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Boosting nation's start-ups

August 10, 2023
New Straits Times
5 mins read

KUALA LUMPUR: The additional RM1 billion of funds by the government and government-linked investment companies (GLIC) announced under Madani Economy Framework to support local startups will  be pivotal in producing better quality startups in Malaysia.

Prime Minister Datuk Seri Anwar Ibrahim announced the RM1 billion funds recently, a move that was lauded by venture capitalists and startup companies.

They said this would match the funds set by private sectors in a bid to support and bolster the startup ecosystem as well as produce more technopreneurs in the country.

This would augur well with the efforts of stakeholders within the startup ecosystem in enhancing and improving the startup environment in the country, they added.

One of the solutions suggested by stakeholders are better partnerships between the private and public sector in terms of funding, initiatives and knowledge sharing.

Malaysian Venture Capital and Private Equity Association (Mavcap) chief operating officer Noor Amy Ismail said the agency welcomed the new announcement as "a combined effort is greater than the sum of individual efforts".

She said the involvement of stakeholders from different sectors is pivotal in ensuring the country is able to produce more high quality startups.

This capital support of joint government and private funds also ensures synergy where both public and private sectors contribute expertise, networks, and resources to boost the start-ups ecosystem's overall impact.

"Mavcap has been using this collaborative model for the last 10 years where we raise funds through our fund-of-fund strategy with global and local fund managers namely 500, Gobi, Vynn Capital, Intrest and a few other players," she told the New Straits Times.

She added that the government investment offers a dual advantage by not only catalysing innovation and entrepreneurial growth but also synergistically amplifying the impact through strategic partnerships with private funds, resulting in an augmented infusion of resources into promising and high-potential start-ups.

"It clearly conveys the importance and benefits of government investing and aligning it with private funds. This approach fosters innovation, stimulates entrepreneurial activity in our country, and leads to greater resources being directed towards promising start-ups," she added.

Noor Amy pointed out that the partnership between government and private funds will lead to a significant increase in available resources for start-ups especially on funding.

This bodes well with Mavcap's mandate to ensure, despite development allocation funds we need to raise more than three times multiplier.

"Furthermore, this infusion of capital allows start-ups to develop their products, hire talent, and expand their operations more rapidly, contributing to job creation and economic growth," she added.

Noor Amy also said the recent announcement augurs well with the effort to boost the ecosystem by funding more startups to flourish.

"For Series A and Series B startups, they need more funds and this is important as to ensure that we are able to maintain these startups to domicile in the country, therefore we need to grow more funds," she added.

Islamic-themed streaming service Durioo+ founder Sinan Ismail said the latest announcement by the prime minister is positive news for the startup industry.

He said the Malaysian startup industry has the potential to grow even bigger and with the latest boost of funds, it will help to propel the industry further as the local startups are proven to be flexible in adapting to different environments.

"Malaysian startups are quite diverse in terms of the people as well as ideas, we are also easily adaptable to other cultures and this is a strong point in order to market our ideas, product and services to other foreign markets," he said.  

Sinan also said within the Malaysian startup ecosystem, there has been quite a number of startups in the series A to series B categories.

"With more money available in the startup ecosystem, there will be more quality startups in the making, provided that the funds are being distributed and disbursed to the right company with the right founder.

"Especially now that there are a lot of companies that are looking for funding, however, they face some challenges in securing the funds to sustain the company," he added.

Sinan emphasised the need for the government to have a system in place that will ease the funding application process along with a sound and high quality startup identification in order to grant the funding.

Echoing the sentiment, insurtech startup Oyen co-founder and chief executive officer Kevin Hoong said the company welcomes the capital support from the government and private sectors.

"We do hope that the funds will be well distributed to startups across stages of their developments," he said.

He said grassroots initiatives by and for founders proven to be fundamental in ensuring the ecosystem to grow and strengthen sustainably as capital injection alone is not sufficient to foster the next generation of technopreneurs.

"I personally hope to see more experienced founders/ investors giving back to the startup community," he said.

Hoong also pointed out that Malaysia has one of the best talents in the region especially within the technology sphere and many great products can be built within the country.

"Internationalisation is a key part of Oyen's long-term success and who hope that the government-private capital matching initiative can help us achieve this goal sooner rather than later.

"Aside from funding support, network access and local operational support needs to come hand-in-hand in order for any internationalisation plans to be successful," he added.