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A 2023 Guide to Startup Funding in Malaysia

If you are a Malaysian startup, the range of funding options can get overwhelming. You want to choose the option that gives you the best connections and opportunities. 

So do you approach a bank or crowdfund? Do you apply for a government grant or seek an angel investor? 1337 Ventures dives deeper into how startups in Malaysia can access capital.

Accelerator Programme

Accelerator programs mostly support early-stage startups that have a minimum viable product. It is fast-paced, intensive, and can take several weeks or months to complete. Almost every accelerator provides funding. For example, in the award-winning Alpha Startups™ Pre-Accelerator, the top 2 winners will receive funding between RM50,000 and RM150,000, plus up to RM16,000 in digital credits for infrastructure and networking opportunities with other VCs and angels.

Venture Capital

Venture Capital (VC) typically invests at any stage of a business. They often look for businesses with high growth potential in information technology (IT), energy and environmental technologies, and life sciences. Many also invest in consumer and business services, products, and others.

You’ll give away a percentage of ownership in exchange for capital. Additionally, you’ll also receive extra support through mentorship and a strong network of investors. Pitching is the most common way to gain a VC’s attention. If you are looking for funding from us, submit your idea and pitch here.

READ ALSO: MINIMUM VIABLE PRODUCT AND WHY IT IS IMPORTANT TO YOUR MALAYSIAN STARTUP

Angel Investors

Get ready to network hard to find the best angels for your business. Angels, or “angel investors,” are private investors who tend to be low-profile individuals who put their own money into promising startups in exchange for equity. They choose businesses they are interested to invest in. 

Some are industry experts who offer their technical and management knowledge and their connections. There are some angel clubs around, like the Eleet Angels Club, Malaysian Business Angel Network, Angel Investment Network to name a few.

Equity Crowdfunding

With the rise of online platforms such as Leet Capital, equity crowdfunding is becoming more popular in Malaysia, and many entrepreneurs are turning to it to scale their businesses. 

Equity Crowdfunding (ECF) is a method to raise funds through the collective effort of a large pool of investors. The funds are raised through an online platform, authorized by Securities Commissions (SC). The money raised is usually released once the predetermined funding target is reached. In exchange for money, investors gain equity in your company.

Peer-to-Peer (P2P)

Similar to crowdfunding, peer-to-peer lending (P2P) allows you to get money from investors without going through the bank. The process is much faster and more streamlined on an online platform, which is also regulated by the SC. This allows you to receive funds much more quickly. However, in return, P2P investors will earn interest on their investments. Interest rates are calculated based on the risk profile of your startup.

READ ALSO: KEY CONSIDERATIONS WHEN INVESTING IN ECF

Government Grants

Since it’s not always easy to scale your startup, government agencies provide aid to Malaysian businesses. You might use this financing for various costs like R&D, marketing, equipment, and product development. A grant technically refers to a sum of money that does not require repayment. However, you are legally bound to use it under the terms of the grant; otherwise, you may be required to reimburse it. Visit muru-ku to discover a list of local grants.

Bank Loans

If you are an early-stage startup, banks may offer loans, but the amounts are typically limited. This is because banks usually like to see a stable track record, some revenue, or a sufficient amount of collateral before providing cash flow. With banks, you won’t be giving up company equity in exchange for cash.

Friends and Family

Getting financial support from family and friends is another common source of funding. Some of them want equity in your business, and some may not expect any returns. However, there might be potential challenges associated with mixing your business and personal lives.

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