Starting a business is an exciting journey and securing the right funding is crucial for growth and success.
Malaysia, with its vibrant entrepreneurial landscape, is bolstered with various venture capital (VC) firms that support startups across different stages of growth and industries.
As a first-time founder, understanding the types of VC firms operating in Malaysia and the stages of VC investment can help you target the right investors to fuel your startup’s growth. In this article, we will delve deep into the types of funding stages and types of venture capital firms in Malaysia.
Venture capital funding stages
Before diving into the types of VC firms, it’s important to understand the different stages of VC investment. Let’s explore the various crucial stages of VC funding that every early founder should know.
- Pre-Seed Stage: The earliest stage of funding, often used to develop an initial concept or idea.
- Seed Stage: Focused on developing the product and validating the business model.
- Series A: The first significant round of venture capital financing.
- Series B: Funding aimed at scaling the business further.
- Series C: Focuses on significant expansion efforts, including entering new markets and developing new products.
- Series D and beyond: Additional rounds of funding for companies that need more capital to meet their growth objectives or address unforeseen challenges.
Click here to read a full breakdown of each funding stage: Understanding Startup Funding Rounds in Malaysia
Types of venture capital firms in Malaysia
Let’s explore the different types of VC firms you can find in Malaysia:
Government-back venture capital firms
Government-linked venture capital (GLVC) firm is a venture capital firm that is either partially or wholly owned by the government. in Malaysia, these firms are established to support economic development, promote innovation, and stimulate entrepreneurship within the country. They typically invest in startups and small to medium-sized enterprises (SMEs) across various sectors to help drive growth, create jobs, and enhance the competitiveness of the national economy.
Examples: Malaysia Venture Capital Management Bhd (MAVCAP), Penjana Kapital, Cradle and Kumpulan Modal Perdana (KMP).
Corporate venture capital firms (CVC)
Corporate VC firms are subsidiaries or divisions of larger corporations that invest in startups. They typically look for strategic investments that align with their parent company’s business objectives. In Malaysia, CVCs are relatively new, with the most established ones operating for just a few years. Besides funding, CVCs provide access to the corporation’s resources, market channels, and expertise.
Examples: PETRONAS Ventures (a special CVC arm of PETRONAS), Sunway Berhad’s Sun SEA Capital, and AirAsia Digital (previously known as RedBeat Venture).
Independent venture capital firms
Independent VC firms are privately owned and raise funds from various investors, including institutional investors, high-net-worth individuals, and family offices. They invest in a wide range of industries and stages, from seed to growth, and bring extensive industry knowledge and networks.
Some of these VCs are agnostic, meaning they are flexible in their investment approach and do not limit themselves to specific industries, sectors, or stages. Others are sector-specific, focusing their investments on particular industries or market segments.
Examples: 1337 Ventures, 500 Global Southeast Asia, Gobi Partners and The Hive Southeast Asia.
Sector-specific venture capital firms
These VCs specialise in specific sectors or industries like healthcare, information technology, business and financial services; leveraging their deep domain expertise to identify promising startups. They provide not just capital but also strategic guidance, mentorship and industry connections.
Examples: Vynn Capital, Xeraya Capital and Khazanah Nasional Berhad.
Impact venture capital firms
Impact VC firms prioritise investments that generate positive social or environmental impacts alongside financial returns. They focus on startups addressing critical societal challenges, such as sustainability, education, healthcare, and financial inclusion.
Examples: Gobi Partners and Khazanah Nasional Dana Impak.
University-linked venture capital firms
Universities and educational institutions in Malaysia are increasingly establishing VC arms to commercialise research and innovation. These firms invest in startups founded by students, faculty, and alumni, fostering a culture of entrepreneurship within the academic community.
Examples: University Science Malaysia Centre for Innovation and Consultation (CiC USM), UTeM Holdings Sdn Bhd and University of Malaya Centre of Innovation and Commercialization (UMCIC).
To conclude
The venture capital landscape in Malaysia is diverse and dynamic, offering a range of funding options for startups across various stages and sectors.
Whether you’re seeking government support, corporate partnerships, independent funding, sector-specific expertise, impact investment, university-linked opportunities, agnostic VC firms, or leveraging the advantages of local and foreign VCs, Malaysian entrepreneurs have access to a broad spectrum of VC firms to help them realize their business ambitions.
Understanding these different types of venture capital firms and the stages of VC investment can guide you, as a first-time founder, in targeting the right investors, thus enhancing your chances of securing the necessary support to scale your venture successfully.
If you are an early-stage startup with a pitch deck, pitch it to us on the Pitch Tuesday platform, where we are always looking for early-stage startups to invest in. Book your slot at: https://1337.ventures/pitch-tuesday/
