SERIAL technopreneur Douglas Gan is in trouble. His start-up, interactive map service Shownearby, has failed to secure advertisers or the additional investment that will allow it to continue improving its maps.

Mr Gan, 25, whose current start-up is his third, said the squeeze is so bad that the 15-man firm has been forced to sideline its map service and take on general information technology and Web design jobs to survive.

The firm is not the only one in difficulty - several local digital media and technology start-ups have also become the latest victims of the global credit crunch as private investors pull out and cost-conscious customers cut back.

Digital media start-up Tyler Projects' founder Leonard Lin, for instance, said he has heard of several other start-ups that have either folded or are in dire straits.

Two other companies, which did not want to be named, told The Straits Times that they are in dire straits financially.

The impact of having many such firms fail cannot be underestimated: Start-ups are important to Singapore because they are the cradle of entrepreneurship and innovation, holding out the promise of a home-grown Microsoft, Google or Apple.

The Government's involvement in nurturing start-ups is a measure of how important they are.

In July, the National Research Foundation (NRF) announced that it would pump $10 million each into six venture capital funds, to be invested in early-stage tech start-ups.

Last month, the Government appointed a new incubator to dish out up to $50,000 in public grants to promising digital media start-ups.

But public funds are not enough. Private investment is more important to start-ups, because the Government does not bankroll companies, no matter how promising - start-ups are expected to risk some of their own money, and much of this comes from investors. Now, say companies, industry experts, venture capital firms and angel investors, private investment has just about dried up.

Investors who previously invested in start-ups may now plump for a stake in a safe, profitable and established listed technology company instead, said Dr Thomas Choong, executive director of financial advisory firm Waylion.

Start-ups are reeling as a result, said Mr James Seng, a partner in venture capital firm Tandem Advisers. He added that the situation is looking 'very bad' for new start-ups looking for seed funding.

'Early-stage investment in Singapore has never been good (and) this crisis will make money flow even worse.'

In fact, he said, many start-ups 'will definitely die' within the next 12 to 18 months.

But though the outlook is bleak for most, Mr Seng said survival, and even profitability, is possible for a handful, as there are still investors interested in start-ups that have a working product and income from customers.

Tyler Projects, which is raking in more than $30,000 a month in profits from its Battle Stations video game, has no shortage of offers to invest in it, said Mr Lin.

There is another bright spot.

'The cost of starting a business is lower. Rent is down, and the job market is soft,' said Professor Wong Poh Kam, the director of NUS Entrepreneurship Centre and an angel investor himself.

The Government is also paying close attention to the situation. If things go further south, it may step in.

At the launch of the incubator last month, Media Development Authority deputy chief executive Michael Yap, who oversees the NRF's $500 million digital media war chest, said the Government is aware that private-sector funding has taken a hit.

If necessary, it is open to doing more to ensure start-ups have adequate support, he said, such as matchmaking firms with investors. He did not rule out increasing the amount of public funds available.

Mr Eddie Chau, whose start-up e-Cop is a success story, offered a different take: Tough times will separate the wannabes from real entrepreneurs. Last year, he sold e-Cop, which monitors the Internet for security threats, to a Temasek Holdings unit and swiftly raised $1 million to start a new company.

'Those that survive in recessions can survive anything,' he said.

Shownearby, meanwhile, is determined to stay in the game. Like a few other firms, it will turn to doing more mundane jobs to stay afloat until the environment gets better.

Said Mr Gan: 'I'm not too proud to repair computers, if that's what it takes. One day, the recession will end, and I intend to be there when it does.'

This article was first published in The Straits Times on November 11, 2008.