Golden Gate Ventures: ‘Now Malaysia becomes really interesting and appealing to us’

• Seeing more companies breaking out of Malaysia, having found product market fit
• Looking to make possible follow-on investment into media company’s startup

“THERE’s a right time to making investments,” says Michael Lints (pic), a Dutch who is a partner in Golden Gate Ventures Pte Ltd (GGV), an independantly owned venture capital company based in Singapore.

For GGV that right time – for Southeast Asia (SEA) – was seven years with the founding founders, Vinnie Lauria and Jeffrey Paine and co-founder Paul Bragiel making a bet that the region was going to be a hotspot ripe for startups to be disruptive. They choose Singapore in 2011 as their base of operations and have since then established GGV as among the leading early-stage investors in the region with close to 30 investments thus far.

During that time, they have been in and out of Malaysia, active in the startup scene through engagements and collaborations with Malaysian Digital Economy Corporation and Cradle Fund Sdn Bhd. The Cradle relationship was specifically through a co-investment partnership in 2014 to invest on a matching basis in early stage Malaysian technology startups with up to five investments a year.

The promise of that partnership did not materialize as both sides could not find the right startups that they could agree on to jointly invest in. But that has not deterred GGV and on Nov 30 it announced that it was opening a Malaysian presence with an office in KL with a dedicated US$18 million (RM75 million) fund for startups that are founded in Malaysia or are already part of GGV’s existing portfolio but which are looking to expand to Malaysia. The funding comes from GGV’s recently closed US$100 Fund III.

“Despite our active engagement here, we didn’t feel the right amount of deal flow nor investments that would suite our fund, coming from Malaysia earlier. But we are seeing it more and more now and feel it is getting better,” says Lints.

GGV is now seeing more companies breaking out of Malaysia, having found their product market fit and looking to go into their second or third markets. “Now it becomes really interesting and appealing to us.”

And while the change in government to one that has promised to govern by rule of law was not by any means a key factor, Lints says that it has helped lift sentiment especially from the way people look at the country from a foreign perspective.

Reacting to the news of GGV setting up office and a US$18 million investment fund, Dr V Sivapalan, president of Malaysian Business Angels Network says: "It is great to see a seasoned VC like GGV opening an office and committing a significant sum of money for Malaysian investments. This shows the maturity of the Malaysian startup scene and the many opportunities to invest in some excellent companies. I have said all along that there are many gems in Malaysia and this is further proof that our companies are doing well. This is great for entrepreneurs and angel investors in Malaysia but it is a wake up call for local VCs and local corporates. It is going to get more interesting. Congratulations to GGV and welcome to Malaysia."

Meanwhile, GGV is already in talks with large Malaysian corporates to make co-investments with it in Malaysia. “Infact, over the past 12 months we have intensified talks with them with especially good progress made with an insurance company and a media company,” says Lints adding that GGV is looking at an internally incubated company from the media player to take on a follow-on investment.

GGV is also looking at the Islamic market and whether any Malaysian startups have the right technology to tackle this market opportunity. “We actually had a long debate on the potential of the Islamic market earlier this year and while it is super interesting, we think it is early days and SEA startups are not mature enough to tackle the opportunities.”

Yet this has not prevented GGV from already looking at two potential investments, both Indonesian based startups. One is in the financing space which GGV feels is a particularly big opportunity. The second one is in insurance.

Still in the process of identifying the lead for its KL office which will be based at shared work space operator, The Co’s Bangsar space, Lints estimates the office to open in Jan/Feb 2019. The KL office will be its third in SEA after it opened in Jakarta, Indonesia last year. The fourth office will open in Vietnam in the second half of 2019.

Opening an office in the markets it is active in, or in the case of Malaysia, where it plans to be more active, allows GGV to not just get closer to and better help its portfolio companies. “It also allows our portfolio companies to better collaborate with each other and we expect to see the same dynamic in Malaysia as well,” says Lints.