Malaysia: Cradle Seed Ventures’ debut deal in Involve Asia, 500 Startups too invests

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Cradle Seed Ventures announcing its maiden investment. From left: Involve Asia CEO Jimmy How, CSV CEO Aziz Hussein and Involve Asia COO Sabina Chang.

Cradle Seed Ventures (CSV) has locked in its first investment deal – a single-digit million-dollar Series A co-investment with 500 Startups in e-commerce marketing platform Involve Asia Technologies.

This is the first investment announcement by CSV, which launched its Fund I in June 2015. The current fund size is MYR40 million ($9.35 million), with a hard cap of MYR100 million ($23.38 million).

CSV chief executive officer Aziz Hussein told a press conference that the investment injection involves “millions of US dollars” for a 20 per cent stake.

“CSV has been greatly impressed with Involve Asia’s strategic focus and momentum since they launched last year. We have great hope that Involve Asia will either reach profitability or secure further investments for continued growth which in turn will greatly improve our exit potential,” Hussein said in his speech.

“CSV is anticipating our strategic focus (…) will allow us to go deep into sub-verticals and build great knowledge and network for us, and by extension our investees, to leverage on,” Hussein said of the firm providing added value to Involve Asia and other investee companies.

He also pointed out that having 500 Startups on board its investment signalled positively that foreign private funds and investors are looking to invest in early stage Malaysian startups.

Involve Asia chief executive officer and co-founder Jimmy How said the Series A funds will provide an estimated runway of one to 1.5 years for the startup to expand regionally, grow its technology team and develop partnerships in the region, particularly in Indonesia.

The startup’s chief operating officer Sabina Chang said the funds raised will be used for expanding into Indonesia and Thailand next. The company has just launched its Indonesian office in October, where four staff had been hired.

“We have a lot of strategic partners in Indonesia, on whom we are looking to leverage to work with more e-commerce merchants, as well as through personal connections with large media owners,” How said.

“For Thailand, we have been seeing a lot of organic reach, and we plan to explore that more,” he said, noting that Indonesia was the immediate expansion plan.

Involve Asia is a digital performance marketing platform that connects online merchants and brands to end customers via digital publishers.

Its e-commerce focused marketing platform enables merchants to enhance their digital marketing efforts and generate more sales by providing performance-based offers to publishers. Involve Asia, previously known as ShopStylers, earns a commission from the merchants on its platform.

The platform has over 80 online merchants with more than 1,000 websites in its network, available in Malaysia, Singapore and Indonesia. Collectively, the platform offers 10 million products.

Involve Asia raised an undisclosed angel round in January 2015, from a syndicate of investors that included Chang. The startup is also a CIP500 grant recipient from Cradle Fund in October 2014.

Fund I still not closed

CSV is the venture capital arm of early-stage technology startup ecosystem influencer Cradle Fund. An executive with the venture firm said it is still looking to raise funds for Fund I, with an objective to close the fund by September 2016.

Although CSV is largely funded by the Ministry of Finance, being a government-linked entity,  the firm is also seeking funds from corporates.

“We are not discounting that we may be able to raise the fund size to MYR100 million but currently our internal strategic focus is to continue making investments, building a good pipeline of deals, and creating a track record for CSV,” Hussein said during the press conference.

“I think that would allow us to either raise a bigger amount for this fund, or the next one,” he said.

Hussein noted that while CSV had a portfolio strategy to include foreign startups, the firm’s main focus is now on Malaysian startups as the local dealflow is strong.

Before the year ends, CSV is also looking to close another two investment deals, one of which will also be a co-investment deal and another brought in on its own.

The executive said the investee companies had requested stealth, hence CSV will not likely announce the deals.

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