Week in Review: It's all about the money
By Karamjit Singh December 21, 2012
- High tech startup QEOS land RM10m in venture funding
- Malaysian Business Angels Network launched, targeting RM100 million in angel investments by 2020
IT'S ALL about the money this week. RM10 million and a potential RM100 million. [RM1 = US$0.33]
The RM10 million is safely in the bank account of Quantum Electro Opto Systems (QEOS), thanks to a maiden investment by Agensi Inovasi Malaysia (AIM). The high speed LED startup aims to use the funding to grow its valuation to US$100 million by the end of 2013 says its chief executive officer, Dr Gabriel Walter.
Gabriel, who has been building the company since 2008, is positioning QEOS to be acquired at some point by one of the larger global tech players. It is an unusual strategy as far as Malaysian companies go. The only time I can recall a Malaysian startup being acquired by a global tech player was a three-person startup in 2009 by Facebook.
Walter's story is interesting because the Sarawak-born Kelabit was persuaded to launch his startup in Malaysia thanks to a Ministry of Science, Technology and Innovation grant of RM2.8 million under the Brain Gain Diaspora grant. He subsequently received funding from Kumpulan Modal Perdana and First Floor Capital too.
Although Walter is reluctant to reveal how much funding he has raised so far, back of the envelope estimates would probably have it in the RM20 million range. Who says doing cutting edge research and development is cheap!
Walter has used each round of fund injections to grow the business enough to convince another investor to bet on him.
But here is the beauty of what he has done so far -- he has not convinced any investment to come in because of the revenue QEOS has, there is none yet. But rather, on the potential revenue. So there is hope for our tech entrepreneurs who complain that investors want to see revenue streams before they make a bet on any startup.
Meanwhile the gang at Cradle Fund Sdn Bhd are working hard to ensure that Malaysian technopreneurs have access to a larger pool of people who will bet on them. It has launched the Malaysian Business Angels Network (MBAN) whose mission is to educate, train and even accredit angel investors.
Yes, we in Malaysia take our angels, seriously! We even want to accredit them. From the government's point of view this has to be done because it will now act as the back-stop to any losses angels make in their investments.
To recap: Effective Jan 1, 2013, an angel investor can qualify for a tax relief of up to RM500,000 per annum, in the third year of his shareholding, for any equity investments made in a qualified technology company(s). But, to qualify for this incentive, the angel investor must first be accredited with MBAN.
But just having money won't get you that prized accreditation as an angel. You must also have domain expertise or management experience; a minimum of five years in a relevant industry or role for example. All this is to ensure that the angel can add value beyond mere funds.
What I especially like about MBAN is that Cradle intends for this to be a private sector-led organization. It will just play a supporting role. Cradle is hoping to see RM100 million in angel investments made by 2020 and is looking to attract 30 angels by the end of 2013.
These are exciting times to be a startup in Malaysia indeed.