Malaysia has been very a very vibrant market for startups and entrepreneurs in recent years. This comes in light of the ongoing efforts by the government in developing this sector while there is very rapid growth in the mobile and digital platforms. Hence, it is natural to see more startups pushing their businesses forward and this will bring about the call and demands for more funding options.
Enter the Venture Capitalist firms
The VC or Venture Capitalist market is not new, particularly in the startups and most notably tech-related companies. In fact, VCs have been responsible for some of the biggest tech firms in the world today including the likes of Facebook. The same landscape is currently going on in Malaysia with companies (both private and semi-government) offering these services.
So, what is a VC?
Venture capitalists are firms that provide venture capital which is a sum of money (or capital) to a fledgling company that needs it to either kickstart the business or for other business-related purposes. VCs offer not only funds but in certain cases, they provide guidance and even management advice as well. The concept behind this is that the VC will be taking a form of risk when they put the money into a particular business. Since the risk is relatively higher than many other forms of investments, the only absolute security the VC gets would be through preference shares. In some cases, in order to protect their investments (which could be very high as well), they could even be given the prerogative to make certain major decisions. In most cases, however, the VCs actually see their profit when they liquidate their shares through engines like trade sales, sell-back or IPOs to name a few. VCs would be great partners for new startups with sound business ideas with very good potential.
Where should you start?
As a startup or a new business, you will need to have a few things up your alley before you go seeking out VCs.
- Business Idea: it is very important to have a business idea with potential. Anyone can have a business idea but you need to create the idea into a marketable one
- Transparent: This is very crucial as you will be ‘selling’ your business idea in platforms that can be for the general public
- Details: You need to be as detailed as possible when it comes to preparing your business plan. Every cost and every requirement must be explicitly spelled out
- Target: Who are you looking for to be your VC partner? Do your research, then you can approach them.
Axiata Digital Innovation
Axiata, a renowned name with Celcom, one of the largest telecommunications company in Malaysia provides funds to help Malaysian businesses with a strong focus in companies that are Bumiputera. Offering funds to help startups and those in the Early stages, they have since provided assistance to names such as Katsana, among others.
Cradle Investment Programme
Cradle is perhaps one of the most popular VC companies in Malaysia. Known for providing funds for the Seed stages, Cradle has helped so many startup and tech firms, it has a reputation of being one of the most significant players in this industry. In fact, known names like iMoney and Grab were some of the companies that have benefited through their programmes.
KK Fund offers capital injections into businesses from the Seed to Early stages. It is a VC that provides such services to companies in Hong Kong, Taiwan and across the Southeast Asia region mainly in startups involving the internet and mobile sectors. The company is actually based in Singapore where it has already moved into the Malaysian market for some time now that include CapitalBay, among others.
MAVCAP stands for Malaysia Venture Capital Management Berhad which was established by the Malaysian government in 2001. The idea behind this was to help develop the ICT industry which has then expanded their span of services to offer funding options to startups in other business areas as well. Today, it helps companies and businesses especially those with products that have potential and marketability. Among the names that have benefitted through MAVCAP’s programme include Grab and Carsome.
OSK is a very established name in the money markets, especially among Malaysians. Through OSK Ventures, this is a VC firm that provides funds for businesses in the Seed to Early stages. The firm is working with SBI Holdings Inc from Japan in providing capital and funds within businesses in the region.
Khazanah Nasional is a sovereign fund organization. It is one of the major market movers in the region as it has invested in some of the largest corporations around. In fact, Khazanah Nasional is quite known to inject funds into corporations in the local and international scene including the Alibaba Group, before it went public. Today, Khazanah Nasional has nurtured many local startups through its KNEO (Khazanah Nasional Entrepreneurship Outreach) programme and is looking to continue their initiatives into this sector.