Disrupt: 2014 is going to be ‘Startup Malaysia Year’

• Potentially over US$70 million in venture funding to be launched
• Internet entrepreneurs TS Wong, Patrick Grove playing major role

IS Malaysia on the verge of becoming a fantasy come true for startups starved for funding?
 
Malaysia has been hailed by Dr Gabriel Walter, cofounder of high speed LED startup Quantum Electro Opto Systems (QEOS), as one of the best countries in which to raise money – if one has an advanced technology startup with its own intellectual property.
 
And the soil could get a lot more fertile for even consumer-based Internet companies, with a number of venture funds about to launch next year.
 
The discussions around funding all happened last week at the DNA-TeAM Disrupt series, which provided yet another enriching experience. The panellists freely shared their opinions about the venture capital scene in Malaysia, and whether the country was a great place to try and raise money for your technology startup.
 
You can read the article A. Asohan wrote on the event, but for me what stood out was the comment Patrick Grove made about how tough it was even for his Catcha Group, with its track record, to raise money for a fund that he has been talking about for the past year.
 
“It’s funny but we have found it really, really hard to raise money,” said Grove (pic), but then went on to praise the “amazing support from Mavcap” (Malaysia Venture Capital Management Bhd) and talked about his confidence that it can raise between US$40 million (RM128 million) and US$50 million (RM160 million) for its first venture fund.
 
If Catcha Group meets the Dec 31 deadline set by Mavcap, then Grove’s fund will become one of Mavcap’s Third Outsourced Partners Programme (OSP 3). Catcha will put in US$5 million of its own money, with the rest coming from other investors and with Mavcap expected to contribute 50% of the final amount raised.
 
The Malaysian Government still clearly has to play a major intervention role here, but look at the amount that Catcha is putting in and what it is trying to raise from its network.
 
This is just another example this year of a successful Internet entrepreneur giving back to the ecosystem – of being the success story to attract even more money into the startup space. And, in the process, this could turn Malaysia into an increasingly attractive place for startups.
 
Of course, the first to get this ball rolling was T.S. Wong and his MyEG Services Bhd, which is putting RM20 million into a RM60-million (US$18.7-million) seed fund, Cradle Seed Ventures Fund 1.
 
Cradle Fund Sdn Bhd, an agency under the Ministry of Finance, is putting in another RM40 million. This was announced in October, with the fund to be launched next month in January.
 
Add the fund that Catcha is likely to form, together with at least one or two more OSP 3 funds, and we are easily looking at over RM200 million next year!
 
And with Grove aiming for his fund to act like “the venture fund we wish we had when we were starting out,” I think it is safe to say that 2014 is shaping up to be a very exciting year for startups in Malaysia.
 
Of course, Grove also seems to be motivated by the fact that he thinks being above 30 leaves one too old to launch an Internet business. “There are just so many great ideas and entrepreneurs out there. But if you are above 30, your only chance is to invest in others,” he said at Disrupt, only half joking.
 
Aside from the funding space, we are not even talking about what impact the Malaysian Global Innovation and Creativity Centre or MaGIC will have on startups. Curiously, the Ministry of Finance apparently had a recruitment advertisement in every major paper on Saturday, inviting applications for the chief executive officer position.
 
With very specific requirements for the role, one would think the ministry would already have a short list of candidates. That is going to be one very interesting announcement when it comes, and will surely act to stir up excitement in the startup space even more next year.
 
It is already Visit Malaysia Year but they may just want to also announce 2014 as Startup Malaysia Year.
 
Related stories:
 
TS Wong on MyEG’s RM60mil partnership with Cradle
 
MaGIC needs right leader to work its magic
 
Disrupt: More success stories needed to plug funding gap
 
Mavcap on verge of launching third round of outsourced funds (OSP3)
 
 
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