Mavcap-Gobi Asean Growth Fund aims for 1H2017 launch with initial US$50mil

• In advance negotiations with certain parties to put in funding
• Mavcap emphasizes role as ecosystem builders, impact beyond funding

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A BOUT of gout on a big day for Malaysian Venture Capital Management Bhd (Mavcap) chief executive, Jamaludin Bujang, wasn’t going to keep him down yesterday. Not on a day when he was able to publicly extol the value and impact of Mavcap, and where he emphasized Mavcap’s role as an ecosystem builder and not mere provider of funding.

And not on a day when he witnessed the signing of two Memorandums of Understanding (MOUs) with venture capital (VC) firms Gobi Partners and Elixir Capital with the target of raising a combined US$450 million (RM1.99 billion) in new funding for startups. 

And certainly not on a day when Dr Mohd Irwan Serigar Abdullah was in attendance to witness the signing. As Ministry of Finance Secretary General of Treasury, Irwan, holds the purse strings for all the public sector venture funds in Malaysia.

“We want to be known as ecosystem builders because we go deeper than just giving money,” Jamaludin said, pointing out that both Malaysia Debt Ventures and Cradle Fund were launched within Mavcap before they were spun out, and how ex-Mavcap talent were now in leadership roles in various parts of the ecosystem.

And looking at the impact of Mavcap making direct investments (separate from its co-investment partnerships), Jamaludin was able to draw out a track record that showed, from between 2013 to 2015, its investees had RM1.8 billion in revenue, paid RM46.5 million in corporate taxes and created 3,600 new jobs.

Expecting similar positive impact, the MOU with Gobi Partners, a VC firm from China, will see the establishment of the Asean Growth Fund targeting up to US$200 million, focusing on later stage financing for growth stage companies in Malaysia and Southeast Asian (SEA).

Meanwhile, with Elixir Capital, a Silicon Valley-based VC, it will be setting up the Global Islamic Economy Fund targeting up to US$250 million, for the Islamic innovative funding ecosystem.

Mavcap is targeting to launch both funds by June 2017 with between US$50 million to US$60 million as the first close of the funds. “We are aiming to launch both funds by June 2017 and then keep raising money to hit the US$200 million and US$250 million fund. Once you start making some investments and build a portfolio, it becomes easier to raise the next round,” he explained.

Jamaludin is quite confident of raising between US$50 million to US$60 million for the Gobi Asean Growth Fund as “we are in advance negotiations with certain parties to put in US$50 million,” he said.

A tour of the Middle East is slated to begin in Jan 2017 as a follow-up to a mid 2016 tour they first went on. “We are still talking to interested parties for the Islamic Fund. The Jan tour is for follow-ups and to develop relationships with potential investors,” he says.

Developing relationships between the VCs that Mavcap has partnered with and the possible synergies that can be created from this was a theme highlighted by Thomas Tsao, managing partner of Gobi Partners.

Speaking of the trust formed and communications built by the VCs that have partnered with Mavcap and work within its ecosystem – Gobi, Intres Capital, Teak Capital and Elixir –will pave the way, Tsao believes, for companies in the Gobi-Mavcap portfolio to work with the others.

It’s an under appreciated fact, but having this closer relationship, built on trust translates to possible M&A’s – never an easy exercise. “They are never easy and most don’t work due to corporate and cultural differences with the ego of the entrepreneur another barrier. And so, it’s left to the VC to rationalize capital and create a stronger company in combination and this is much easier to execute when the VCs know each other,” he shares.

For Jamaludin and Mavcap, any exercise that happens between its VC partners that creates a win-win situation is yet more proof of the strengthening ecosystem it is trying to build.

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