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In a country of just a few million people like Singapore and Israel, it is often easy to move in unison, especially when the chips are down, and situations call to action. But if you come from a nation the size of Malaysia with 33 million citizens and counting, it can be trickier to talk about national agenda, let alone engender one, in a country where diversity of race, culture, and religion shape the people’s outlook on life in divergent ways. Other countries do not have the same preoccupations we do.
In practically every disaster movie – be it Independence Day or The Sum of All Fears – there comes a moment when a character looks at the protagonist and says something to the effect of “the fate of the planet or the country is in your hands”. Though there is no asteroid bearing down on Earth and no nuclear bomb going off, we are facing our fair share of serious obstacles in the third decade of this century. To those who consider themselves entrepreneurs, our country – and the world – depends on you. Our future is going to rise and fall with the dreamers and doers, the builders of new technologies and the breakers of old orthodoxies. Let us worry a little less about our net worth or valuation and a little more about our net impact. Entrepreneurs do have a responsibility to do more than develop popular apps or create another marketplace. The Internet of Everything will affect every aspect of our lives in increasingly seamless ways, and we shall use this tool to our advantage. Innovations will be addressing core societal needs and broad-scale change, and that many will be focused on impact as well as purpose, not just profit.
To corporates, it is time to develop a perpetual sense of paranoia and curiosity. It is time to both fear the future and seize its promise, to restlessly drive to master it, no matter what it holds. Companies would be better positioned if you figured out how to better engage with entrepreneurs so that you can invest in them and own a piece of the action. Some established companies have created internal venture funds, in part to have an early-warning radar system for emerging ideas, some of which may end up leading to profitable partnerships. Others have developed their own innovation department, serving as a concierge of some sorts to help build bridges between executives and entrepreneurs. In this digital age, partnerships will become more important. As Helen Keller said, “alone we can do so little, together we can do so much”.
If entrepreneurs have a responsibility to devote their talents to making a lasting positive impact on society, and if executives are required to break down silos and look beyond their industry for partnerships to invest, then government has an obligation to encourage entrepreneurs and smooth the way for partnerships as well as investment to take off. While politicians and regulators love to tell others how important it is to encourage innovation, talk is often cheap. We must replace those platitudes with actionable policies. We must reduce the regulatory burdens on entrepreneurs while forging a new path forward for new industries, must make the playing field level, so every good idea or invention has a shot at raising capital, and must attract as well as retain talents so we can win the global battle for the best and the brightest.
“We are at a juncture with genuine potential for renewal but also one that, played badly, could unravel the slowly functioning ecosystem, and leave us more fractured.”
In other words, a startup ecosystem comprises a group of people, startups, and related organisations that work as a system to foster innovation and use the pool of resources available to create and scale new startups. This ecosystem draws together vital actors and stakeholders that gravitate towards growth ventures, including new entrepreneurs, mentors, incubators, sources of talent such as universities and corporations, investors and supporting services like startup-savvy law and accounting agencies.
Malaysia Startup Ecosystem by the Numbers
As a strategically placed country with a diversified economy and robust offerings, Malaysia as a nation has proven time and time again as a country that is ripe for startups and investments in many areas. Located at the heart of the ASEAN, startups in Malaysia have access to over 674 million potential customers within the region. The country has unrivalled connectivity, infrastructure, talent, and strong government support, which is conducive for entrepreneurs to create and grow new startups. The country has been consistently ranked as one of the world’s most promising emerging startup hubs by Startup Genome, a testament to its potential to develop into a vibrant venture capital ecosystem.
1) Global Accelerator Programme (GAP) by Malaysian Research Accelerator for Technology & Innovation (MRANTI)
GAP by MRANTI is a government-funded Accelerator Programme tailored for both local and international startups with an ambition to expand in the ASEAN market. It is a 2-month thematic Accelerator that focuses on expediting the growth of companies to scale and commercialise products and services by being investment-ready.
2) Selangor Accelerator Programme (SAP) by Selangor Information Technology & Digital Economy Corporation (SIDEC)
SAP is a structured 4-month scheme, organised by SIDEC under the Selangor Government. It aims to assist startups in the early stage that have not undergone Series A funding. The programme acts as a gateway for startups to prepare themselves for the final demo day and for them to be investor-ready. Participants also get to go for overseas pitching opportunities, study trips and gain the necessary industry-related exposures. Notable alumni includes but not limited to Petotum (Online Booking Platforms for Pets Care), and Golog (Logistic Platform).
3) RAVe Accelerator by The New Entrepreneurs Foundation (MyNEF)
RAVe Accelerator is a 12-week intensive Accelerator that focuses on creating a core catalyst for Bumiputera ICT Companies to drive and contribute to the growth of Malaysia’s ICT industry. RAVe has curated an experienced pool of mentors and coaches to ensure that each venture that is accelerated is investor-ready at the end of the Programme.
The Malaysia Startup Ecosystem Roadmap (SUPER) 2021–2030 is a crucial government initiative launched by The Ministry of Science, Technology and Innovation (MOSTI) on 18th November 2021. By coordinating efforts among all main stakeholders, SUPER, under the purview of Cradle Fund, serves as the true north of all other national laws and rules on startups, intending to provide a friendly, effective, and efficient environment for startups. Under SUPER, the Mystartup platform was initiated to serve as a central depository of information on Malaysia's ecosystem. It is a digital information resource portal that provides comprehensive facilitation services for startup ecosystem networks. Through this initiative, the country aims to create 5,000 startups and 5 unicorns by 2025. The ultimate goal is to place Malaysia as one of the top 20 global startup ecosystems.
But how does Malaysia currently match up against its close neighbour, Singapore?
Startup Ecosystem - Malaysia vs Singapore
Based on the table above, Malaysia’s Kuala Lumpur lags behind Singapore in all startup ecosystem metrics. Singapore is one of the smallest ASEAN countries in terms of population, and the country is home to fewer than six million people. What Singapore lacks in size, they certainly make up for it in its startup ecosystem. Singapore ranks 18th in the Top 30 Global Startup Ecosystem list and 1st in Southeast Asia. While Malaysia’s startup ecosystem has become competitive, more work needs to be done before Malaysia can stake its claim as one of the top 20 global startup ecosystems.
In Singapore, cohesive and consistent government intervention is leading it to become Southeast Asia’s and Asia’s next big tech hub. From welcoming regulatory policies to comprehensive and systematic approaches toward fostering a robust and conducive startup ecosystem. Furthermore, Singapore has streamlined and consolidated its government funding entities. This exercise resulted in an effective and catalytic role within the country’s startup ecosystem as it has fewer but stronger entities, tightened coordination and alignment between the agencies, and shared operating support services. The Malaysian government must take a leaf out of Singapore’s book in its quest to create a similar ecosystem and work hand-in-hand with the private sector.
Opportunities in the Startup Ecosystem
In today’s capitalistic economy, the perception that private businesses are the key growth drivers, and that government should just focus on providing social public goods that are not provided due to market failures, is still prevalent. It is unfortunately often forgotten, the most important role the government has played in driving the growth of an economy – socialising risks.
To quote John Maynard Keynes from The End of Laissez Faire:
“The important thing for government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.”
Innovation is, undoubtedly, an extremely risky venture. With all the abovementioned government interventions, the private sector should see this as an opportunity to venture and participate in the startup ecosystem. The conventional returns per unit of risk has improved as the de-risking activities have been undertaken for potential returns to be reaped.
Whilst venture capitalists generally provide for financial capital, they also play a vital role in opening doors for business opportunities through their network capital. Corporate industry leaders can also play a role in being mentors for the next generation of entrepreneurs, leveraging of their veteran status in the industry. These improve the chances of breakthroughs through technology innovation, the economic growth’s biggest multiplier of the production function.
The hope is that with the participation of both public and private players, the startup ecosystem will move towards being ultimately self-sustaining.
Furthermore, Penjana Kapital was also invited to the Wild Digital Southeast Asia 2022 which witnessed the gathering of Southeast Asia’s biggest players and leaders of the tech landscape – each of them keen to share their most exciting ideas and learnings from their successes and discuss the upcoming trends that are propelling Southeast Asia into the global arena. Penjana Kapital’s CEO, Taufiq Iskandar, was one of the panellist during the event’s first panel session titled Changing Gears: Malaysia's Race to Become a Digital Nation” alongside Shahril Hamdan (Economic Advisor to the Prime Minister) and Gopi Ganesalingam (SVP of Ecosystem Development Division, MDEC). The event was also blessed by the presence of the Malaysia Minister of Finance, YB Senator Tengku Datuk Seri Utama Zafrul Tengku Abdul Aziz.
Taufiq also spoke during the KL Venture Finance Forum 2022, Malaysia’s first Venture Finance forum that gathered local and international speakers from the regulatory and finance sectors, as well as from Malaysia’s pool of successful start-ups and technology unicorn. Themed “Accelerating Start-Ups”, the forum was held for it to become a strategic platform for the speakers to share their expertise in an active discourse on how start-up funding is evolving in the region particularly the role of venture finance as an alternative financing for tech start-ups, as well as key opportunities, challenges, and current trends in the start-up space.
Penjana Kapital also attended Experience Ventures 2022 which was hosted by Petronas Ventures, the corporate venture capital arm of Petronas. The event was held to feature Petronas Ventures' aspirations and strategies to support Petronas' business growth and sustainability agenda. The twoday event was attended by well-known players in the venture capital space as well as a few of Petronas Ventures' investees. Ng Yi Chung (or better known as YC), Partner at AC Ventures Malaysia, was one of the presenters during the event, where he spoke about the emerging trends in the mobility space. AC Ventures Malaysia is one of the fund managers under Penjana Kapital's DPN programme.
We applaud everyone’s commitment in supporting events such as the above that will hopefully create high-quality dialogues between key stakeholders in the venture capital space. With greater participation among various parties in similar events, Southeast Asia’s venture capital ecosystem will flourish.
We have attached a few pictures from the abovementioned events below for your viewing pleasure.
YCombinator Regional Startup School
KL Venture Finance Forum 2022
Wild Digital Southeast Asia 2022
Experience Ventures 2022
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