Country Guide

Malaysia

Malaysia
Navin Danapal

Guest Editor

Navin Danapal

Director Southeast Asia at MOX - SOSV

Navin Danapal is a venture capitalist based in Kuala Lumpur. Before joining venture capital firm SOSV, Navin was with Microsoft SEA developing the region, where he initiated a number of projects new to the region including SEA Imagine Cup to develop talent and the first Microsoft //build/ conference outside of US to upskill corporates & professionals. Navin focuses on investing in Asia Cross-Border companies.


Guest editors are local ecosystem leaders: successful founders, investors, or thought leaders. Have someone in mind? Nominate a country guest editor.

Disclaimer: all content within the Startup Ecosystem Summary and Editor’s Guide sections is written by and reflects the personal perspective of the guest editor. The guest editor is not responsible for content within the Country Snapshot and Community sections, as much of this content is compiled from external sources and does not necessarily reflect the guest editor’s view.

Startup ecosystem summary

Key Startup Cities

Kuala Lumpur, Cyberjaya, Penang, Johor Baru, Kuching

Connected Country Ecosystems

Singapore, Indonesia, China, United States, Japan

Differentiators

  • Young, English-speaking population
  • Multiculturalism given Chinese & Indian populations
  • Affordability

Challenges

  • Lack of experienced founders
  • Small consumer population
  • Lack of foreign investment
  • Operating in the shadows of Indonesia (much bigger Islamic market) and Singapore (mature capital market)

Editor's Guide

Introduction

Malaysia’s early days of venturing into startup development started when Microsoft partnered with the gov development agency MDEC (originally Multimedia Super Corridor Development Corp, now Malaysia Digital Economy Corp) to open an incubator with the national telco university (Telekom Malaysia Multimedia University) in Cyberjaya, the designated tech hub run by MDEC (MDEC advisors included Bill Gates). Then funding kicked in as these startups grew through government agency Cradle. Finally, government startup agency MaGIC, launched in conjunction with US President Obama, helped catapult Malaysia on the map as both a startup generator and destination. Since then, other government agencies have come in to help align the large base of small businesses in the country to digitize and reach global markets.

In parallel, local corporations have helped startups grow by either contributing funding, market access or both as they seek to tap into local innovation to keep themselves innovative as well as to answer the government’s call to contribute back to the nation. Recently these have expanded to Family Offices who own traditional businesses that are likewise looking to innovate via a new generation of entrepreneurs and consumers.

Outlook

After having a strong start with MaGIC, the ecosystem is headed for maturity by bringing in more later-stages funding like Series B and beyond, as well as relying on more stable industries like logistics and B2B/B2B2C, switching from B2C due to the small market and lack of access. However for these to grow, a lot of further development is needed to provide qualified talent, either by upgrading the existing base or attracting foreign enablers, or even foreign talent, especially in the areas of Deep Tech. Regulations and laws will also need to be both upgraded, and this requires the government to be abreast of not only the latest trends, but upcoming trends too.

Bigger nearby markets like China are also an attractive pull besides the regional small markets. The local Malaysian lifestyle attractions, with the accessibility to Singapore for capital and connections, and rising economies like Indonesia, makes for a strong pull factor to be based out of Malaysia. Malaysia is also a good sandbox for bigger Islamic markets like Indonesia & Middle-East because it has better infrastructure & has invested in ecosystem development. The government has begun the process of de-risking startup development and investment, and corporations & Family Offices must now continue it.

Featured Tech Startups

Editor’s choice of the country’s top 10 emerging tech startups.

Focus Industries

Editor’s choice of the industries with the most potential for technology disruption and growth.

Digital MediaThe creative drive in the challenging local environment that fueled solutions to overcome restrictions also led to the development of the media industry with exported IP that commercialized into the arts. This has led to a close development with the sports & eSports industry in tandem with game development and traditional crafts. This has a spillover effect into the fusion food market from various cultures mixing, leading to mediums being used to convey this culture in a digital experience crossing borders.
FintechDue to the large unbanked population in developing markets like Malaysia, many users have a device as the lowest form of digital entry, but may not be engaged with the financial system. This population segment is targeted by startups and increasingly telcos and banks seeking to not only financially educate users to enrich their life, but also tap into a new wave of offerings that make sense to their livelihood which is not used by the urban folk. This led to the World Bank & the UN focusing on FinTech for Indonesia & SEA from Malaysia.
LogisticsThis is the biggest driver in the region as the interest in e-commerce has taken off led by Alibaba investing in Lazada for its SEA presence and the launch of the DFTZ (Digital Free Trade Zone) in Aeropolis (Kuala Lumpur International Airport). As more e-commerce activity increased in the region to ride on Lazada’s wave, other players like SEA’s Shopee and Indonesia’s unicorns of Tokopedia & Bukalapak have capitalized on the need. This has then been harnessed by small businesses who have traditionally only focused on their local market, but now have access to bigger regions like China to export their wares for better income.

Talent

Editor’s perspective of the maturity level of talent in the ecosystem.

  • Technical TalentAdvanced
  • Marketing TalentModerate
  • Experienced TalentUndeveloped
  • International TalentUndeveloped

Culture and History

Editor’s commentary on how the country’s culture and history have impacted the ecosystem.

Malaysia has a challenging culture & history, and it’s in part why the startup scene is active. The local environment shapes founders to be independent and creative in overcoming their odds. The confluence of 2 ancient cultures of China & India (Malaysia has the biggest number of Indians in SEA) translates into a trickling of learnings that is passed on in industry and fuses with new developments. The country’s political change after 6 decades of stagnation has injected new possibilities allowing the former development to spearhead further growth, but this requires guidance as it is a new road ahead. The consumer mindset is also changing, and is driving new solutions in the market: a historical reliance on old industries has started to shift, but this requires a new breed of talent able to harness this opportunity.

Interested in becoming more involved in this ecosystem and connecting with local ecosystem leaders? Let us know.

Community

Active Investors

500 Durians (Singapore): A sector agnostic SEA fund targeting seed startups.

Cradle Fund (Kuala Lumpur): A sector agnostic fund targeting pre-seed and seed startups.

Ekuinas (Kuala Lumpur): A private equity company owned by the Government of Malaysia investing in growth stage companies.

Gobi Partners (Kuala Lumpur): An early-stage venture firm investing across Asia with offices in KL.

Golden Gate Ventures (Kuala Lumpur): An early-stage venture firm investing across Asia with offices in KL.

Intres Capital (Kuala Lumpur): A sector agnostic venture firm providing capital to Series A startups.

Kejora (Kuala Lumpur): A Venture Capital Firm for early and growth stage with a focus on B2B companies in Southeast Asia.

Khazanah Nasional Berhad (Kuala Lumpur): A government-led fund investing across sectors for startups in the Series B stage and onwards.

KK Fund (Singapore): A B2B focused venture capital fund investing in seed stage internet and mobile startups across South East Asia, Hong Kong and Taiwan.

Kumpulan Modal Perdana (Kuala Lumpur): A government-led Venture Capital company started in 2001, wholly owned by the Ministry of Finance. It serves as a two-way channel for Malaysian companies and investors to tap into international resources and vice-versa.

KWAP (Kuala Lumpur): Malaysia's largest public services pension fund, investing in growth stage companies.

Malaysia Business Angel Network (Kuala Lumpur): The official trade association and governing body for angel investors and angel clubs in Malaysia. It is responsible for the accreditation of individual angel investors and angel investors clubs, creating awareness and training for angel investors, as well as monitoring angel investment statistics in Malaysia.

Malaysia Tech Development Corporation (Kuala Lumpur): A government-led fund focusing on hardware and deep tech startups in the Series A stage and onwards.

MAVCAP (Kuala Lumpur): In 2001, the Malaysian government formed MAVCAP to help nurture infant ICT companies into big thriving businesses.

Monk's Hill Ventures (Singapore): A sector agnostic venture firm providing capital to Series A startups in Southeast Asia.

Nexea (Selangor): A venture capital firm and startup accelerator for early stage companies looking for startup funding and investments. Nexea is focused on delivering not only seed capital but also the best-in-class support via its exclusive and top-tier angel investors, mentors, experts, and partners.

OSK Ventures (Kuala Lumpur): A B2B-focused venture firm investing in Series A and onwards.

RHL Ventures (Kuala Lumpur): A sector agnostic venture firm providing capital to Series A startups.

Sun Sea Capital (Selangor): A sector agnostic venture firm providing capital to Series A startups.

Vynn Capital (Kuala Lumpur): A sector agnostic venture firm providing capital to Series A startups.

Xeraya Capital (Kuala Lumpur): A life sciences focused VC firm investing in Series A and onwards.

incubators

Innovation Incubation Centre (IIC) (Kuala Lumpur): Supports the growth of technopreneurs in the renewable energy, ICT, biotech and engineering industries. (Source: IIC)

MAD Incubator (Pulau Pinang)

TEGAS Startup Lab (TSL) (Sarawak): A one-year structured incubation program that aims to equip local Sarawak entrepreneurs with the tools to sustain and accelerate their business growth and build on the Sarawak government’s digital economy blueprint. (Source: TSL)

Tune Labs (Kuala Lumpur): 12 week startup bootcamp.

Women Entrepreneur Financing Programme (WEP-LEAP) (Kuala Lumpur): Equips women entrepreneurs with the knowledge and skill-sets to enhance their strategic business skills in key functional areas including financial management, marketing, leadership as well as technology. (Source: WEP-LEAP)

accelerators

Alpha Startup Accelerator by 1337 Ventures (Kuala Lumpur): A pre-accelerator program for idea stage startups after which they are eligible to gain priority admission into funding program by 1337 Accelerator and other recognized funding organization. (Source: Alpha Startup Accelerator by 1337 Ventures)

Cyberview Living Lab Accelerator (Cyberjaya): A government-owned company mandated to drive the growth of a holistic Global Tech Hub. (Source: Cyberview Living Lab Accelerator)

Distro Dojo (Cyberjaya): A selective 10-week program to help accelerate businesses by developing a systematic approach to think, solve, and act on growth initiatives. (Source: Distro Dojo)

Global Accelerator Programme by MaGIC (Cyberjaya): Equips local and global startups, keen on expanding in Southeast Asia, with the necessary skills, tools and network to be invest-ready in 4 months. (Source: Global Accelerator Programme by MaGIC)

Selangor Accelerator Programme (Selangor): Helps startups who are already established and registered with the Companies Commission of Malaysia (CCM), with at least a Beta version or MVP of their product/offering, with a focus on emerging technologies, such as Artificial Intelligence, Blockchain, the Internet of Things (IoT), and Smart City and e-Commerce technologies. (Source: Selangor Accelerator Programme)

Startup Accelerator Program by Nexea (Selangor): Finances and supports early stage startups.

SuperCharger Accelerator (Kuala Lumpur): Finances and supports companies at various growth stages with a focus on FinTech sub-categories and verticals. (Source: SuperCharger Accelerator)

WTF Accelerator (Kuala Lumpur): Finances and supports emerging tech startups.

Startups Raising Capital
There’s more to be discovered! Help us showcase this startup community by adding information.
Startups Hiring
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Coworking Spaces/Hubs

CO. Bangsar (Kuala Lumpur)

Common Ground (Kuala Lumpur, Penang, Petaling Jaya)

Dojo KL (Kuala Lumpur)

Paper + Toast (Kuala Lumpur)

Sunway iLabs (Selangor)

WORQ (Subang Jaya, Kuala Lumpur)

conferences
meetups

Drinkentrepreneurs in KL (Kuala Lumpur): DrinkEntrepreneurs is a laid back monthly event where entrepreneurs and budding entrepreneurs come together to meet and have a great time.

Inspire Series (Kuala Lumpur): A community development project for entrepreneurs through monthly niche events that give entrepreneurs, investors and corporations a sneak peek into the current relevant topics in the startup industry.

Government Programs

Cradle Investment Programme (CIP3000): A pre-commercialization program, intended to kick-start innovative technology based start-ups, which provides a conditional grant and value added assistance for entrepreneurs. (Source: CIP3000)

Expand Program: Provides tech start-ups them with opportunities to connect with decision makers, influencers, investors, and collaborators.

Malaysia Digital Economy Corporation (MDEC): Promotes and upgrades policies/regulations to encourage and drive greater innovation to boost Malaysia’s overall Digital Economy.

Malaysia Global Innovation & Creativity Centre (MaGIC): Global leading creativity & innovation centre for technology-driven entrepreneurs.

National Regulatory Sandbox: Provides a safe test bed to experiment and pilot solutions that either requires regulatory framework or potentially impacts a regulatory environment. (Source: National Regulatory Sandbox)

Non-Government Organizations
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Country Snapshot

Economy

Startup funding
Startup funding
US$85 million (2019)
Standard of living
Standard of living
Global rank: 51
Innovation
Innovation
Global rank: 33 (2020)
Entrepreneurship
Entrepreneurship
Global rank: 58 (2018)
Annual GDP growth
Annual GDP growth
4.3% (2019)
(Global avg. 3.0%)
Ease of doing business
Ease of doing business
Global rank: 12 (2019)
Ease of starting a business
Ease of starting a business
Global rank: 126
Research and development
Research and development
1.4% of GDP
(Global avg. 2.3%)
Contract enforcement
Contract enforcement
Global rank: 35

Sources

Startup Funding: Cento Ventures
STANDARD OF LIVING: International Monetary Fund - GDP per capita (PPP)
INNOVATION: Global Innovation Index
ENTREPRENEURSHIP: Global Entrepreneurship Index
ANNUAL GDP GROWTH: World Bank
EASE OF DOING BUSINESS: World Bank
EASE OF STARTING A BUSINESS: World Bank
RESEARCH AND DEVELOPMENT: World Bank
CONTRACT ENFORCEMENT: World Bank

*Updated with latest available data based on listed source.

Society

Population
Population
32.4 million (2020)
Government
Government
Federal Parliamentary Constitutional Monarchy
Stability
Stability
Global rank: 28 (2020)
Internet usage
Internet usage
84.2% (2019)
Smartphone usage
Smartphone usage
57.5% (2018)
Literacy
Literacy
94% (2018)
Population under 15
Population under 15
23% (2019)
Median age
Median age
28.5 (2018)

Sources

POPULATION: Worldometer
GOVERNMENT: The World Factbook
STABILITY: Global Innovation Index
INTERNET USAGE: International Telecommunications Union
SMARTPHONE USAGE: Newzoo
LITERACY: World Bank
POPULATION UNDER 15: World Bank
MEDIAN AGE: The World Factbook

*Updated with latest available data based on listed source.

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