UPDATED 3 MARCH 2020: More information & VCs added to the list
This article is about VC in Malaysia, the article consists of, first of all, introducing the topic. Secondly answering why companies need a VC, the VC environment, our venture capital list Malaysia. Lastly, we include an explanation of how to find the correct VC for your company.
What is Venture capital?
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 of the company so that they can influence its direction. At NEXEA we are interested in tech start-ups as this is our expertise.
Why do companies require a venture capitalist?
Is it true that Venture Capital fund managers always bring in value on 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 venture capital list is more than just a fund. They will be part owner 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 capitalist as they are mostly rapid growing companies with unexperienced 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 Malaysia – Environment
Venture capital 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 capitalists. At the moment the success rate for start-ups in Malaysia has been greatly influenced by venture capital.
Very Early Stage Investment Venture Capital List Malaysia (<US$1m)
Venture Capital list for early stage companies
- NEXEA Venture Capital
- TH Capital
- BizAngel
- Expara Ventures
- Cradle Fund
- Netrove Partners
- TinkBig Venture
- 500 Startups
Later Stage Investment Venture Capital List Malaysia (>US$1m)
- TH Capital
- Intres (via the Axiata Digital Fund)
- Cradle Seed Ventures Management Pte Ltd
- MavCap
- Jungle Ventures
- KK Fund
- Sequoia Capital
- Golden Gate Ventures
- Vertex Ventures
- SoftBank Capital
- IMJ Investment Partners (now Spiral Ventures)
- SPH Media Fund
- Asia Venture Group
- Incubate Fund
- Rebright Partners
List of Accelerators in Malaysia (Idea Stage Startups)
We added this to our venture capital list because venture capitalists dont 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
List of Government Grants in Malaysia (Early Stage Startups)
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.
Finding the right venture capital firm for your company.
First of all, you have to know what stage your company is currently. 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 in a fast-growing firm.
Steps to finding the right venture capital 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.
- Geography: The location of your startup should be in the region which the VC is operating in. At NEXEA we invest in tech start-ups in the SEA region. However, for some programs, we prefer companies that are based in Malaysia as we are located in Kuala Lumpur. So do some research on the VC to know if your location is applicable to them.
- Sector: Usually VC’s only invest in companies that operate in fields of business where they have a lot of experience in. As discussed before at NEXEA we have a lot of expertise in tech-related companies. For us, a company which has a traditional business model would not be applicable.
- Portfolio conflict: A VC will typically not invest in a company which is a direct competitor of a company in their portfolio. So before applying to a VC find out about there portfolio and see if you can identify any direct competitors.
- Involvement: There are two types of VC firms, the first group are the VC’s that are very involved. These VC’s typically do not invest in a lot of companies as they do not have the time to be highly involved in a lot of companies. The second group of VC’s are the opposite, these firms are not very involved in the companies they invest in. This is usually due to the number of start-ups they invest in. They simply do not have the time to have a meeting with each startup every week. At NEXEA we are highly involved with each start-up due to our start-up mentor network. For a start-up, it is essential to know from each founder whether they prefer a highly involved VC or less involved VC.
- Fund size: A start-up has to know beforehand what series a VC invest in. It does not make sense to apply for a pre-seed start-up while you are doing your A-series. Furthermore, if you plan beforehand that you want to do you B-series and A-series with the same VC to ensure good collaboration, you should check whether or not they invest in both series.
Venture Capital List Summary
There has been and a growing number of venture capital firms in Malaysia which has a very positive effect on the economy of the country. For startups wanting a venture capital, it is important to identify in 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?
Add your VC/Accelerator/Incubator here! Just comment your business name & description and I will add it above.
Ben thanks for your insights. Would you be able to guide me to a venture capital opportunities with ESG initiatives.
Thank you so much Ben. Timeless article, so convenient for aspiring entrepreneurs.
Ben Lim
Look forward to talking direct with you soon
sincerely
MJ Indonesia
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