Week in Review: The rise of the angel investor?

  • Cradle Fund’s Angel Tax Incentive gives up to RM500,000 tax exemption
  • Government hopes it will encourage investments into tech start-ups

Week in Review: The rise of the angel investor?NATURALLY, election talk has been the dominant theme for the week, even in tech circles, with every media commentator having an opinion about what impact social media in particular will have, given that Malaysian Prime Minister Najib Razak has dubbed this the “first social media election” in the country.
 
I think that is dramatizing it a bit and playing to the gallery, but for a grounded feel of what impact the Internet will have on the elections, you will be well informed by the time you get through GE13: Technology and democracy, like a horse and carriage.
 
But in the tech ecosystem this week, the big news has to be the official launch of the Angel Tax Incentive by Cradle Fund Sdn Bhd, which also unveiled the details of the incentive.
 
You can also listen to the podcast from DNA’s Tech Talk segment on BFM radio on April 4 to hear the excitement in my voice as I talked about this amazing incentive.
 
Why amazing? Because this has to be the first time that the Government is providing a business incentive to individual Malaysians where it not only supports you in case your angel investment goes bust, but even lets you offset your investment against your taxes due in the event that your bet pays off and your start-up is on its way to become the next Jobtreet.com! A case of ‘heads, you win; tails, you win too.’
 
While you can read all about the incentive in our article The real message behind the Angel Tax Incentive, let’s appreciate the huge effort put in by Cradle, led by its CEO Nazrin Hassan, which has been relentlessly pushing for this incentive since 2009.
 
The reason for this is easy to see. High net worth individuals in Malaysia are not comfortable making investments into technology companies. Most still prefer the traditional means of diversifying their investments.
 
Yet research from the United States reveals that start-ups that get backed by angel investments have created about 250,000 new jobs in 2009. This represents an amazing 5% of all new jobs created in the country.

Research also shows that start-ups which receive angel funding have an increased probability of survival and improve their growth by between 30% and 50%.
 
That is why there is a need for such a strong incentive from the Government here. It wants to see the private sector be the main engine behind the early stage funding of our tech companies.
 
Previous Installments:
 
Week in Review: The rise of digital-only publications

Week in Review: The certainty of taxes

Week in Review: Phison founder determined to make his mark here

Week in Review: A once hot start-up fights to stay relevant

Week in Review: Fueling the dreams of start-ups

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