Corporate Venturing Ecosystem in Malaysia
The Government of Malaysia has been a stalwart supporter of the nation’s start-up ecosystem. This has been facilitated by various agencies such as Penjana Kapital, Malaysia Venture Capital Management Berhad (MAVCAP) and Malaysia Digital Economy Corporation (MDEC).
According to the World Bank’s report, Malaysia: Assessment of the Start-Up Financing Ecosystem, CVCs in Malaysia are relatively new, with the most established ones having only been in operation the last several years. Examples include PETRONAS Ventures (a special CVC arm of Petroliam Nasional Berhad or PETRONAS), Sunway Berhad’s Sun SEA Capital, and AirAsia Digital (previously known as RedBeat Venture). Although there is no official specific framework for the establishment of CVCs, most of them are structured as investment holding companies.
In tandem with the rising popularity of fundraising and investment via the private market, the Securities Commission Malaysia (SC) has been advocating the development of the Malaysian digital market. Among other things, the regulatory authority has been monitoring the development of the domestic private equity (PE) and VC industry, by requiring registration in 2015 and also setting up the Malaysian Venture Capital and Private Equity Development Council (an inter-ministerial council comprising of representatives from the public and private sectors, set up it 2005 to provide vision and direction as well as coordinate strategies for the overall development of the PE and VC segment).
Under the Capital Market Masterplan 3 CMP3), which aims to promote a more sustainable and equitable economy, the SC has committed to collaborating with pertinent agencies and investment entities in Malaysia to develop the corporate venture landscape. On this front, SC-affiliated Capital Markets Malaysia (CMM) will lend its support through the delivery of capacity building progammes and awareness campaigns, to encourage development and build depth in corporate venturing.
In November 2022, the SC enhanced its Guidelines on the Registration of Venture Capital and Private Equity Corporations and Management Corporations (VC/PE Guidelines, first issued in March 2015). Aimed at creating a more conducive environment and increasing the vibrancy of private markets, notably in the PE and VC sector, this will also offer diverse funding options to micro, small and medium-sized enterprises (or MSMEs), particularly start-ups and high-growth enterprises, in turn driving innovation and strengthening economic growth.
Since the introduction of the SC’s registration framework, the AUM of registered VC/PE firms have experienced a steady growth.
In line with its developmental mandate, CMM launched Malaysia’s pioneer CVC programme in March 2023 – to promote the domestic PE and VC ecosystem by driving corporate investment on the part of big public listed companies (PLCs). The programme also targets to build confidence in CVC as a potential enabling or innovation strategy in fuelling growth.
This inaugural CVC programme highlights the significance of technology and digitalisation in driving economic transformation and progress. The programme seeks to heighten awareness and familiarity with the corporate venturing strategy, the ecosystem and market participants.
CMM will also join forces with the relevant agencies and investment entities in Malaysia to bring together and connect verticals within a network which will enhance access to capital, capacity building, as well as business leadership and development. Moving forward, CMM intends to collaborate with more strategic partners to deliver impactful workshops and networking roundtables to benefit the market as a whole.
In keeping with the overarching theme of promoting market development, Bursa Malaysia launched the PLC Transformation (PLCT) Programme on 2 March 2022, with the objective of elevating the stature of Corporate Malaysia and increasing the appeal of PLCs in the country. This programme will run up to end-2025, and will encourage PLCs to accelerate their growth strategies and uplift their performance while enhancing the market’s competitiveness against other regional bourses. This is anticipated to be attained by sharing best practices and insights, improving engagement and greater transparency.
The PLCT Programme, underscored by key tenets contained in five digital guidebooks unveiled in 2022, counted 101 participating PLCs as at end-March 2023, of which 21 were champions. Notably, almost half of the overall participants hailed from the industrial products & services and consumer products & services sectors while all 21 champions were big-cap blue chips.
As part of its mandate to lead Malaysia’s digital economy, MDEC established the Global Acceleration and Innovation Network (GAIN) programme in 2015, This programme is designed to launch high-potential Malaysia-based tech companies on to the global platform. It provides year-round growth interventions based on four pillars, i.e. Gateway, Amplify, Invest, and Nurture.
Today, GAIN has cultivated more than 150 successful tech companies under its umbrella through various CVC matching and accelerator platforms. Participating investors include well-known corporates such as Petronas Berhad, Sunway Berhad and Genting Berhad under Genting Ventures.
In March 2023, Khazanah Nasional Berhad launched the Future Malaysia Programme, an initiative under its RM6 billion Dana Impak – a key pillar of its Advancing Malaysia strategy. Dana Impak is a five-year commitment to invest based on six themes concerning issues and challenges that Malaysia encounters. The sovereign wealth fund believes that many potential solutions to such issues can be found in early-stage companies, which will necessitate the infusion of risk capital at different stages.
The Future Malaysia Programme also advocates strategic corporate collaboration within the domestic VC ecosystem, to stimulate the sharing of ideas and augment business value. It will initially deploy RM180 million to cooperate with established local and international VC and CVC players based in Malaysia.
Reflecting its determination to discover and develop early-stage entrepreneurs and start-ups via the provision of strategic growth support, Khazanah has tied up with Gobi Partners and 500 Global, whose international footprints and networks are expected to convince regional venture funds to invest in Malaysian companies. Moreover, local start-ups will be motivated to expand globally, with a view towards becoming regional players. Elsewhere, Khazanah has also formed a partnership with Plug and Play, to set up a Malaysia-based corporate innovation and accelerator programme involving leading Malaysian corporates.