MDV hosts Malaysia’s first KL Venture Finance Forum 2022 to accelerate growth of home-grown unicorns

• M’sia must embrace new tech, become innovators instead of mere users
• Govt to streamline value chain in the startup industry development, provide support to startups 

Malaysia Debt Ventures Berhad (MDV), a subsidiary of the Minister of Finance (Incorporated) [MOF Inc] and an agency under the purview of Malaysia’s Ministry of Science, Technology & Innovation (MOSTI) organised the nation’s first KL Venture Finance Forum 2022 (KLVF22) at the Westin Kuala Lumpur, Monday. The forum was organised in conjunction with MDV’s 20th anniversary celebration to commemorate its establishment by the government back in 2002.

The forum was attended by the minister of Science, Technology & innovation (MOSTI), Dr. Adham Baba, who delivered the keynote address to more than 200 participants. Deputy Finance Minister II, Haji Yamani Hafez Musa, MDV’s Chairman, Khairul Azwan Harun and MDV’s Chief Executive Officer Nizam Mohamed Nadzri, were also in attendance.

Adham in his speech congratulated MDV for its efforts to nurture and grow the startup funding ecosystem through the hosting of the forum as it has the potential of becoming an important platform for knowledge exchange.

“Innovation is the main driver in creating new opportunities to produce higher socioeconomic value for society and the country. Startups have pioneered many of the world's greatest technological innovations, Hence, the government believes that home-grown technology startups are able to contribute significantly to the country's technology sector to generate and maintain a sustainable economic growth and are an essential part in supporting Malaysia's transition to a digital economy and high-income nation,” he said.

The government through MOSTI has identified the efforts that the country needs to undertake to remain competitive and to become a leader in innovation and a hub for technology startups in the region. The efforts include to streamline the value chain in the startup industry development, incentives to boost the public and private capital market, as well as providing strong support to startups in overcoming the challenges and constraints that are hindering their potential to become the nation’s next unicorns.

Also speaking at the forum, deputy finance minister II, Haji Yamani Hafez Musa echoed similar sentiment when he said that for Malaysia to become a high-income and high-tech country, it must embrace the use of new technology and to become innovators instead of mere users.

“In developing local technology and innovation, the government has always been consistent in its efforts to strengthen the SME and startup ecosystem. However, to support the government’s efforts, the private sector needs to play a bigger role in helping to drive economic growth, especially through the development of disruptive and high-value technologies driven by local talent,” he explained.

MDV’s chairman, Azwan, said that it was a proud moment for MDV as it charted a new course by becoming the pioneer in venture debt financing in the country. Venture debt as a financing means has several advantages to companies as it is significantly less dilutive for shareholders than Venture Capital.

“The primary attraction of such a financing facility is that it provides an extension of the company’s cash runway, allowing the startup to use the additional funds to generate further data to enhance its valuation, delay its next equity raising,” he said.

However, in fulfilling the potential of venture debt as an alternative funding source for startups in Malaysia, Azwan emphasises that there needs to be enhanced partnerships between market players such as MDV’s collaboration with Kenanga IB last year in establishing a fintech fund.

He also said that listed corporates and big conglomerates in Malaysia have the capacity to play a more active role in developing the startup funding ecosystem by investing to assist local startups and must rise up to the challenge.

Currently, MDV is the only financial institution in Malaysia offering a Shariah-compliant venture debt model via its venture financing programme that was first introduced in 2018.

The one-day forum with the theme “Accelerating Startups” was successful in bringing together policy makers, investors and financiers, as well as founders and key personnel of various startups, in an active discourse on how startup funding is evolving in the region particularly the role of venture finance as an alternative financing for tech startups, as well as key opportunities, challenges, and current trends in the startup space.

The forum’s panel speakers included Shahril Sufian Hamdan (Economic Director, PMO), Dr. Ong Kian (Former Deputy Minister MITI) , Taufiq Iskandar (CIO Penjana Kapital), Martin Tang (Genesis Alternative Ventures Singapore), Dr. Gregory Bournet (PwC Malaysia & Vietnam), Nizam (MDV), Adrian Yap (Moneymatch), Warren Leow (Inmagine), Noomi Fessler (Lapasar) and Mohd Farid Mohd Rosli (MDV).