Malaysia launches SME co-investment programme with $21m fund corpus

SME Corp's parent committee meeting with strategic partner TUBE

SME Corp. Malaysia, a government agency under the Ministry of Entrepreneur Development (MED), has launched the SME Investment Partner (SIP) Programme, a co-funding initiative with the local private sector.

SME Corp. Malaysia has appointed Warisan Quantum Management and RHL Ventures to manage the investment fund that has a total corpus of 90 million ringgit ($21.7 million).

Warisan Quantum and RHL Ventures will raise funds from private investors with a matching amount coming from the government through SME Corp. Malaysia.

To date, both fund managers have raised up to 50 million ringgit ($12.07 million) which will be matched with the government’s seed fund of 40 million ringgit ($9.66 million). It is understood that the SIP programme will cut cheque sizes between 500,000 ringgit ($120,700) and 3 million ringgit ($720,000) per deal.

According to MED minister Mohd Redzuan Yusof, the co-matching ratio will be 1:1. He said, the SIP programme is “better spread” as compared to typical venture capital financing which tends to focus heavily on tech-based companies.

The programme will offer both equity and debt financing, fund early-stage SMEs [that have been operational from 1-3 years], and, cover such enterprises in high-growth sectors.

“We don’t go where VCs like to go – we look at businesses that are starting to gain traction and are looking for Series A or pre-Series A where it is difficult for them to seek financing from private equity funds or financial institutions. This is the gap we look at,” said SME Corp. Malaysia CEO Noor Azmi Mat Said.

SME Corp. has identified over 150 potential deals from the government’s existing SME development programmes such as Tunas Usahawan Belia Bumiputera and others implemented in collaboration with PlatCOM Ventures, Malaysian Global Innovation & Creativity Centre (MaGIC), and Yayasan Inovasi Malaysia (YIM) for a preliminary assessment.

In April, RHL Ventures had launched a 100 million ringgit ($24.2 million) fund anchored by SME Corp. to support the growth of local startups as well as SMEs, one of the first few public-private collaborations under the Mahathir-led government.