Short red skirts, sexy long legs … and startups

  • SEA’s most successful tech companies are based out of Malaysia
  • Yet Japanese and US investors continue to ignore the country

Short red skirts, sexy long legs … and startupsI FELT like an abandoned stepchild; ignored, invisible and to be avoided at all costs. It was a strange feeling. I am not speaking of myself in personal terms but as a Malaysian.
I recently attended the Asia Leaders Summit 2014 in Singapore, at the invitation of Jeffrey Paine of Golden Gate Ventures Singapore, the summit’s co-organiser.  The other organiser was Masahiko Honma, the founder of Incubate Fund in Japan.
Participants included investors and entrepreneurs. The event itself consisted of panel discussions and entrepreneur pitches.
It was also the highest concentration of Japanese investors I have seen at one single event, and the reason is simple: The Japanese are coming to South-East Asia.
We have already seen this trend in recent years with Japanese investing and acquiring companies in the region. Examples include IMJ Fenox investing in Malaysia’s iMoney, B-Dash Ventures investing in Singapore’s e27 and Cyber Agent Ventures investing in of Vietnam.
Short red skirts, sexy long legs … and startupsRakuten the e-commerce giant from Japan acquired Viki, the video-streaming site based out of Singapore, and, an e-commerce company in Thailand.  Hitachi Japan acquired eBworx in Malaysia and Japanese e-marketing company Opt Inc acquired Catcha Digital Asia.
This is a strong indication that the Japanese are aggressively increasing their presence in South-East Asia, both via investments and acquisitions, yet at the Asia Leaders Summit itself there was no mention whatsoever of Malaysia as an investment destination.
Most of the conversations were around Indonesia, Singapore, the Philippines and Vietnam, but not a single mention of Malaysia. Really, not one single mention of Malaysia throughout the entire Summit!
Is there no interest in Malaysia among investors, or are the other countries sexier than us, leading to them getting the lion’s share of interest?
If you look at the statistics, Malaysia should definitely be in their portfolio. It has the second highest per capita income and infrastructure in South-East Asia, a more educated population, we speak English (only Singapore and the Philippines speak English as a strong first or second language), we are among the highest Facebook users per capita population in the world, and have a very active Internet population (the number of e-commerce companies and Facebook users is testament to that).
The most successful South-East Asian Internet and ICT companies are also in Malaysia: JobStreet, MOL (including Friendster), Catcha, iProperty and more. Heck, the largest tech acquisition in South-East Asia is now also Malaysian (Australia’s SEEK Ltd acquiring JobStreet for RM1.73 billion).
Too bad this last acquisition came after the Summit, but it proves the fact that Malaysia has much to offer the smart investor. So this led me to ask the question why Malaysia was not on their radar, for which I received possibly the loudest applause and ‘thumbs-ups’ from the audience.
I did not however receive a proper reply from the panel, perhaps because they were taken aback by the question. The only panellist who responded was Willson Cuaca, managing partner at East Ventures based in Indonesia, who said he did not discount Malaysia but was focused on Indonesia because of its sheer size and opportunity.
I found this whole episode quite disconcerting. It is not good for Malaysia as a whole, and neither is it good for Malaysian entrepreneurs, because the Japanese are considered good, long-term investors. Clearly there is a lot of Japanese money coming this way, but it seems to be avoiding Malaysia.
We have had the Multimedia Super Corridor (MSC Malaysia) project for almost 18 years now, and plenty of entrepreneurial activity over the last decade, yet investors are passing us by in favour of Indonesia, the Philippines and Vietnam.
We have so much to offer and no one to offer it to. Actually, even the American investors have passed us by. That’s why we are facing a funding crunch – not just ‘Series A’ funding but funding at all levels. If it weren’t for the grants offered by Cradle Fund, most companies would have had no early-stage funding either.
Ultimately, it is a perception issue. Malaysia is perceived as a country that does not have high growth potential, has too small a population, or lacks exciting companies.
Whatever the reasons, we are not on the radar of most of these investors and that’s bad news.
I can’t say that its because we haven’t done anything as a nation: Certainly agencies like Multimedia Development Corp or MDeC (which manages the MSC Malaysia initiative) have been promoting Malaysia for years. It can’t be because we don’t have successful companies – as mentioned above, the most successful South-East Asian tech companies are based out of Malaysia.
Short red skirts, sexy long legs … and startupsPerhaps it’s because we just aren’t sexy enough. Maybe that’s why Tony Fernandes chose to attire his stewardesses in short red skirts. Everyone remembers AirAsia not just for its tagline, but also for its pretty stewardesses.
[And speaking of AirAsia – an example of yet another Malaysian success story, a company that has disrupted the global airline industry – ED].
So how do we make Malaysia sexy? No, we can’t make our entrepreneurs dress in short red skirts or shave their legs (most of them are guys after all), but we need to create more successful companies on a global scale.
Malaysian entrepreneurs must build innovative global or regional companies. Companies like Waze (acquired for US$1 billion by Google) make Israel a sexy place for investors because of such innovations.
Far too many of our companies merely have copycat ideas that lack real innovation, or are jaguh kampung (village champions) happy to just build something that serves the local market, but not Asia or the world.
From their inception, JobStreet, MOL and Catcha were innovative companies building regional businesses, but there are fewer of them these days. Also, many of our entrepreneurs who are building such companies are doing it quietly under the radar, or are unable to obtain funding to seriously grow their business because they don’t have great public relations skills or simply don’t want to appear in public to ‘boast’ of their success.
We also need our many government agencies to work together with entrepreneurs and associations like the Technopreneurs Association of Malaysia (TeAM) to create a more concerted effort to attract investors and other successful entrepreneurs to Malaysia.
[Disclosure: The writer is a council member at TeAM]
Singapore regularly attracts foreigners to its shores by offering them easy work permit applications, funding, and the ease of setting up operations there. Malaysia has a great environment for entrepreneurship, but try applying for a work visa and you’ll know what I mean. It is a major challenge.
There is a lot that we can do to make Malaysia an attractive destination, but everyone must play a part. Entrepreneurs must build more attractive global and innovative companies; while government agencies must make it easier to attract talent and must work with other agencies and entrepreneurs to promote Malaysia.
Venture capitalists and angels must take on more risks by funding high potential companies, because ultimately, we need to show that we have successful companies.
That is the only real attraction for investors and acquirers. Build great companies and they will come. Maybe then I won’t feel like a stepchild again.
Dr V. Sivapalan is chief evangelist at Proficeo Consultants, a company which coaches and mentors technology entrepreneurs; an angel investor; and the author of ‘Blue Sky Innovation,’ a book on business innovations available in leading bookshops in Malaysia and on Amazon’s Kindle store.

Related Stories:
Malaysian startups and the VC perception barrier

Malaysia too small a market? Dotcom heavies weigh in
Malaysia's start-up scene needs to break out of stealth mode
Is Malaysia ‘losing out’ to Singapore?
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