that SBICs are privately owned VC firms, though licensed by the government firm SBA. Thus, there is no double funding by the Government.
Unique Business Strategy
The unique strategy in this policy, perhaps even explaining their success, is the unique strategy in allowing firms to enter markets. Companies are encouraged to enter markets where there is limited competition. In other words, these markets have only small companies and no "big players". The programme with then groom the firm to be the dominant player in the market.
Comprehensive funding
Funding offered is categorized into $5M for manufacturing and up to $3M for anything else. Furthermore, it is divided into two phases, a developmental and a transition state. This ensures that the funds will be used effectively in each area necessary for the company's growth.
The fund covers a total of nine years (5 years for the developmental stage, and 4 years for the transition stage). This provides a financial security for firms.
Good training and Mentorship
SBA outsources its management and technical assistance to qualified service providers. The Management Consulting Assistance Programme covers a wide-ranging field, from business operations, to marketing and to business development. On top of this, the Mentor-Protégé Program, allows firms to learn directly from experiences businesses.
ALIGNMENT WITH THE I&E FRAMEWORK
I: Had an exclusive funding for developmental stage. This ensures that companies will develop their product or service properly such that it is complete.
E: Helps out in the market-entry stage, and furthermore, the programme does it with a good strategy.
E: The wide-ranging management courses provide the theoretical knowledge, whereas the mentorship programme provides a better understanding of real-life situations. These two programmes complement each other to provide a well-covered development.
IMPLEMENTATION IN SINGAPORE
As much as it is important to help firms develop their product and management, it is also important to assist firms in the market penetration stage. Together with comprehensive management assistance, this will help sustain the growth of firms.
Insight?
Federal government contracts, i.e. funding, is awarded on the sole source or non-competitive basis. I am not sure what this means, but the programme seems to emphasize on this.
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- Tan Yinglan
yinglantan@stanfordalumni.org
yinglan_tan@hksphd.harvard.edu
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