In boost to Malaysia’s ECF & P2P markets, MTDC allocates US$2.8mil co-investment fund
By Karamjit Singh May 13, 2020
- To co-invest US$2.3mil with pitchIN and US$460k with MicroLEAP
- First govt agency to co-invest with an ECF platform in those that meet criteria
Aiming to stretch the funds it has received from the government to invest in technology and science based companies, the Malaysian Technology Development Corporation (MTDC) signed two Memorandum of Understanding (MoU) with Pitch Platforms Sdn Bhd (pitchIN) and Microleap PLT Sdn Bhd (MicroLEAP) yesterday to invest US$2.3 million (RM10 million) and US$460,000 (RM2 million) respectively to collaborate in the areas of equity crowdfunding (ECF) and peer-to-peer (P2P) financing.
“Instead of making investments into three companies of up to RM3 million each, through this collaboration, we can leverage on the sophisticated investors on pitchIN and make up to 12 investments of up to RM900,000 each and help more innovative and promising Malaysian tech companies,” says Norhalim Yunus (pic, right), CEO of Malaysian Technology Development Corporation. In the process MTDC becomes the first government agency to co-invest with an ECF platform in companies that meet its investment criteria.
“We want to create a dynamic synergy between the funds provided by the government and the sophisticated investors that invest in these platforms,” he adds.
MTDC sees this as a new initiative on funding for SMEs in line with the government encouraging and promoting co-investment and matching funds.
The RM10 million co-investment fund for pitchIN will be focused on technology and deep science startups.
Sam Shafie (pic, below), Chief Executive Officer of pitchIN explains that, “Not only will the co-investment fund result in more companies receiving funding, MTDC will able to provide its valuable network, a support mechanism and expertise to the companies they fund.” This will help raise the success potential of these companies, he says, adding that the presence of MTDC, a well regarded technology investment body, and its co-investment fund will be a boost and attract more investors into equity crowdfunding deals.
“Regular investors who invest alongside VC, angels and institutional funds in equity crowdfunding deals on pitchIN now have another experienced lead investor in the form of MTDC, specifically in the high technology and deep science fields.”
The RM2 million allocated for MicroLEAP will focus on technology-focused companies in sectors such as deep sciences, green tech, advanced materials, medical devices and Industry 4.0. MTDC will co-invest alongside P2P Investors in companies identified jointly by microLEAP and MTDC as having high-growth potential.
To start with, MTDC will invest up to RM500,000, or maximum of 30%, in Shariah-compliant Investment Notes issued by these companies on microLEAP’s platform as long as it meets its investment criteria.
Danny Nasaifuddin Mudzaffar (pic, left), Founder and CEO of microLEAP is bullish over the collaboration. “MTDC is rolling out a great initiative and it is an honour to be appointed as the P2P Financing partner for this. The support shown by MTDC will be an enormous help to our tech companies seeking to raise funds. MTDC part-funding the financing requirements of these tech companies will be a strong pull for many of our P2P Investors to get involved.”
Norhalim feels the funding collaboration will also help drive Industry4.0 in Malaysia. “These collaborations will help more and more local entrepreneurs to work on developing 4.0 industry technologies and also help us to identify companies so we can help them grow faster.”
MTDC aims to bring these companies into its ecosystem to build networks with companies it has already funded for them to work together to help each other grow domestically, regionally and internationally.