Malaysian govt agency to funnel seed-stage startups to funding programme

TWO Malaysian government entities are collaborating to bridge the funding gap that the country's early-stage startups face.

The Malaysian Global Innovation & Creativity Centre (MaGIC) will funnel its alumni startups, especially seed-stage ones, to Dana Penjana Nasional (DPN), a fund-matching initiative by the government for venture capitalists. MaGIC is a government agency under Malaysia's Ministry of Science, Technology and Innovation.

This effort comes as Malaysian startups compete for venture funding with peers in more well-funded ecosystems, such as Singapore and Indonesia.

Under the DPN, the Malaysian government will match RM600 million (S$141.1 million), on a 1:1 basis, of the funds raised by the venture capitalists from foreign and private domestic investors, with a target allocation of RM1.2 billion.

As at end-May, Penjana Kapital had raised RM850 million, with more than half from foreign investors in Hong Kong, South Korea and Singapore, it had announced in June. Some RM118 million was approved for investment in nine startups.

By bridging the funding gap, MaGIC and Penjana Kapital aim to "reorient private capital for innovative start-ups, attract global and regional VCs into Malaysia, as well as elevate knowledge transfer, talent development and creation in the Malaysia ecosystem", they said in Monday's press release.

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The DPN is part of Malaysia's Short-Term Economic Recovery Plan (Penjana), targeted at attracting private capital to facilitate the growth of startups. MaGic is a startup ecosystem enabler that has served 2,800 startups.

"We have always stressed the importance of capacity building, and we are happy to identify start-ups with potential and funnel them to Penjana Kapital and its partner VCs. Funding has always been a key challenge for startups to scale up, and we seek to bridge this gap via the DPN," said Amiruddin Abdul Shukor, acting chief executive of MaGIC.

Taufiq Iskandar, chief investment officer of Penjana Kapital, said the collaboration with MaGIC will accelerate Malaysia's economic recovery amid the pandemic.

"We are aware that seed stage start-ups face some funding challenges, and in collaboration with MaGIC, we believe we can help them overcome these," he said.