The Secretariat for the Advancement of Malaysian Entrepreneurs (SAME) has launched SAME Venture Capital with an initial fund size of RMB3 billion ($483 million) largely backed by China investors, to provide local startups and small medium enterprises (SMEs) alternative funding.
The VC is spearheaded by SAME, a unit under the Prime Minister’s Office, with three venture capital firms in partnership.
SAME Venture Capital has an initial fund size of RMB3 billion or MYR1.79 billion. All three partners noted that the fund is not closed and will likely grow over time as the firms attract more investors.
DOERS Seed Fund will invest between MYR250,000 and MYR1 million per project or company, Fuller Capital stated that its financing will be from MYR250,000 to MYR10 million while Grandpine will commit between MYR1 million and MYR10 million per investee company.
SAME CEO Neil Foo said the government unit intends to encourage angel and venture capital funding among local SMEs via this partnership.
“Venture capital is still a new concept among local SMEs (but) this is the era of venture capital. SMEs need to look for funds alternative to commercial banks as banks can’t lend to young companies with no track record or insufficient collateral,” he said during a press briefing, noting that cash-rich China investors are hungry for investment opportunities in the Southeast Asia region.
Foo added that the fund will not be limited to technology-savvy companies only, as Malaysia has already other established government-linked venture capital funds that focus in that area, such as Mavcap and the Axiata Digital Innovation Fund.
The partners in SAME Venture Capital will seek investments in the food and beverages, energy, health care, shelter, education and entertainment industries.
DOERS Seed Fund and Fuller Capital are backed by investors from Malaysia, China and Taiwan while Grandpine Capital has an investor network from China, Hong Kong, the US and Malaysia.
DOERS general manager Michelle Yong said the fund aims to invest into 30 companies in the seed funding stage within this year.
“We already have six investee companies and we have the next six months to look for the rest,” she said, adding that the seed fund will take between 10 to 20 per cent equity in the investee companies.
The other two funds did not specify any investment targets, neither in volume or value.
Grandpine group managing director Lok Kok Khong said there is no guidance as the deal structure will depend on each investee company.
He noted that Grandpine’s investment appetite is in high-potential companies that are primed for initial public offerings within three years. “We are focused on e-commerce businesses but not limited to that segment. We prefer those who use technology to support traditional businesses,” he added.
“We do not have any specific guidelines for that; we will weigh according to the business model and financial roadmap of each company that we are interested to invest in,” Fuller Capital managing director Lai Yip Poon said.
Fuller Capital is 20 per cent owned by Lai, 10 per cent owned by DOERS Group, 10 per cent by Fuller Capital (China) and the remaining by Malaysia BSE Alumni Club.
The firm is run by the alumni from DOERS Group’s investment education programmes.
SAME was set up by the Prime Minister’s Office in October last year an attempt to bridge the gap between businessmen and government agencies.