Malaysia’s startup ecosystem has several new international entrants in the form of venture capitalists (VC) and angel investors. With the advent of these new funds, the existing VCs might have to compete harder for closing deals .
Proficeo chief evangelist Dr V Sivapalan believes that the recent developments in the Malaysian startup ecosystem, will bring in additional funding, which in turn, will make the local angel investment and VC scene, much more competitive.
According to him, some of the Malaysian investors were quick to turn down entrepreneurs, often missing out on real potential ideas. “Local VCs need to change both their mindset and their approach, towards entrepreneurs. With more money coming in, the VCs will have no choice but to loosen up,” he said during a discussion at the Digital News Asia- Technoprenuers Association of Malaysia (TeAM) Disrupt panel session.
Already, the country is seeing more investors from Singapore and other countries like Japan. Inf act, several Malaysian entrepreneurs too have crossed the southern border, searching for funding, which the Singaporean VCs have been happy to provide. The biggest example is that of the firm GrabTaxi.
Sivapalan, who is also the co-founder of TeAM, refuted the common VC perception of Malaysia not being “vibrant” enough. “Malaysian investors keep saying there are not enough good deals but there are good deals here. With so many funds (coming into) the system, the deals that no one wanted, will be grabbed by the new players,” he warned.
Malaysia Venture Capital Association president Amin Shafie admits that in this ‘rush for deals’, some will turn out to be bad. “(But) the sufficient flow of capital in the system will also create the natural filtration in the ecosystem over time,” he added.
Amin is also the co-founder of the Malaysia and Hong Kong-based venture capital firm Questmark Group.
Sivapalan added that most VCs have stuck to a set of ‘template questions’ when whetting an entrepreneur. “VCs say they invest in teams. An entrepreneur might not have the means to hire the right people, so how does he have a team? Choosing to fund an enterprise should be about the marketability of an idea and then about finding a way to make it successful not just a team,” he said.
Whether the business had any entry barriers or the entrepreneur had industry experience: both were irrelevant while judging the true potential of an idea “It is often, the people from outside an industry who are able to disrupt the industry and make the changes,” he said.
He recommended that the VCs should ask an entrepreneur about the setting up the business, rather than evaluating if everything is established.