UPDATED 21 January 2022
This article about VCs in Malaysia includes the definition of VCs, why companies need VCs, the VC environment, and of course, the list of Venture Capital funds in Malaysia and the rest of Southeast Asia. We have also included how you can find the right VC for your company as well!
A venture capitalist or VC is an investor who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to equities markets. Venture capitalists are willing to invest in such companies because they can earn an impressive return on their investments if these companies turn out to be successful. Venture capitalists look for a strong management team, a large potential market and a unique product or service with a strong competitive advantage. They also look for opportunities in industries that they are familiar with, and the chance to own a large stake in the company so that they can influence its direction. At NEXEA we are interested in tech start-ups as this is our expertise.
The video below further explains venture capital.
Is it true that Venture Capital fund managers always bring value to the strategy and execution of the business? That is far from the truth – from my experience, not many Venture Capitalists are able to bring in much value. Not only are they too busy managing 10-20 companies per partner, but they also have to manage many of their Limited Partners (investors) too!
However, any VC in this list of venture capital firms in Malaysia is more than just a fund. They will be part owners of a company and want to see this company grow so they will do anything to help a start-up succeed. At NEXEA we have ex-entrepreneurs who can guide start-ups and help them avoid mistakes they have made before when setting up their business.
The start-ups need venture capitalists as they are mostly rapid growing companies with inexperienced owners who do not always know what to look out for. To reduce the risk for the venture capitalist as well as for the start-up it is important that there is a great connection between the two parties.
"You will need to do the due diligence in order to really understand if a VC is going to add value in addition to capital. This value can be introductions for potential partnerships, their network of other successful founders, or the infrastructure the firm brings."
Venture Capital is the most well-known method of raising funds, and for good reasons. The average yearly VC deal value has increased by nearly fivefold over the last decade. Companies that are ready to expand quickly with the willingness to give up stocks and listen to the VC investor's will benefit greatly from venture capital. VC investors are motivated to bring more than just money to the table since they profit (substantially) if your firm succeeds. In this regard, they are one of the most helpful sources of startup capital. Investors supply crucial information for running a successful firm, as well as marketing and sales guidance, networking opportunities, and industry contacts.
The publicity that comes with landing a significant deal can help young businesses build demand for their products and recruit top people. Although “VC” has become synonymous with “early business financing” due to its major participation in some of the most significant launches of the decade and genuinely exponential growth, the reality is that VC investment is the exception, not the rule.
VC in Malaysia has been booming lately. There has been an increase in venture capital firms over the last couple of years. This increase has been very positive for the start-up environment in Malaysia. Venture capital has a great influence on a growing economy as well as job creation and transitioning into a knowledge-based economy. This is extremely important for Malaysia and this great environment has and will on having a great influence on the country.
Furthermore, the success rate of start-ups is significantly improved by venture capital in Malaysia. They bring in not just money, but also value like connections to corporates, and follow in investments from venture capitalists that do larger deals than they do. Eventually, the private venture capital market leads to private equity, mezzanine investors, or even public markets where Startups can eventually exit.
People who invest in enterprises are known as venture capitalists and angel investors. When it comes to investing both angel investors and venture capitalists take measured risks in the hopes of making a profit (ROI).
So, what exactly is the distinction between angel investors and venture capitalists? Knowing the answer to this question can help you save time and choose the appropriate funding source.
Below are some important distinctions between angel investors and venture capitalists.
|Angel Investors||Venture Capital|
|An accredited investor who invests in small enterprises with their own money.||A person or a company that invests in small businesses with money from investments firms, huge organizations and pension funds|
|Angel investors are more willing to invest in enterprises that are still in the early stage of development.||To limit the danger of losing money, venture capitalists prefer to invest in well-established enterprises|
|Angel Investors may expect a 20% to 25% return on their investment.||Venture capitalists could expect a 25% to 35% return on their investment.|
|Angel Investors serve as mentors to their proteges. They could give you advice on how to operate your business.||Venture capitalists may demand that you form a Board of Directors and grant them a seat on it. They are often not interested in serving as mentors.|
Venture Capital funds in Malaysia for early-stage startup companies are listed below:
We added this to our venture capital list because venture capitalists don't typically cover idea stage companies.
An accelerator is a 3-4 month program that helps Startups jump-start their business with about RM50k for about 8%. Startups that graduate should be able to raise funds. Accelerators usually offer mentoring and coaching, as well as networking opportunities.
Government start-up accelerators
Private start-up accelerators
Corporate start-up accelerators
A government grant is a financial award given by the federal government to an eligible startup. In Malaysia, this usually originates from the Ministry of Finance.
The Venture Capital Southeast Asia ecosystem has been growing significantly from previous years as the internet economy is rapidly expanding. According to Pitchbook, the venture capital dry power has increased up to eleven-fold in the past 6 years. This shows how competitive the VC landscape is in Southeast Asia as large international investors (Y Combinator, 500 Startups, GGV Capital, etc) start to focus on SEA, while regional VC investors (NEXEA, Asia Partners, Strive, etc) are doubling down.
First of all, you have to know what stage your company is currently in. When you know what stage your company is in you can start applying to venture capital. To ensure you have the opportunity to pitch your company you have to prepare an informing pitch deck.
The infrastructure and “speciality” of the VC is the most interesting part to look out for, this is what separates the best from the rest. Venture Capitalists like Andreessen Horowitz or First Round Capital have a dedicated team of marketers, recruiters and other resources to bring into a company they invest in. At NEXEA, we have dedicated lawyers, regional level CFOs, many world-class CEOs that mentor and invest in Startups and other support infrastructure in place.
Lastly, set boundaries for yourself. Especially companies which are founded by multiple people it is very important that you know from each other what you are willing to give away. Giving away is not only in terms of equity but as well in time. When a venture capitalist invests in your firm the whole working dynamic can change as you hopefully transition to a fast-growing firm.
In addition to some tips to find the correct venture capital firm for your company, we would like to supply you with some easy steps which you could implement to find via this venture capital list that fits your firm.
There has been a growing number of venture capital firms in Malaysia which has had a very positive effect on the economy of the country. For startups wanting venture capital, it is important to identify at what stage they are as well as finding the right expertise and setting boundaries for the company.
We hope this venture capital list has provided you with enough knowledge. Let us know in the comments if there is anything we should add?