New US$238mil fund for tech companies in Malaysia, strengthens ecosystem

• MDV launches new fund targeting areas like AR, VR, AI, 4D-printing etc
• Is digitizing traditional processes the new low hanging fruit for CEOs?

THE tech ecosystem in Malaysia received a huge boost this past week with the introduction of a new US$238 million (RM1 billion) fund from Malaysian Debt Ventures (MDV), one of Asia’s leading venture debt specialists.

Unlike MDV’s previous two funds which were catered to developed, mature and revenue-stage companies with clear and strong credit profiles, this fund will be focusing on technology-based companies that are in early stages of growth and development. Among the areas MDV will be looking at are artificial intelligence, virtual reality, augmented reality and 4D printing, among others.

It has already identified 15 companies involved in eCommerce, 3-D printing and robotics that could receive financing within the next 6-months.

Predictably the new fund is being welcomed. Dr Sivapalan Vivekarajah, co-founder of Proficeo says that the fund strengthens the funding ecosystem for entrepreneurs and completes the loop for funding from angel investments and the Equity Crowd Funding platforms to the newly launched Leading Entrepreneur Accelerator Platform (Leap) that is the third market on Bursa Malaysia. “This makes Malaysia a great place from which to build a solid business. There is almost no excuse now for entrepreneurs in terms of the funding environment in Malaysia. If you're a good company you will always be able to get funding.”

I like the part where Siva says entrepreneurs that entrepreneurs building good companies will have no excuse now for not being able to raise any funding. While this is not free money as MDV is a venture debt player, tech entrepreneurs know how hard it is to walk into a bank and try to get some funding. With MDV they get an agency that is already steeped in the tech ecosystem having disbursed funding to more than 680 tech companies which helped those companies deliver 773 projects to their customers.

And with US$238 million allocated for tech, this presents a huge boost to them, especially those in the new areas MDV will look at because you can forget about walking into a bank and trying to get an officer to understand what you are trying to do.

The Technopreneur Association of Malaysia (TeAM) also hails this welcome addition to the growing range of financing available to Malaysia's tech companies. “We at TeAM hope that entrepreneurs will capitalise on the opportunity and consider venture debt as a viable option to grow their businesses, as an alternative to the scarce venture capital funding. As long as we concentrate on revenue rather than land grab as the main indicator of growth, many of these companies will be in it for the long run and venture debt is a great option for them,” says Fadzli Shah Anuar, TeAM president.  

The fund comes at a reported 8% interest and I am sure that will not deter entrepreneurs who will need the funding to deliver their projects. It is going to be interesting to see after one year, what types of companies have been getting the funding and the impact this fund will have had.

All in, exciting times for tech entrepreneurs. It is also exciting times in Indonesia as the startup ecosystem there is about to welcome its first IPO when online-to-offline (O2O) startup PT Kioson Komersial Indonesia Tbk (Kioson) is scheduled to list on the Indonesia Stock Exchange on Oct 3.

There will be huge pressure on Kioson founders as well because their success as a public company will open up a new exit path for investors and will attract more funding into the startup ecosystem as investors will see IPOs as an viable exit for them instead of just hoping for a trade sale or a larger internet company buying their investee out.

So good luck to founders Roby Tan and Jasin Halim. There’s a lot riding on their shoulders!

On other interesting point that caught my attention was on how CEOs of large companies are beginning to see how digitizing traditional business processes can unlock efficiencies and increase revenue even with staff able to devote more time to revenue generating ideas/projects. Certainly this digitizing of work processes seems to be a low hanging fruit that new Telekom Malaysia Bhd Group CEO, Mohammed Shazalli Ramly is banking on. His success here will certainly pave the way for all CEOs to seriously relook their own processes as that will eventually lead to better business results. Do you know of any CEOs who are already on a path to digitizing as many of their business processes?

With that, I wish you a restful weekend and a productive week ahead.

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