Wednesday 31 May 2023
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Karel Doshi, Head of Commercial Banking, HSBC Malaysia

The Malaysian startup scene is evolving, as the country is home to a slew of new technology companies at 4,800 companies and counting, according to startup data platform Tracxn.

In HSBC, part of our studies include looking at these new economy businesses, and how they can contribute to a sustainable and prosperous future for the region.

As such, in order to gain further insights on the inner workings of startups in Malaysia, we invited key players in the startup ecosystem to join us in a discussion on navigating the opportunities and challenges in Malaysia’s startup scene.

We had the pleasure of hearing the firsthand experience from three startups, including Malaysia’s first unicorn CARSOME and its chief of staff Aaron Kee, soon-to-be unicorn Aerodyne and its chief strategy officer Amir Zakwan Anuar and up and coming startup, Swipey and its CEO Kalyana Mohan Teagarajan.

Besides the startups, we were also fortunate to receive perspectives of key officials from the agencies supporting the ecosystem, namely Penjana Kapital’s chief executive officer Taufiq Iskandar, Malaysia Digital Economy Corporation Berhad’s (MDEC) senior vice president for Digital Exports Gopi Ganesalingam, and chief executive officer of Malaysia Venture Capital Management Berhad (MAVCAP) Shahril Anas Hasan Aziz.

Our discussion with the ecosystem players reaffirmed our conviction on the potential of the new economy and why we think that startups are a vital building block for Malaysia especially through the synergies that they can unlock.

Using the three invited startups as an example, CARSOME has carved its footing as Southeast Asia’s largest used car ecosystem and Malaysia’s first and only unicorn - a term coined for privately held startups with a valuation of over US$1billion; Aerodyne has taken the word innovation to another level with its AI-driven drone systems, and have successfully penetrated 35 markets by executing synergistic M&A opportunities; and Swipey, though just incorporated less than two years ago, has already made a name for itself within the SME space with its easy payment and expense management solutions for businesses.

Their growth stories and that of many other startups were made possible thanks to the support received from the agencies in the ecosystem .Penjana facilitates the deployment of the Dana Penjana Nasional, a matching fund-of-funds program where the Malaysian government matches on a 1:1 basis, funds raised by the venture capital (VC) fund managers from foreign and private local investors, while MAVCAP is Malaysia’s largest VC fund and has been instrumental in supporting the government’s efforts to collaborate with the private sector to spur growth. Then there is MDEC that supports the ecosystem through programs such as GAIN (Gateway, Amplify, Invest and Nurture) which fuels high potential Malaysian companies to excel on a global level.

I will elaborate more about the good work and support that Penjana Kapital, MDEC and MAVCAP have done for the ecosystem in the second part of my article next week.

On what more could be done to further drive the startup scene, the ask from startups is for there to be more mentorship programmes and “pay it forward” attitudes from other tech founders which would be beneficial especially for startups in their early stages, a level playing field where startups are given equivalent opportunities or even a first mover advantage compared to larger players in their industry, and a ‘pooling together’ of startups and international investment firms, to increase funding opportunities.

According to a report by Nikkei Asia, of the total US$15.82 billion in startup equity funding raised in Southeast Asia last year, companies in the Philippines and Malaysia accounted for 3.9% and 3.3% of this funding, respectively.

The role that startups play will become increasingly more prominent as Malaysia ramps ups its digitalisation efforts. For one, the behemoth RM25.5 billion investment by Amazon Web Services (AWS) to create an Infrastructure Region in Malaysia by 2037 will definitely boost the startup ecosystem, as it gives startups, entrepreneurs, and enterprises and others a greater choice for running their applications and serving end users from data centres located in Malaysia.

The stories of these three startups and many more like them who have not just successfully commercialised their great ideas but grown their market share both locally and abroad, is a testament to the entrepreneurship qualities that we have here in Malaysia, and is a reflection of the quality of our talent.

Malaysia ranked 36th ahead of India (40th), Thailand (43rd), Vietnam (48th) and the Philippines (59th) in the 2022 Global Innovation Index which tracks the current state of innovation globally and ranks the innovative performance of 132 countries.

For us at HSBC, we see the moulding of startups with resilient and sustainable business models into larger companies as having a positive multiplier effect to the economy, via job creation and the strengthening of supply chains. As the world’s leading bank for trade finance, we are always looking for ways to help businesses innovate, develop the solutions of the future and add value, and we think that startups with robust, resilient and sustainable business models should be given the support to scale up to be regional champions.

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