THE Technopreneurs Association of Malaysia (TeAM) has submitted various proposals to the Government for the provision of more seed- and early- stage funding, also known as developmental-stylefunding.
The aim is to assist seed-stage companies bridge the funding gap prior to receipt of venture capital (VC) funds, primarily through a funding mechanism that is not motivated purely by financial returns, but by developmental objectives.
TeAM’s advisory consultant Sivapalan Vivekarajah said this will encourage the setting up of more of such companies, even though there may not appear to be a clear-cut financial gain in the funding. “While funds have been made available for VC-type funding and we recognise that there are a lot of funds available in the VC system, little of this has been made available for seed- and early- stage companies. This does not help the cause of developing technopreneurship or the information and communications technology (ICT) industry,” he told Computimes.
Sivapalan, who is also 3Capital.com Sdn Bhd’s chief executive officer, said TeAM has championed the cause of technopreneurs over the last two years, including the lack of seed- and early-stage funding, with various representations to the Government.
According to him, funding institutions related primarily to VC funds do not invest as much as they could in seed companies because of the high risks involved.
“This is not only a local scenario but a global phenomenon. VCs are far more cautious today after the bursting of the Internet bubble. Therefore, it is hoped that the Cradle Investment Programme (CIP) launched recently by the Government through the Malaysian Venture Capital Management Berhad (Mavcap) will bridge the gap and assist in creating more companies to go beyond seed stage, and VCs will find more `investible’ companies that present a lower-risk profile for investment.”
Sivapalan was commenting on the call by Deputy Prime Minister Datuk Seri Abdullah Ahmad Badawi for more developmental funding to be offered beyond mere VC-type financing, especially since the majority of technology start- ups are at the pre-seed and seed level.
On a related development, Sivapalan said there is also a gap between the needs for local industry participants and the existing facilities and programmes, in terms of the incubator programme, which is also subjected to unfulfilled expectations.
He said though there are several incubators in Malaysia, none has proven to be successful. They offer neither funds nor any kind of expertise to assist in the development of seed and pre-seed companies, which is the main role of an incubator.
“Today, most are at best landlords that offer some additional administrative services. It is understood that the new management in Multimedia Development Corporation, and in particular the Technopreneur Development Flagship, will be revamping the incubator programme towards a more viable and workable one that offers true value to seed companies,” Sivapalan said.
