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Malaysia's Competitive Advantage from the Perspective of Venture Capitalists at Echelon e27 Malaysia

At the recent Echelon Malaysia hosted by e27, a panel consisting of Venture Capitalists from Golden Gate Ventures, KK Fund, Captii Ventures and Gobi VC got together to discuss their perspective on the competitive advantage of a Malaysian startup.

In recent years, technology is catching up fast in all active markets in Asia. With a burgeoning scene involving creative programmers, mobile apps are being created to ease day-to-day lifestyle as well as bettering the service industry including F&B, hotels, manufacturing, agricultural and many more.

The idea of this discussion is to reinstate that competitiveness of a Malaysian startup in comparison to the region’s fast-growing talent. Moderated by Lalitha Wemel, Regional Manager (Startup Programs), from Techstars, the discussion included Gobi VC (Shanghai), Golden Gate Ventures (San Francisco), KK Fund (Japan) and Captii Ventures (Malaysia).

While each venture capitalist focuses on various investments and region, they all have one common interest – to support and invest in promising startups that has potentials to develop, evolve and benefit the industry as a whole. When asked about the various countries in comparison to Malaysia, it was once agreed that Singapore, Malaysia and Indonesia – although geographically located within close proximity of each other – has very different standards and level of growth. Singapore is standing at the height with huge funding and receiving many applications for seed funding for Singapore startups. While Malaysia is still considered a more mature market than Indonesia, both are at the cusp of a hike towards greater growth involving creativity and support.

Discussing on what Malaysia is lacking and what ways can be implemented to improve, it was clear that Malaysian do lack some interpersonal skills in conveying our ideas. Aside from the lack of capital and delayed P&Ls from local investors commented by Koichi Saito, General & Founding Partner of KK Fund, Michael Lints, a Venture Partner of Golden Gate Ventures site the rather ‘negative’ impressions of corporate businesses towards startups.

Aiming towards changing the stereotypes these corporated businsses have on startups, Saikit Ng, Executive Director of Captii Ventures commented: “Malaysian entrepreneurs need to be more vocal when you trying to attract foreign investor. Whenever you pitch to any investor, bear in mind the our purpose and the capital we have. You would need to be able to articulate your business proposal to us – [include] how you want to expand your niche product aiming at a broader mindset.”

As agreed by the panel, the Malaysia market is definitely a mature place that is conducive for foreign market to enter. The government is heavily investing on this market putting a hold on corporate tax with capital income. Lints, in comparison to the incentives offered in Singapore, suggested the need for transparency on topics including how startups are taxed when funds are received in advance, ad risks that could be mitigated in this field. He also added that getting funds and setting accounts for funds are some of the difficult processes in Malaysia.

Echelon is a great way if you already have a business plan to share with your investors
Echelon is a great way if you already have a business plan to share with your investors

How do we attract VCs?
“We welcome the right talent and that include business and tech talents that would bring impact into the market. Let’s treat startups as an MBA certification in becoming successful entrepreneurs and creatives. Old school methods are restraining creativity,” said Chua – VP of Gobi VC.

“Malaysia should be using their CEOs more to build their own companies. There’s a huge talent pool waiting to build their own companies. And if they have a great idea, they shouldn’t be afraid challenged by the safety they have on a 9-5 job, and instead go and experience the most amazing process in life,” said Lints – Venture Partner of Golden Gate Ventures.

The VC s are also highlighting some of their experience when dealing with Malaysian startups. Malaysian are pretty diligent and has a high record of good comments when it comes to funds and execution, Chua commented: “With Malaysian startups, they seem to have some sort of experience and know-how of the industry. We are not worry about execution.”

A more constructive comment on investors’ experience on dealing with so many startups is also the amount of homework being put in before seeing an investor and also calling for a more vicious approach to knocking on VCs’ doors. “We are human beings too and like to get knocks on our doors. At the same time, we hope to see more people owing to their ideas, so, don’t be so modest,” added Lints.

Confirming that Malaysia is indeed growing in its tech support and programmes, Saito from KK Fund added that there needs to be more incubation programme to channel creativity and in order for the ecosystem to develop. He also wanted to see more startups present real issue faced by the country including supply chain, logisitics confirming the reality that there are “…needs to solve challenging issues that people do not want to do.”

In conclusion, there’s only positivity up ahead in the tech and startup industry in Malaysia. There are suppliers and creators to provide relevant product, so Malaysian, what are you waiting for?!

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