SINGAPORE Law and Practice Contributed by: David He, Benjamin Teo, Kinnari Sahita and Binh Vong, Gunderson Dettmer Singapore LLP
2. Venture Capital Funds 2.1 Fund Structure Organisation and Documentation of VC Funds Singapore-managed VC funds commonly opt for a Cayman Islands or Singapore limited partner - ship. Under both constructs, the main governing document is the limited partnership agreement, with the fund being controlled and managed by the fund’s general partner (GP). Singapore adopted the variable capital com - pany (VCC) legislation in 2020, and a number of Singapore-managed VC funds have successfully utilised this structure. The VCC is a corporate entity that can be used both for traditional and alternative investment funds (including mutual funds, hedge funds, private equity funds and VC funds). VCCs allow for the segregation of assets and liabilities between multiple sub-funds or special purpose vehicles, enabling multiple investment strategies or portfolios to be housed within a single umbrella entity while maintaining limited liability. Under the VCC construct, the main governing document is the shareholders’ agreement and constitution. A mixed structure is also seen where the main pooled investment fund is formed in the Cay - man Islands and the Cayman fund establishes a wholly owned VCC in Singapore as a holding company. The Cayman fund then deploys most of its portfolio investments through the VCC, allowing it to benefit from tax treaty advantages associated with the VCC structure. 2.2 Fund Economics Economics for Fund Principals Fund principals participate in the economics of the VC fund through two key methods:
start-ups can allocate resources more strategi - cally to uncover patterns and correlations, adapt to changing market dynamics and scale their operations through automation, which frees up monetary and human capital for other core busi - ness activities. The power of AI has been deployed across start- ups operating in many distinct verticals: • In fintech, AI optimises the assessment of credit risk and default in lending and sig - nificantly expedites the loan approval pro - cess and pricing of premiums in insurance products. AI tools are also being deployed to provide low-cost financial advice through portfolio strategy and diversification solutions in wealth management. This has spawned significant new investment opportunities in fintech beyond the payment and digital bank - ing solutions previously seen. • In healthcare, AI enhances telehealth plat - forms by enabling virtual consultations, assessment of symptoms and remote moni - toring of patients. • In biotech, machine learning accelerates the analysis of vast datasets to uncover patterns, predict drug efficacy and identify novel thera - peutic targets, leading to faster and more cost-effective drug development. • In e-commerce and other direct-to-consumer channels, AI-driven chatbots are providing personalised customer interactions, around- the-clock support, product recommendations and virtual shopping assistance. For further insights into recent trends in Singa - pore’s venture investment and exit transactions, please see the Singapore Trends and Develop - ments chapter in this guide.
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