Exclusive: Malaysia’s Cradle Seed Ventures set to launch $20m second fund

Photo: Reuters

Cradle Seed Ventures (CSV), the venture capital arm of Malaysia’s early stage financier Cradle Fund, is preparing to launch its second fund CSV II at close to $20 million, an executive close to the development told this portal.

CSV has, however, not yet firmed up the dates for the launch of the new second fund that will focus on technology companies in consumer-facing sectors, the executive, who asked not to be named, told DEALSTREETASIA recently.

The VC firm is currently deploying funds from its first fund, an MYR40 million (nearly $9.5 million) vehicle. This fund’s deployment has already hit close to 70 per cent of the total capital, a juncture when most venture capital firms or investors would start drafting plans for a new follow-on fund.

It may be noted here that Cradle Seed Ventures was looking to raise an additional MYR60 million for its first fund at the time of its launch in 2015 to take the cohort size to MYR100 million.

However, the fund was closed at the MYR40 million committed at the time of the launch, indicating a likely lack of interest from private and foreign parties for pooling capital in the fund at that time.

The venture capital firm, along with its parent Cradle Fund, gets its allocations from the Malaysian government and looks to invest in startups with high growth potential. It invests through equity participation for minority stakes.

About 70 per cent of the fund from Cradle Seed Ventures is spent in Malaysia while the rest 30 per cent is for overseas investments.

Its portfolio firms include InvolveAsia, a referral platform that connects businesses with customers; ServisHero, a regional mobile marketplace for local services; 3ciety, an online marketplace for businesses to sell their merchandise online; and AVANA, which micro-enterprises by transforming social media from a promotional platform to a transactional platform.

The Malaysian government has been seen actively fostering startups to promote innovation. Despite the presence of government-backed organisations such as MAGIC, Cradle Fund and Cradle Seed Ventures, there has been a dearth of local startups making an entry to the unicorn club. Moreover, later stage funding for startups also remains a challenge as many Malaysian startups often find a base in other Asian countries.

Last year, Malaysia had announced a $47.8 million (MYR200 million) allocation for startups and declared that year 2017 will be the Startup and SME Promotion Year in line with the role played by SMEs in significantly contributing to nation’s growth and labour market.

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