State-backed Malaysia Debt Ventures Bhd (MDV) plans to invest in up to 300 technology enterprises over the next 20 years through its third fund, which has a corpus of RM4 billion ($952.8 million).
The third fund caters to technology enterprises in the early stages of growth and development, unlike its two earlier funds which catered to mature and revenue-stage companies with clear and strong credit profiles. The latest fund will target startups in the areas of artificial intelligence (AI), virtual reality (VR), augmented reality (AR) and 4D printing, among others.
MDV’s first fund was sourced from the Japanese Bank of International Cooperation (JBIC) through the Ministry of Finance (MOF) and totalled RM1.6 billion.
In 2007, MOF approved RM2.5 billion for MDV’s second fund. The first tranche saw MDV issue an RM1.5 billion Islamic Medium Term Note (iMTN) to finance technology projects. With the second fund, MDV expanded its focus areas to include biotechnology.
According to MDV, it has identified 15 enterprises involved in e-commerce, 3D printing and robotics that could receive financing from the third fund within the next six months, with about MYR 100 million worth of projects across these areas.
This latest fund will strengthen the funding elements of Malaysia’s startup ecosystem, which already has investment platforms such as Crowdo, Alix GLobal and Ata Plus operating.
Loans from the fund come with a reported 8 per cent interest rate and will see its capital raised through Islamic Medium Term Notes (iMTNs). It will serve as a platform for MDV to identify and fund new technology areas as well as to develop and launch complementary financial products to support their potentially novel business model.
Established in 2002, MDV currently provides financing facilities to technology firms in information and communication technology (ICT), green technology, biotechnology and emerging technology sectors in Malaysia and claims to have disbursed more than RM11 billion in financing to more than 680 technology companies, enabling the completion and delivery of an estimated 773 projects in various technology domains.