Raising money IS supposed to be hard!
By Karamjit Singh February 25, 2013
- Lot more money available today than ever before for entrepreneurs
- The money is seeking quality in both the idea and team that will execute
LAST week’s DNA-TeAM Disrupt session was the second time we had funding as our topic of discussion.
The first in October had Tan Sri Vincent Tan and Johnathan Lee of Cradle Fund Sdn Bhd as panelists and drew a standing-room-only crowd. I was thus surprised that last week’s session drew just over 50 people.
If it’s true that it is indeed hard to raise money in Malaysia, I would have thought many more entrepreneurs would have attended the session which also had a venture capitalist from Singapore, Amit Anand, managing partner of Jungle Ventures, appearing via Skype.
He was joined by Mavcap CEO Jamaludin Bujang and Catcha Group’s Patrick Grove.
As another panelist, Khailee Ng, said, “I smell the money, man!” He was only half joking and this was before he even saw Ganesh Bangah, founder of MOL Global.
Ganesh who was in the audience, spontaneously joined the panel towards the last part of the 75min session talking about what he invests in both from a MOL perspective and a private basis as an angel.
And that is the interesting thing here. That some of our leading tech entrepreneurs are now making investments on a personal basis too. It did not strike me to ask Grove if he does any angel investing but I do not think he does.
Then just the week before Disrupt, the founder of a listed tech company asked me to alert him if I came across any interesting tech entrepreneurs. It is not the first time this has happened.
This growth in the pool of angel investors and the Malaysian Government’s steadfast support with venture funding, to the tune of RM250 million (US$81 million) for the next few years, really screams to me that there is money available. But, it is money looking to invest in quality ideas and solid entrepreneurs. Shouldn’t it be that way?
So, sure, it’s hard to raise money in Malaysia, and Singapore too, as Jeffrey Paine of Founder Institute Singapore tweeted. But it is supposed to be hard to raise money!
There were only two times in Malaysia’s history when it was ‘easier’, not easy, to raise money. The first was in the 1999 to end -2000 period, the fun days of the dotcom bubble. The other time was in 2008 when Multimedia Development Corporation (MDeC) was giving out pre-seed grants of RM150,000 (US$48,000) each.
Granted it was not a lot, but it was only meant to help entrepreneurs crystallize their ideas or get some minimum viable product out. Boy, I would have liked a piece of that, but I was safely in my 9-to-5 cocoon back then!
The easy money from MDeC then allowed close to 300 entrepreneurs to get funds. Did even 5% of them manage to leverage on that to raise further funding after that? Will they complain that is it hard to raise money?
As Dr V. Sivapalan, chief evangelist at Proficeo and past president of the Technopreneurs Association of Malaysia (TeAM) noted in his closing remarks of a panel session held last October under Cradle’s Coach and Grow program, “There are so many grants, loans, venture capital funding and even angels here. If in such an environment, you cannot raise money, it is not about the environment then but your business -- and you probably need to relook it.”
From my perspective, I can tell you that it has not become harder. What makes things harder now is that investors have become more knowledgeable and ask hard questions, as they should.
And if those seeking to raise funds do not like the questions, that is too bad. Perhaps head on down to Singapore or Taiwan to raise money. As Digital News Asia (DNA) has highlighted, some of our entrepreneurs have raised money there. So, it must be easier there, right?
I myself have faced tough questions from one of the top entrepreneurs in the region as I tried to raise angel funding from him before launching DNA. Did I complain? Well, a little bit maybe, but only to my co-founders. But you move on and do not let rejection get you down!
Meanwhile, I want to thank Khailee for challenging DNA in front of the world (Disrupt was streamed live). He said we should stop giving start-ups we feature an easy time and making it seem like all is sexy and cool and fun.
In fact, this is a discussion that we have had at DNA already. And we will start to ask those harder questions, Khailee!
Angels with pitchforks, VCs who don't venture