SC reviews recommendations to drive venture capital ecosystem

• Targeted government intervention needed to catalyse private sector participation
• More integrated cooperation among the VC ecosystem stakeholders

THE Securities Commission Malaysia (SC) is reviewing recommendations proposed by the Institute for Capital Market Research (ICMR) to spur further growth and drive greater synergies in the Malaysian Venture Capital (VC) industry.

The recommendations are based on an in-depth study by ICMR, which was commissioned by the SC as part of its ongoing efforts to facilitate the intermediation of risk capital and enhance access to financing for startups and early stage companies in the Malaysian capital market.

The independent report by ICMR highlighted the need for targeted government interventions to catalyse greater private sector participation, more integrated cooperation among the VC ecosystem stakeholders and adoption of a global mind-set. In line with this, the report proposed eight interconnected recommendations to be considered in a holistic manner:

• Restructuring of existing public VCs to be more commercially-driven;
• Establishment of a dedicated government agency to bridge the funding gap for nascent and high-growth ventures;
• Establishment of fund-of-funds with matching elements and appropriate incentive mechanisms;
• Creation of a single platform for market access to assist domestic entrepreneurs overcome developmental challenges;
• Facilitation of the expansion of the venture debt sector;
• Further liberalisation of VC tax incentives;
• Establishment of a centralised information gateway to assist in research, policy formulation and industry profiling; and
• Establishment of an inter-ministerial council to ensure alignment of objectives across different ministries involved in the VC ecosystem.

The SC will engage with relevant industry stakeholders directly as well as through the Malaysian Venture Capital and Private Equity Development Council (MVCDC), which it chairs, on the operationalisation of these recommendations.

In undertaking the study, ICMR conducted extensive consultations with various industry participants ranging from public and private VCs, entrepreneurs, equity crowdfunding operators to corporates and angel investors.