With the impact of COVID still lingering in the industry, the early stage startup industry is poised for strong growth. The reopening has been crucial for the economy, but there are also other factors that are leading to growth. PE and VC firms invested more than US$5.9 billion in Malaysian startups between 2014 and 2020. Malaysia also has a relatively young and digitally savvy population, which are generally strong key drivers of the digital economy in the country. This has led to more interest from investors in the market.
One such investment entity is the latest partnership between Sunway Group, one of Malaysia’s largest conglomerates and VC Kejora Capital, which recently launched the US$25 million Orbit Malaysia fund. Orbit Malaysia will actively invest in Series A, industry-leading companies operating in key sectors, and will invest not only in Malaysian startups, but also significantly in other high-growth Southeast Asian startups.
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These companies will be able to tap into Sunway’s various business divisions ranging from property, healthcare, education, retail, and digital as well as Kejora’s digital ecosystem. There is also a strategic angle of “Jakarta Express” to help Malaysian startups and investors capitalise on the high growth Indonesia market via Kejora.
We speak to Raymond Hor, Managing Director, Orbit Malaysia to better understand the Malaysia funding ecosystem and what he believes the fund will be able to do in the market.
Could you please share a bit more about what the goal of the fund is?
Orbit Malaysia was launched together with Sunway Group, with the Malaysia Venture Capital Management Berhad (MAVCAP) as anchor investor. The funds from Orbit Malaysia will be used to actively invest in Series A, industry-leading companies operating in the FinTech, AgriTech, eCommerce, EdTech and HealthTech sectors in Malaysia and other high-growth Southeast Asian countries.
Through Orbit Malaysia, both Kejora Capital and Sunway Group will bring in different value propositions based on their own ecosystems. Here at Kejora Capital, we have a series of early, growth and late-stage funds that can provide potential subsequent funding and synergy for its existing regional portfolio of companies operating in the FinTech, logistics, eCommerce, and EdTech sectors.
Likewise, Sunway Group will complement this with its twelve business divisions operating in property, healthcare, education, construction, retail, and hospitality. Orbit Malaysia is an extension of Kejora Capital and Sunway Group’s unique innovation ecosystem and startup funding funnel, allowing both companies to invest in category leading companies while at the same time, create real social and sustainable impact across markets.
As such, companies will be able to leverage on a vast network of seasoned business leaders and multi-sector industry experts from both Kejora Capital and Sunway Group to help early-stage Malaysian and Southeast Asian companies expand their market base through regional expansion.
How much of the USD 25 million is earmarked for Malaysian startups?
60% of the fund will be used to invest in Malaysian startups and 40% on other high-growth Southeast Asian startups across the FinTech, AgriTech, eCommerce, EdTech and HealthTech sectors.
What other markets do you think have the most potential?
We will likely see a continued interest in markets such as Indonesia and Vietnam. However, as these markets grow, investments will only continue to increase as more investors look to capitalise on new opportunities within these markets, especially for opportunities that have arisen due to the pandemic. However, such enthusiasm is also likely to spread to other
markets within Southeast Asia such as Thailand and Malaysia, as investors look to unearth more ‘diamonds in the rough’ in the region.
Do you have any particular startups in mind that you believe can become unicorns in the next couple of years?
Without naming the exact startups, we believe that a few unicorns will come from the Malaysia eCommerce, logistics, and fintech sectors, within the next 3 years.
What’s the future for Malaysia’s startup ecosystem? How does it take the next step in developing a sustainable fast-growth environment for startups?
According to the World Bank’s 2020 Doing Business Report, Malaysia is ranked 12th out of 190 countries in terms of ease of business and accessibility for startups. As such, Malaysia is already set in the right direction for building a sustainable, fast-growth environment for its startups. We anticipate that as the world moves out of lockdowns and travel restrictions, Malaysia will begin to have a greater emphasis on international collaborations. Working alongside international talent will allow local entrepreneurs to exchange information, insights and ideas, leading to mutually beneficially partnership.
The various government initiatives launched by the Malaysia Digital Economy Corporation, such as the Global Acceleration and Innovation Network program and Malaysia Tech Entrepreneur Program is testament of the country’s long-term goal to develop its local startup scene.
Additionally, the Malaysian Startup Ecosystem Roadmap (SUPER) 2021 – 2030 was recently launched with a plan aimed at setting a target to build and develop a conducive startup ecosystem to drive local innovation and achieving the ultimate goal of establishing Malaysia as one of the top 20 global startup ecosystems. This will help unifiy players at an ecosystem level and create collaborations to ensure that startups have the resources to develop and grow. The Cradle Fund Sdn Bhd has also been allocated RM 20 million through the Startup Action Strategy Programme to support the development of startups.
Through these initiatives, the Malaysian government has helped bridge the funding gap and will reinvigorate Malaysia as the next startup hub of the region and attract global and regional venture capital firms and investors into the country. We also hope more listed corporates in Malaysia will follow the steps of Sunway Group to participate in these initiatives, to enrich the country’s funding ecosystem.
While the ecosystem in Malaysia is still in its nascent stage, I believe that with the nation’s young, digitally savvy population, a growing technology adoption rate and the government’s focused reform agenda to keep the economy competitive, we will be able to uncover more “diamonds in the rough” and soon see SEA’s next unicorn born out of Malaysia.
What’s the next step for Orbit Malaysia?
Orbit Malaysia is excited to kickstart its search for Malaysia’s and the region’s best startups, and to boost the ecosystem through our provision of capital, resource and expertise. We are also opened to collaborate with Malaysia’s listed corporations to co-invest in startups.