Nascent corporate funding scene set to pick up pace: Page 2 of 3

Corporates make their move

 In fact, Mavcap chief executive officer Jamaludin Bujang (pic, above) says that the company is currently in close talks with several companies on corporate funding initiatives.

 “We are currently working with some corporates, but we can’t reveal their names yet. Nevertheless, there are already some corporates like Genting, Digi and other family-owned companies getting into this space, either by participating through VC funds managed by fund management companies or through their own initiatives,” says Jamaludin when contacted by Digital News Asia recently.

While the number corporate participation has been growing, the majority of the corporate enterprises and organisations are not taking part in such activities in Malaysia.

"Investing in tech is something new to corporate Malaysia. This is a risky investment and most corporate do not have the required background in tech investments, and therefore, they are very cautious in making a move," explains Jamaludin.

"The lack of successful tech companies coming from Malaysia does not also help boost their confidence in taking the risks," he adds.

Having a stronger participation from the corporate sector will have a big impact to the country's tech startup ecosystem.

"As recently as 2015, supposedly the total funding in the tech startup ecosystem was RM7.15 billion. But, my research via Bloomberg estimated the cash holding of all companies listed on Bursa Malaysia amounted to more than RM500 billion. Imagine if only 1% of that goes to startups, that's already RM5 billion at very least. In my opinion, the pie will be significantly bigger if corporate funding enters the market," said Kamarul Nizam Kassim (pic, right), a partner at Intres Capital Partners. 

Why are the corporate jumping on the bandwagon?

For many years, corporate companies, (well, at least most of them), have been able to grow their revenue steadily. So, why would these companies - which seem to have already figured out their growth formulas - want to venture into tech startup investments?

Following the crowd, just because many companies in the West are doing so does not necessarily mean that companies in the country, or in the region, should be doing so.

"Companies in the West are doing it to build their market reach and to keep up with the changing technology," ventures Jamaludin.

Kuala Lumpur-based regional accelerator and early stage investor 1337 Ventures founding partner Bikesh Lakhmichand (pic, below) concurs.

"I think we can expect to see more corporations jumping onboard although not entirely the same way as some of the others with a ready fund. It is becoming a great way for corporations to have more affordable research and development, by looking into external solutions for internal pain points," says Bikesh.

"I think most corporations will be taking the contest and hackathon route, but give it time and hopefully these corporations let down some barriers and learn to work with other corporations for the common good," he adds. 

Next page: How the startups feel