Digerati50: The joy of nurturing startups

• Catalysed and generated many deal flows that have benefited other investors/founders
• Thrilling to be first party to identify great potential where others can only see risks

Digital News Asia (DNA) continues its series that profiles the 50 influencers who are helping shape Malaysia’s Digital Economy, from Digerati50 2016-2017 (Vol 2), a special print publication released in February 2016. The digital version of that publication can be downloaded from the link at the top right corner of the page thanks to the sponsorship of Telekom Malaysia Bhd, Malaysia’s convergence champion.

For information on customised reprints email [email protected]

FOR more than a decade, Cradle Fund chief executive officer Nazrin Hassan has been playing an integral role in the tech startup ecosystem. Over the years, Cradle’s various programmes and grants have helped many startups take their first steps towards success.

Both financial services technology (fintech) startup iMoney and regional ride-sharing powerhouse Grab (originally MyTeksi, later GrabTaxi) received Cradle grants during their early days.

Despite its success, Nazrin believes that there is room for Cradle and the ecosystem to further improve, which is why over the last couple of years, and over the next few years, there will be a significant change in Cradle’s focus.

By 2017, Cradle is targeting that 70% of its allocations will be in the form of equity funding, including via its various co-investment programmes. “The need to shift to equity investment has been there for a few years now,” says Nazrin, also an inaugural Digerati50.

“The Government has been gradually reducing its grant funding over time. Therefore this year [2016], 50% of Cradle’s allocation, which is about RM15 million, will be targeted at equity investments – whether via direct investments or co-investments.

“For the ecosystem, it is significant as grant funding will be much reduced and limited. In the next two years, they [startups] will need to shift to equity mode if they are thinking of raising funds from Cradle,” he adds.

“It is best that over time, particularly in areas such as commercialisation and beyond, that it be funded in the form of equity investment and not grants.

“I won’t say we are chasing unicorns, but some of our Cradle recipients are companies like MyTeksi, iMoney, Flexiroam, Carlist, and CatchThatBus – we have catalysed and generated many deal flows that have benefited other investors or founders, from a returns or exit perspective,” he notes.

Even though Nazrin, who is a big fan of Arsenal Football Club, has been actively involved in the Malaysian startup ecosystem for over a decade, there’s no sign of him tiring. So where does he get all his energy from?

“I have seen and played a small role in evolving the ecosystem over the last 15 years. It [the ecosystem] has come a long way, thanks to the collective effort of thousands of people.

“Even today, I still enjoy engaging with budding entrepreneurs and seeing them grow their startups from mere ideas to sizable companies, with a few of them exiting and returning to the ecosystem as mentors, coaches or investors.

“It is nice to complete that cycle. It is thrilling to be the first party to identify great potential where others can only see risks, and where we are the main platform for early-stage startups to prove themselves… before they even become ‘sexy’ to investors at a later stage.

“To be the only people to believe in talented entrepreneurs, before anyone else – I still get a kick out of that, and so do the rest for the Cradle team and our partners!”

For more technology news and the latest updates, follow us on Facebook, Twitter or LinkedIn.