Cradle and Golden Gate in 1:1 matching fund pact
By Digital News Asia May 21, 2014
- Duo to fund up to 5 companies a year with annual total allocation of RM2.5mil
- Cradle plans to forge similar partnerships with local VCs and angel syndicates
CRADLE Fund Sdn Bhd (Cradle), a non-profit under Malaysia’s Ministry of Finance, has joined forces with Singapore-based seed fund provider Golden Gate Ventures Pte Ltd (GGV) to co-invest in Malaysian early-stage technology companies.
The two organisations have agreed to a one-to-one match in funding amounts -- with any sum GGV provides in funding, Cradle will fund an equal amount into the selected technology startup but will not take any equity in the invested company.
Under the agreement, Cradle and GGV will fund up to five companies a year with an annual total allocation of RM2.5 million (US$776,690), Cradle said in a statement.
Selected technology startups will each receive a maximum of RM500,000 (US$155,340) or the equivalent amount in Singapore currency.
Cradle chief executive officer Nazrin Hassan (pic) said the working relationship with GGV would give Malaysian technology startups the extra edge as they prepare to compete at a global level.
“We are elated to have this partnership with GGV as it has been a long-time collaborator with Cradle. This co-investment partnership takes the relationship to the next level.
“GGV also gives us additional insights and experience in investing in startups which Cradle may not currently have,” he said.
Nazrin also sees Cradle’s expansion into co-investment as one of the steps for attracting foreign investors, especially venture capitalists and angel groups, to invest in technology business deals in Malaysia.
“This will be a boon for our entrepreneurs who are seeking to raise further funds to support their business growth as they will not have to venture across Malaysian shores to seek investors.
“It is also hoped that … a larger pool of discerning foreign investors … will encourage our Malaysian entrepreneurs to be more global in their approach and market access,” he said.
GGV founding partner Jeffrey Paine (pic) said the partnership would enable it to better prepare Malaysian technology companies to compete on the world stage.
“With our partnership with Cradle, resources will be made available to entrepreneurs with ambitions for a global expansion – whether their target is the South-East Asian region or the United States.
“We also find the diversity of the Malaysian technology startup scene very interesting but in order to help these entrepreneurs achieve their goals, we need a local partner to help us gain a cultural understanding of these companies. Cradle fits that bill,” Paine said.
GGV has been behind successful names such as online supermarket RedMart.com, mobile payments provider Coda Payments and cloud-based web development platform Nitrous.io. To date, it has invested in 18 companies in South-East Asia and Taiwan.
In 10 years, Cradle has funded over 600 Malaysian technology startup products via its CIP150 product development grant and CIP500 commercialisation fund. Funded companies include taxi booking mobile application MyTeksi, financial planning website Intelligent Money, infographic design web tool Piktochart and hypoglycaemic-shock alert bracelet Hypoband.
It also has a commercialisation rate of 58%, which it said was the highest among all government grant agencies in Malaysia.
The Cradle-GGV co-investment initiative is the first of its kind for Cradle and plans are in the pipeline to forge similar partnerships with local venture capitalists and angel syndicates. These partnerships will be announced in due time, the agency said.
“Such initiatives are timely as we prepare for the gradual reduction of government grants towards supporting early stage startups,” Nazrin said, adding that Cradle plans to channel 50% of its funding allocation to co-investing initiatives by 2017.
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