Plan is to help them commercialize and get manufacturing up
Actual binding agreement yet to be signed however
JUNE 27 was a big day for Agensi Inovasi Malaysia (AIM), a statutory body set up by the Malaysian Government to fuel the push towards establishing an “innovation economy, as it signed three term sheets with three of the five companies it plans to invest in.
It is highly unusual to publicize the signing of term sheets as the actual binding agreement for the investment to be triggered is only done a month or two after the legal documents are signed. Furthermore term sheets are normally conditional upon a full business and technology due diligence and can also lapse if either party chooses not to sign if they cannot agree on the terms of a binding agreement.
Nonetheless, speaking exclusively to Digital News Asia (DNA), Mark Rozario, chief executive officer of AIM, is confident the companies AIM signed the term sheets with, will sign.
The three companies are Quantum Electro Opto Systems Sdn Bhd (QEOS), Sekhar Research Innovations Sdn Bhd (SRI) and Mecha Medic Solutions Sdn Bhd.
AIM will make an investment of RM10.5 million (US$3.3 million) into QEOS, and RM6 million (US$1.9 million) into SRI, with venture capital company QuestMark Asset Management putting in RM4 million (US$1.3 million). The third investment is into Mecha-Medic Solutions Sdn Bhd with RM5 million (US$1.6 million) to be invested.
Broadly speaking, Rozario says that AIM intends to help the three companies with market access, reach out to specific industry groups relevant to each of them, and try to match them with some of the public-listed companies where the innovations from these three can be immediately applied.
Offering a high level view of what each does, he says that QEOS is run by Gabriel Walter, a Sarawakian of Kelabit-descent who was wooed back to Malaysia in 2008 to work on an innovation around light emitting transistors.
Walter has come up with a disruptive product that can displace copper cables over short distances, specifically up to 15 meters in length. One big application is in the HDMI (High-Definition Multimedia Interface) cables which are becoming common in homes. Copper is currently the main material here.
QEOS has been successful in producing a light emitting transistor that is cheaper and faster than copper, Rozario claims.
"The amount will be given in a single tranche and is enough to set up the commercial plant and do marketing," he says. A second, smaller amount will be available when QEOS wants to scale.
SRI is run by chief executive officer Gopi Sekhar and is a clean-tech company which has come up with a combination of a mechanical-chemical process that converts rubber from used tyres back into reusable raw material.
This has potentially huge cost savings for tyre makers as passenger car tyres made with up to 10% from this SRI-produced process have shown the same reliability as tyres made from raw materials, according to Rozario.
The cost of the raw materials is much higher than the cost of the reusable raw material from SRI.
He is particularly excited because German tyre maker Continental has been testing a tyre made with SRI's reusable raw materials and the results, according to Rozario, "have been very good."
But the first step is to set up a factory in Malaysia and work with re-treaders to make tyres and to make automotive components such as engine mounts. The next step after this is to work with Malaysian tyre makers.
The third company, Mecha-Medic, run by Dr Chew Heng Hai, has invented a non-invasive, non-pharmacological device for the treatment of hemorrhoids and piles.
"It is a very simple and effective device for the treatment and prevention of these illnesses," says Rozario, pointing out that the current treatment method is to go for surgery.
"It is a very simple and effective device, has been written about in a medical journal in Italy and is being used by a doctor in Singapore," he adds.
The game plan here is to help them set up production and market the product globally.
Rozario is confident that all three can contribute meaningfully to wealth creation in the country. The first step is to formally accept the terms set by AIM in return for its investment.
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