The startup trade in Malaysia has seen optimistic developments however extra have to be performed to ascertain the nation as a startup hub, the Securities Fee (SC) Malaysia mentioned.
Chairman Datuk Seri Awang Adek Hussin (pic) mentioned that deepening the pool of capital in addition to encouraging Malaysia’s investor group to spend money on the startup ecosystem are two vital areas transferring ahead to ascertain the nation as a startup hub.
He mentioned the small and medium enterprises (SME), in addition to startups, performed an vital position in driving actions on the nationwide and state ranges as they contributed half of the nation’s gross home product (GDP).
“Given the significance of SMEs to the economic system, it’s essential to handle the supply-demand hole for financing these companies,” he mentioned on the launch of Dana Penjana Selangor at the side of the Company VentureCapital (CVC) programme immediately.
He mentioned capital market financing supplied a viable resolution by permitting SMEs to boost funds in a versatile and inventive method.
“This may facilitate them to develop and contribute extra to the actual economic system in addition to doubtlessly going for itemizing within the inventory change,” he mentioned.
On the financing provide facet, Awang Adek mentioned SMEs have issue in accessing sustainable funding for his or her enterprise whereby conventional financial institution loans may also have limitations in assembly their financing wants.
“On the demand (of financing) facet, SMEs, significantly startups, typically face larger dangers and decrease survival charges than bigger corporations.
“This results in a sample of excessive entry and exit charges throughout numerous financial sectors, which causes monetary establishments to view them as riskier mortgage prospects,” he mentioned, including that this dynamic additional hindered SMEs’ entry to financing.
He mentioned the capital market may foster investor confidence and entice extra capital to gasoline SME development by emphasising governance, transparency, disclosures and investor curiosity.
“The federal government have to be credited for its dedication to develop the Malaysian startup ecosystem,” he mentioned.
He mentioned the revised Price range 2023 highlighted a number of initiatives aimed toward supporting companies, significantly micro, small and medium enterprises (MSME).
“Amongst others, RM40 billion is allotted to MSMEs for financing in addition to ensures by authorities companies,” he mentioned.
Nonetheless, he mentioned that funding gaps when it comes to fundraising nonetheless existed whereby startups wrestle, particularly within the later phases of financing, a scenario known as the “Dying Valley” within the enterprise capital (VC) trade as a result of lack of funding.
“That is the place matching fund programmes have confirmed to be efficient in attracting non-public traders into Malaysia,” he mentioned.
He mentioned this method struck the suitable stability between optimising public spending and crowding in non-public capital into the ecosystem.
“Moreover, these programmes function group builders in addition to a bridge between Malaysian startups and the worldwide investor group,” he mentioned.
He mentioned the Dana Penjana Nasional, which is run by Penjana Kapital Sdn Bhd (PKSB), is one notable instance which leveraged the experience and networks of each native and international VC managers to successfully establish and help promising startups.
“I’m happy to see this mannequin is being replicated on the state degree. The launch of Dana Penjana Selangor exemplifies the state authorities’s dedication to fostering a thriving startup ecosystem,” he mentioned.
He mentioned this could complement present programmes in supporting and nurturing tech startups, paving the best way for each the Selangor and Malaysian economies to develop into centres of innovation and entrepreneurship.
Awang Adek mentioned there may be additionally rising curiosity from numerous states corresponding to Selangor, Penang and Sarawak to assist startups and SMEs through capital market financing.
He mentioned the SC can also be dedicated to facilitate a complete “funding escalator” to present startups extra funding choices all through their development lifecycle.
“Different SC measures embrace opening up registration for brand new fairness crowdfunding (ECF) and peer-to-peer (P2P) market operators, together with for these providing Shariah-compliant options.
“The SC additionally launched the DIGID fund with the intention to co-fund modern initiatives that use know-how, advancing the digital agenda for the Malaysian capital market,” he added.