MDEC expands GAIN programme by going small
By Karamjit Singh&Kiran Kaur Sidhu March 3, 2020
- GAIN has become a successful model, boosting export revenue
- Match GAIN companies as mentors to guide, invest in promising startups
You would have heard of The Global Acceleration and Innovation Network (GAIN) programme by Malaysian Digital Economy Corporation (MDEC) which has earned positive accolades since it was established in early 2015 with more than 150 GAIN companies.
Numbers aside what is even more impressive is that around 70 of these companies participated in GAIN market access initiatives overseas and as a result, collectively generated more than US$1 billion (RM4.2 billion) worth of contracts in the last 4 years.
But it wasn’t always smooth. “When we first started, we struggled to even find US$23.7 million (RM100 million) revenue companies and had four by the end of 2015,” said Gopi Ganesalingam, the vice president of Global Growth Acceleration at MDEC who has been leading the initiative since Feb 2015.
Fast forward to today and GAIN has two companies with RM750 million revenue, three with RM600 million, six with RM400 million and many others growing into the RM200 million to RM300 million revenue range.
[RM1 = US$0.24]
One constant among all these companies is that most of their revenue comes from outside, notes Gopi.
And it started with MDEC listening carefully to its initial small group of RM100 million companies. “We discovered they had strong interest to expand regionally as Malaysia was too small a market. You had to go overseas if you wanted to grow into a large company,” says Gopi. And so MDEC started looking into market access beyond Malaysia.
But the market access was not your usual participation in trade fairs, conferences or organised with the Malaysian Ministry of International Trade. Instead, MDEC went about creating what it calls an entrepreneurial ecosystem.
This entrepreneurial ecosystem consists of various trade chambers, government agencies, venture capitalists, private funders and Tier 1 and Tier 2 companies. But that wasn’t all. The Malaysian diaspora in the respective was also roped in to act as mentors while MDEC matched its GAIN companies to the Tier 1 and Tier 2 companies in those markets.
“That’s how we cut short the go-to-market approach,” explains Gopi. And it has worked, with the overseas revenue of its 70 GAIN companies that took part in its immersion markets, charting over 50% of their total revenue. “I can say that we have helped fuel the growth of these companies through this immersion strategy starting from 2017 when we tested the model in Indonesia and generated more than RM350 million in contracts for that year for the participating GAIN companies,” he highlights.
MDEC has built eight such ecosystems, starting with Jakarta, Bangkok, Ho Chi Minh, Manila, Tokyo, Dubai and Melbourne with MDEC looking at Africa and East Europe as the next two regions to pick a city from.
Enter the startups
Having established a working and winning template for its growth stage companies, Gopi says MDEC is now going to focus on helping to scale startups. “We want to pick up the more promising startups and help grow them quicker and in the process becoming a funnel for GAIN.”
Gopi clarifies that MDEC is not doing this because the startup space is sexy. “We found there was a match as startups were looking for help from successful entrepreneurs in terms of business models, strategy, mentorship and visibility. At the same time, our established GAIN companies were keen to look at startups and how they better understood millennials and centennials and took innovative approaches to solving problems.”
The good thing here is that MDEC is not muscling into the space of other agencies focused on growing and supporting startups. Gopi confirms that MDEC is working closely with the Malaysian Global Innovation and Creativity Centre (MaGIC) to make this a reality. The value add of bringing startups on the same platform as GAIN is really the mentoring by the more established GAIN entrepreneurs which will accelerate the go-to-market strategy.
“Investments may also be much faster since mentors can invest in the startups,” he shared.
For starters MDEC will identify 50 high-calibre startups. “We are hoping that by doing this, we can accelerate growth for these startups as well as help them reach their next funding round, quicker.” This will be a yardstick for how successful this programme can be. “When you have money going into a company, it means the idea is tested, proven and people are willing to back it. That is what we want to show,” says Gopi.
[Ed: An earlier version had the wrong number of startups to be identified.]
As for the selection process of startups, it has yet to be streamlined but MaGIC’s input will be significant. “We are compiling a database of startups. There are 400 startups just in the Malaysia Digital Hubs.”
Gopi highlights that this matching of established and emerging entrpreneurs is already a tried and tested model replicated from the Silicon Valley. “The Silicon Valley is thriving because entrepreneurs help and invest in startups. They tweak business models and shape them, then invest in them.”
He also points out that this process has already begun organically and highlights the many investments Ganesh Kumar Bangah of Commerce.Asia has been making over the past four years and to efforts a leading fintech company is doing in its space. MDEC aims to accelerate this process as it believes the entire digital economy of the nation will benefit while strengthening Malaysia’s positioning as the heartbeat of Digital Asean.
Meanwhile, for GAIN, the target now is for a Malaysian company to reach RM1 billion in revenue. “It can be done,” says a confident Gopi who credits his entire GAIN team of over 20 executives, “who all think like entrepreneurs, are creative in approaching challenges and working with partners to leverage each party’s strengths.”