This week, Malaysia asserted its dedication to enhancing its startup ecosystem, aiming to become one of the top 20 global startup hubs by 2030. At the KL20 Summit 2024, a range of strategic announcements were unveiled.
This refocused approach aims to make the country more business-friendly, attract top talent, and nurture its growing startup scene. Among the initiatives announced were special ‘golden passes’ for VCs and unicorns, a fund-of-funds led by Khazanah Nasional Bhd, and plans to establish Southeast Asia’s largest integrated circuit design hub in Selangor.
Here is a list of important announcements from the summit:
Golden pass
Two ‘golden passes’ were announced, one for venture capitalists (VCs), and another for unicorns.
To attract sizable international VCs to establish a presence in the country, Malaysia is offering a VC Golden Pass to provide expedited registration approval from Malaysia’s Securities Commission (SC). This will cut the application time from the usual six weeks to two.
They’ll also receive a support letter from the SC to facilitate employment pass applications for its senior management and staff relocating to Malaysia.
A VC will be eligible for the pass if it has an existing global AUM of at least $100 million, as well as a commitment to building a local presence in Malaysia, which includes a physical office in the country with at least two local staff in the investment team.
Meanwhile, the unicorn pass promises personalised support for “market-leading tech companies or startups” with a dedicated account manager.
The service will facilitate business setup and obtaining relevant passes. It includes support for hiring foreign talent, waiving pass fees for founders, co-founders, and their dependents, and offering customised incentives for office spaces and talent development.
The unicorn pass is open to tech companies that can prove to the government that they can achieve a valuation of at least $1 billion and scale their revenue to over $500 million by 2030.
Applicants must incorporate a private limited (Sdn. Bhd.) company in Malaysia and present a robust and viable tech business concept for implementation within Malaysia.
Khazanah fund-of-funds, Asean Investment fund
Malaysia’s Prime Minister Anwar Ibrahim announced some plans involving sovereign wealth fund Khazanah Nasional Bhd.
First was the announcement that Khazanah would “soon” head a Malaysia-focused fund of funds with an initial allocation of 1 billion ringgit ($209 million), to invest in innovative, high-growth local companies.
Additionally, it was announced that Khazanah, government servant retirement fund Kumpulan Wang Persaraan (KWAP), and semiconductor-focused investor BlueChip Ventures will be jointly investing 3 billion ringgit under an Asean Investment initiative.
Ten VCs to prop up offices in the country
As many as 10 VC investors signed what DealStreetAsia understands to be letters of intent (LOIs) to establish new offices in Malaysia.
The 10 investors named were Nordstar, GP. Bullhound, K3 Ventures, HOPU, Lever VC, Intrinsic Venture Capital, Mundi Ventures, Openspace Ventures, NRL Capital, and M Venture Partners.
Two more investors, namely The Hive Climate Al and China Galaxy Securities, are set to launch their funds in the country.
DealStreetAsia understands that Taiwan-based VC and accelerator AppWorks has also agreed to expand its operations in Malaysia.
SE Asia’s ‘largest’ IC design park
The prime minister also announced that an integrated circuit (IC) design hub is set to be built in the state of Selangor, and claimed that the hub would be the largest of its kind in Southeast Asia.
This comes as Malaysia attempts to position itself as an upcoming powerhouse in the global IC design industry.
The proposed ‘IC Design Park’ will be a collaboration between the Selangor state government, the federal government as well as international semiconductor firms and venture capitalists.
The project has already secured the commitment of four partner companies, including SoftBank subsidiary ARM Ltd, Phison Malaysia, SkyeChip Sdn Bhd and the Shenzhen Semiconductor Industry Association.
According to a report by TheEdge Malaysia, the Selangor government said in a statement on Monday that the hub is set to begin operations by July 2024.
Single Window for Startup Ecosystem
Malaysia’s Single Window for the Startup Ecosystem (MYStartup), a one-stop online platform for information geared to startups, was also launched at the summit.
Startups looking for funders or funding can register on the website and specify their startup type to be directed to relevant funding agencies, aided by artificial intelligence technology that answers queries and provides insight. Tech talent seeking employment with startups can also find job opportunities on the platform.
What do investors think?
Commenting on the KL20 iniatives, Fares Zahir, CEO of life sciences-focused VC firm Xeraya Capital, which is owned by Khazanah, said he was glad to see that the importance of innovation for the flourishing of the local VC scene was recognised through the various initiatives introduced at the summit.
“I liked that it was not just about capital but covered various other areas including more co-ordination among ministries and agencies and introducing Single Window, an AI/tech, that will help parties navigate the ecosystem. There was also some liberalisation of the sector with a dozen international VC firms to be located in Malaysia,” he said in a LinkedIn post on Tuesday.
Meng Xiong Kuok, founder and managing partner of Singapore-based tech investor K3 Ventures, said that the country’s initiatives have attracted a sincere amount of foreign capital allocators who want to be in Malaysia and lean in and invest in the startup ecosystem here.
“The policies of KL20 have been so thoughtful from attracting talent to helping founders have a POC (point of contact) at government-linked corporations and multi-national corporations if their product is good. That will accelerate the scaling process,” he said at the summit on Monday.
The KL20 summit comes after Malaysia began ramping up initiatives geared towards building up startups and the venture capital ecosystem last year, in a bid to create a more developed economy and increase international investors’ interest in the country. A 500-million ringgit ($106 million) vehicle launched by KWAP last September and the launch of Malaysia’s Venture Capital Roadmap 2024-2030 are among these initiatives.
According to DealStreetAsia’s SE Asia Deal Review: Q1 2024, funding volume for Malaysian startups in the first quarter of this year hit a four-quarter low of $20 million. In Q3 2023, funding volume had stood at $110 million, which fell to $83 million in Q4 2023.
