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PETALING JAYA: The startup landscape is set to get a boost as more global venture capital companies eye the lucrative and fast-growing startup business in the country.
Venture capitalists see great potential in local startups considering Malaysia is as an emerging market in South-East Asia.
Analysts and those familiar with the operations of startups said in principle, venture capital firms are seeking three to five times multiple on invested capital over a 10-year period.
It is a metric used to describe the value or performance of an investment relative to its initial cost, commonly used within private markets.
Another catalyst is the government’s initiatives to spur the growth of startups and to strengthen its ecosystem.
This is in line with the its plans to create close to 5,000 startups by 2025. It has also announced an additional RM1bil to support and strengthen the startup ecosystem, aligning with private sector contributions to foster technopreneurship.
Global venture capital firm Antler, which last year forged its partnership with sovereign wealth fund Khazanah Nasional Bhd, aims to further develop and beef up the local startup ecosystem.
Speaking with StarBiz, Antler Malaysia associate partner and country head Frank Kang said the company would primarily focus on the technology sector due to its inherent scalability, allowing for the rapid expansion of business operations, and potential to reach a large user base with minimal incremental costs.
“The country is actively addressing the digital skills gap in its workforce, recognising the potential of the information and communications technology sector for growth, with close to 500,000 jobs estimated to be created within this sector by 2025.
“Of this, the focus by the government, is on developing 20,000 cybersecurity knowledge workers and 30,000 data professionals by 2025.“The technology industry is known for being an innovation hub, and its potential for shaking up markets, scalability, and economic impact align with Antler’s goal to identify and back startups capable of making big changes and delivering strong returns on investment,” he added.
Kang said the focus on technology fits with the firm’s strategy of supporting startups that can quickly adapt to market changes, scale rapidly, expand globally, and contribute significantly to economic growth.
Prior to its tie-up with Khazanah, the venture capital firm had already invested in Malaysian molecular diagnostics and genomics startup, Biogenes Technologies Sdn Bhd in a 2020 seed round.
Singapore-based Antler, which started operations in 2017, is among the most active early-stage investors in the world, having invested in over 1,000 companies across 27 cities with a cumulative portfolio value of US$4bil.
Since launching in Malaysia, he said the company has successfully invested in a total of seven startups.Kang said Antler has invested US$110,000 in each company as part of a pre-seed round. Other than financial support, he said the company also provides its founders with the access to a global network of experts, funding opportunities, and resources that aid in further skill development and business growth.
The company aims to invest in over 30 startups across Malaysia over the next three years, with applications currently open for the April 2024 Founder Residency, a 10-week programme that involves a structured and intensive process where solo founders or pre-formed teams with diverse backgrounds and skills come together and work on innovative business ideas.
They receive support on co-founder matching, ideation process as well as deep business model validation, first funding, expansion support, and the potential for future follow-on funding.
On the global scale, Antler has over 8,000 founders of startups and more than 1,000 portfolio companies supported, including Reebelo, Airalo, and Volopay, to name a few.
Antler, either through direct deals or the Founder Residency, will invest US$110,000 onwards and expects to realise gains from its investments over a long time horizon.
He said the residency is designed to support aspiring entrepreneurs in building and launching their own startups.
As to the growth drivers and outlook of the startup landscape in the country over the next few years, Kang said based on the company’s observations, there is an optimistic growth for startups in Malaysia due to the various support from the government, government-linked companies, government-linked investment companies and, small and medium enterprises.
“The partnership with Khazanah on the latter’s latest Future Malaysia Programme, which is an initiative under its RM6bil commitment, Dana Impak five-year mandate that aims to support the local startup ecosystem of entrepreneurs, startups, venture capital, and corporate venture programmes through collaborations with domestic and international partners.
“With this partnership, Antler envisions playing a pivotal role in fostering innovation, supporting emerging entrepreneurs, and contributing to the growth of the broader startup ecosystem.
“Beyond the initial scouting and cohort formation, Antler continues to support the candidates throughout the programme.
“This includes access to a global network of experts, funding opportunities, and resources that aid in further skill development and business growth,” Kang pointed out.
Elaborating on the challenges facing startups, he said two of the most common hurdles faced by cohorts during the Founder Residency are the search for the right co-founder and the validation of their business ideas.
Addressing the challenges is an integral part of the programme’s design. Antler’s supportive ecosystem, consisting of structured networking, mentorship, and resources, will equip founders to tackle the common obstacles effectively, according to Kang.
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