Malaysia: Unicorn Nation

  • 'Chicken feed' public venture funding does not help create unicorns
  • Mediocre talent leads to mediocre business and this doesn’t attract venture funding

Malaysia: Unicorn NationI know what you must be thinking – that Doc Siva must have lost his marbles – how can Malaysia even come close to being a Unicorn nation, when even the best prospect we had, Grab, is now considered a Singaporean company even though it’s run by Malaysians and was founded in Malaysia.

I totally agree, Malaysia is not a nation that has created unicorns (which to the uninitiated means a company valued at US$1 billion and over) nor does it appear that it ever will in future. But surely there are some who wish it were otherwise and harbour a dream to build a unicorn and wish it was possible to make this dream come true? Even the government has this aspiration in its latest Malaysia Digital Economy Blueprint (MyDigital), where it wants to create or attract 5 unicorns to set up in Malaysia by 2030.

The question is not whether it is possible but what it takes to make Malaysia a “Unicorn Nation”, where it’s possible to start and build a highly successful startup and make it a unicorn. I am going to consider this from two angles, firstly from the macro angle where we will look at the environment and ecosystem in Malaysia to see if it’s possible to create an environment suitable for the creation of unicorns and secondly from a micro angle where I will look at entrepreneurs and their companies to explore if they have what it takes.

Let’s start with the macro angle first.


1.  Market Size and Opportunity

Most of the world’s unicorns come from very large and homogeneous markets like the United States, China or India. Even in Europe we don’t have as many unicorns though these are developed nations with high consumer and business spending on a GDP basis. Clearly, the first and most important criterion is this large market opportunity, which due to its homogeneity makes it easier to sell products and services.

When people speak the same language, have similar cultures and similar purchasing power it clearly makes it easier to serve them with a similar product and to extract sufficient revenues to build a large company. Often just their home market alone is sufficient to make them unicorns.

In Southeast Asia the only nation that comes close is Indonesia with its 275 million population and they have many unicorns like Gojek, Tokopedia, Traveloka and Bukalapak. These companies also essentially serve a single market – Indonesia – and have becomes single market unicorns. 

Singapore has several unicorns like SEA Ltd, Grab, Razer and Lazada but they serve a wider Southeast Asian or global market while the Philippines and Vietnam have one each in Revolution Precrafted and VNG Corporation respectively.

Malaysia with its small 32.7 million population is far from sufficient to create a unicorn. Even larger nations like Thailand with a population of 70 million; Vietnam (100m) and Philippines (110m) struggle to create unicorns. It is highly unlikely we can create a single market unicorn in Malaysia.

Australia has a smaller population than Malaysia at 25 million but it has several unicorns like SEEK and Atlassian while New Zealand has Xero. The difference is that these are companies that built global products serving a global market or in the case of SEEK acquired global startups and built a global business via these investments and acquisitions.

It is therefore clear that with a small population it is almost impossible to create a unicorn unless you have a product that serves a global market.


2. Talent

The other issue that everyone brings up is the lack of talent in Malaysia. Firstly, this is a fallacy because we have good talent except that they may be working in MNCs or large corporations or they may be working overseas; especially Singapore which has been attracting smart Malaysians for decades thanks to a combination of big pay packets and low taxes. Secondly, why are we still thinking like it’s the 1980’s? Today the whole world is a village and you can source talent from anywhere. Even the CEOs of Google and Microsoft are naturalized Indians.

Malaysia is still a highly desirable place to work and we could easily attract talent from around Asia. We don’t have to depend on just Malaysian talent. It’s time we started thinking global in more ways than one. Patrick Grove of the Kuala Lumpur-based Catcha Group has been hiring Australians and other foreign talent for years.

The problem is not talent; the real issue is money to hire top talent. Most startups just don’t have sufficient funding to hire the best, so they end up hiring mediocre talent and build mediocre startups that will never be unicorns. One of my ScaleUp Malaysia companies wants to hire a top talent but his asking salary was high as he was earning close to RM30,000 a month (S$10,000) in Singapore. A quick check on Jobstreet Singapore shows that it costs S$8,000 to S$20,000 to hire a CTO, S$10,000 for a sales director and S$8,000 for a channel sales manager. So this is the benchmark for top talent, but it will be rare to find a Malaysian company with funds to afford this.

They may even have a great business and technology but by hiring mediocrity they end up in mediocrity and this doesn’t attract venture funding leading to a vicious cycle of low performing companies. If only investors had more faith in them to invest at the earlier stages to support their business ventures, then they could have hired top talent to grow the business and possibly achieve unicorn status.


3. Funding

This leads me to the issue of funding, another problem in our ecosystem that has strangled the startup economy for more than two decades. We did many things wrong from the start: we didn’t have experienced venture capitalists (VCs) but instead of attracting experience to our shores we decided to pick corporate finance executives and accountants and got them to start VC firms. The learning curve was steep and we had many failures. Singapore did it right by providing government matching funds to attract the best VCs to set up in Singapore. They brought with them their expertise, experience and networks and led to far more success than we ever could.

Secondly the amount of funds the government provided was small in global terms and this was spread out over decades so on an annual basis there was very little money in the ecosystem so most companies couldn’t get funded.

Thirdly, because the size of funds was small, for example some of the initial outsource partners that government fund Malaysian Venture Capital Management (Mavcap) created had a fund size of only RM25 million, which is really chicken feed, and isn’t even equivalent to US$10 million. How can we expect such small funds to help build potential unicorns? Even Mavcap itself as the largest fund rarely invested large sums. Series B and C funding is anywhere from US$10 million to $50 million, which is bigger than the entire fund size of most Malaysian VCs.

So most funds invested only at the seed and Series A stage (on average between US$250,000 to US$1.5 million per investment) and this didn’t help companies to grow sufficiently large enough to even have the potential to be a unicorn.

Without larger amounts of funding at best we are a breeding ground for Singapore VCs to pick the best from Malaysia and to take them to Singapore to make them Singapore companies ala Grab.  


4. Market Access

Besides being a small market, even local companies including the government linked companies and public companies don’t support local startups by buying their products. It is very different in places like Korea, China and Japan where the buy local mantra is very strong and they will support local startups ahead of foreign companies. Here, local startups have to compete with well funded foreign players and lose most of the time. This is highly damaging to startups who need local buyers to ensure they generate sufficient revenues to hire top talent and to continue innovating.


5. Back Them All The Way

My cofounder in Proficeo, Renuka Sena and I wrote a policy paper for Agensi Innovasi Malaysia (AIM) a decade ago proposing this initiative but it was never adopted. What does the “back them all the way” initiative mean?

While unicorns are private sector companies that need to innovate and scale regionally or globally, this doesn’t mean the government and ecosystem doesn’t play a role in helping them along. In China they have been doing this for a long time. Companies like Haier and Huawei were given significant support whether it was funding, market access or policy support to ensure they became global giants.

Likewise if we want to create unicorns all government ministries and agencies need to get together to support our home grown champions like Aerodyne, EasyParcel and Jom Parking. We need to understand what they need and provide all the support needed like market access, funding, regionalization or changes in policy (for companies like Aerodyne who are in the drone space). We need to “do a China” for our companies. If we select between 5 to 10 well managed, innovative companies and “back them all the way” then we will be able to create unicorns. But this MUST be done purely on merit and to support founders who have the potential to succeed. We must make sure only the truly deserving with high potential are supported in this way.

We do have such companies with the potential to be unicorns but instead of supporting them most of them time they face barriers to success within their own country and this is a real disservice to them. Let’s back them instead and we may then see the creation of more than the 5 unicorns the government desires in the MyDigital initiative.

I could say a lot more but I think these five macro elements are already big roadblocks to creating unicorns in Malaysia. However, this is not the only problem or roadblock to unicorn creation because entrepreneurs themselves are also a problem and are not doing themselves any favours. I will explore this in part 2 of the article tomorrow.

Read also: Malaysia: Unicorn Nation

Dr. Sivapalan Vivekarajah has a Ph.D in Venture Capital from the University of Edinburgh, Scotland. He is the cofounder and Senior Partner of ScaleUp Malaysia Accelerator ( and cofounder of Proficeo Consultants ( He is the author of a book on business innovation - Blue Sky Innovation (available online at: and is currently writing a book on Startup Valuation. Visit his LinkedIn profile at

Keyword(s) :
Author Name :
Download Digerati50 2020-2021 PDF

Digerati50 2020-2021

Get and download a digital copy of Digerati50 2020-2021