The coffers of the Malaysian government have so far helped the country’s venture capital ecosystem develop and, as such, its initiatives should continue, say the country’s state-backed VC firms.
Malaysia Venture Capital Management Berhad (MAVCAP) CEO Shahril Anas said his agency had seeded the Malaysian offices of VC firms 500 Global and Gobi Partners, both of which became the second largest offices of the firms globally.
“MAVCAP has returned 4 dollars for every dollar the government has put in [to MAVCAP],” Shahril added, during a panel discussion at the Malaysia Venture Forum, held at the Asia School of Business in Kuala Lumpur on Wednesday.
During a panel discussion titled ‘Navigating The Malaysian VC Landscape: Past, Present, And Future’, Shahril spoke on whether the Malaysian government’s funding had effectively contributed to developing the local VC ecosystem, facilitating private funding, or if it had instead crowded out private investments.
According to the Securities Commission Malaysia 2022 Annual Report, over 67% of venture capital in the country had come from government sources—36.01% from government agencies and investment companies such as MAVCAP and Penjana Kapital, 27.27% from the sovereign wealth fund Khazanah Nasional Berhad, and 3.79% from pension and provident funds.
500 Global managing partner Khailee Ng, who heads the firm’s Malaysia-based Southeast Asia (SEA) chapter, also spoke on the need for government funding efforts, as it was this “first money” that helped VCs pull in capital from other sources.
“One of the most powerful things that government-linked money can do to stimulate the entrepreneurial ecosystem is to anchor funds. It shortens the GP’s fundraising cycle sometimes by two years. That means startups don’t have to wait two years for that seed money,” he said.
500 Global received an undisclosed amount of funding from MAVCAP in 2014 to set up its SEA office, with MAVCAP joining as an LP.
Ng also said that although reports suggest that a majority of VC funding in the country comes from government sources, this was not true for his company. “For all our three funds, only one-third is coming from Malaysian institutions. Sometimes between 20-30%. The rest of the investments are foreign,” he said.
In September this year, 500 Global announced that it has raised $143 million across its early-stage and growth vehicles to double down on its investments in SE Asia. The VC has backed startups including Grab, Carsome, and Carousell from its two previous Southeast Asia-focused funds.
Amin Shafie, partner at Intres Capital Partners and Asia Greentech Fund, also shared Ng’s views, saying that government funding is very effective as a “seed” for VC firms. “For Intres Capital’s [Axiata Digital Innovation] fund, less than 16% is from the government—through MAVCAP. The rest is all private,” said Amin.
“For Asia Greentech Fund, hopefully [government funding] will be less than 30%. For fund I, government funding, through MAVCAP, was 50%. [During the first Asia Greentech Fund] there were no other early-stage private green tech funds in Malaysia. So MAVCAP took the risk, and the fund is performing well I think,” he added.
The Axiata Digital Innovation Fund has invested in Signature Market, Aerodyne and Happy Bunch, among others.
Meanwhile, the Asia Greentech Fund does not disclose its size on its website. It lists one company as an investee—Sunview Group, a solar energy service company.
The Asia Greentech Fund previously announced that it had partially exited Sunview Group in April this year after the latter launched its IPO on Bursa Malaysia in 2022.