Malaysia’s Cradle Fund Sdn Bhd is set to establish a MYR60 million ($16.5 million) seed venture fund by May, unleashing a fresh wave of investments into startup ecosystem in the region.
An executive familiar with Cradle’s plan said Cradle Seed Ventures (CSV) will initially target “fun startup businesses like in-mobile app developers and internet businesses”, without divulging additional details; and further added that the fund will look at seed investments in ‘complicated businesses at a later stage.
This executive, who did not want to be named, said that “two or three” startups have already been identified for funding.
“The strategy is to then move to invest in players that provide enterprise solutions and further down the road, players in the hardware industry,” the executive said, noting the potential of hardware players, which have not garnered much limelight in the world of seed funding and venture capital.
The executive said the strategy will take some time to be rolled out.
The Cradle Seed Venture Fund 1 is a public-private initiative in which MYR40 million is invested by the Ministry of Finance via Cradle, and MYR20 million by local e-government services provider MyEG Services Bhd.
When the early-stage fund was first announced in October 2013, Cradle said it aimed to invest in 20 startups by 2017 or 2018.
Cradle CEO Nazrin Hassan said then, that the CSV was set up as an alternative funding source for local technology startups, with the hopes of plugging the outflow of early stage deals to Singapore.
The fund is expected to disburse between MYR 1 million to MYR 3 million per startup that is technology and innovation driven, especially related to financial services, education, healthcare, oil and gas and energy.
Nazrin had said that 70 per cent of the fund would be invested in local companies with the remainder for overseas startups.
Cradle is a technology and innovation startup financier and influencer. The government-linked agency has been managing the MYR 100 million ($27.5 million) Cradle Investment Programme since 2003. It also runs the Coach & Grow Programme that trains entrepreneurs.
In November last year, the agency stepped away from its role as purely a grant provider to startups, to a co-investment initiative. The co-investment, valued at MYR28 million ($7 million), was in partnership with Fatfish Ventures Sdn Bhd, OSK Ventures International Bhd, Japanese firm CoEnt Venture Partners Pte Ltd and Singapore-based Crystal Horse Investments Pte Ltd.
With the departure from its grant-provision model, Cradle will take up equity holding in startups that it invests in.