Healthier exit environment for startups and investors than in Malaysia
What is preventing the same from happening in KL? Confidence? Quality?
I NEED to tip my turban to Singapore’s ecosystem. We have regularly featured startups there, either when they have raised funding or just to profile those who are doing interesting things, such as Pirate 3DP.
This week we ran two news items about companies based there that had me thinking. YFind Technologies was acquired by a large US wireless infrastructure player, Ruckus Wireless. The amount was not disclosed. YFind was established only in 2010 and specialises in indoor location-based services.
And then we had a more established company, TechSailor – which offers social, location and mobile media services – being bought by a company that has Malaysia’s Astro Bhd’s investment arm, Astro Overseas Limited, as its biggest investor.
The obvious questions that come up are, why are our homegrown companies not attracting the interest of global tech players and secondly, why are large Malaysian companies not keen on taking equity into homegrown startups?
Do we just end the discussion at this: Our companies are just not good enough?
After all, I am sure Ruckus would have loved to have acquired a Malaysian version of YFind with a Malaysian valuation. And surely any profit-oriented Malaysian company would be looking to take a stake in a promising Malaysian startup that offers synergy with the business that it is in.
That is just business logic, isn’t it? Or does logic not come into the picture when it comes to investing or acquiring Malaysian tech companies?
I only know of Crystal Horse that is based in Singapore but is Dutch in ownership, that has been making regular investments in Malaysian startups. Its activity in Malaysia has not stirred the interest of the other venture funds there, especially the Japanese.
In fact, one leading entrepreneur here had to establish his regional office in Singapore. It was only after he did that were Japanese investors interested in talking to him.
As I wrote last week, when it comes to which country is the regional tech hub, it’s ‘game, set, match’ to Singapore. But that is not a bad thing, as we can tap many of the advantages of its ecosystem. Plus, we share the same cultures, languages and are the same people too, in terms of ethnic mix.
I recently spoke to Lau Kin Wai who runs a regional fund in Singapore called FatFish Group. Granted, it is a small fund with less than S$1 million, but includes matching investments by Singapore’s government agencies.
A Malaysian who grew his own telecom-related startup Viztel and got it listed in 2006, Lau has made six investments so far, but none in Malaysia (watch out for that story). He feels that it is in fact harder to raise private money for tech businesses in Malaysia.
This is a big disconnect because we at Digital News Asia (DNA) have regularly featured interesting startups in Malaysia who have received funding, be it from the public or private sector.
But why are they not attracting the interest of regional funds, why are there no trade sales that we are aware of, and why not even a whisper of any corporate investors?
I wonder what role confidence in the legal system here plays too. I am just throwing this up because I recently met with a startup that is doing business in the region, and the founder told me that in signing the contracts for the deals he does in Thailand and Indonesia, the customers insist that arbitration be done in Singapore and not Malaysia.
This is just down to the lack of confidence in our legal system. Of course, it did not help that just last week the print media ran a story of an arbitrator accused of taking bribes. Ouch. Damage done, even if he is proven innocent.
Do share your thoughts on why you think this is the case. And, talking about sharing your thoughts, do check out the comment posted by DNA contributor Jagdish Malhi to the Techsailor story. Very insightful!
And finally, not to take away from what’s happening here, our latest DNA-TeAM Disrupt on July 24 had a stellar panel and a full house, with lots of good questions but not necessarily good answers.
Still, it was time well spent by all who came. Check out DNA executive editor A. Asohan’s article on it, and you can watch the video of the panel discussion too.
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