MBAN hopes for mindset shift among angel investors
By Karamjit Singh May 8, 2014
- Aims to shift focus of high net individuals from property to tech startups
- Private sector angels offer more than money, with mentoring and networks key
THE Malaysian Business Angels Network, now private sector-led, has wasted little time in getting potential angel investors in the country up to speed with what it means to be a very early stage investor in tech-based startups.
Acutely aware that a vibrant angel community is critical to foster a vibrant startup community and both in turn feed off each other to strengthen the overall ecosystem – and with only 75 registered angel investors at the end of December 2013 – the organisation recognises that there is much to be done to move things up a few notches.
Going full steam into what will be an active next eight months with various educational and awareness workshops and gatherings, it organised MBAN Angels: Learning to Fly, which took place from April 17 to 18, designed to help angels learn how to better support entrepreneurs and drive them towards success.
The event was supported by early stage ecosystem financier, Cradle Fund Sdn Bhd and the EU-Malaysia Chamber of Commerce and Industry.
At a press conference MBAN vice-president, Raiyo Nariman declared that Malaysian entrepreneurs were extremely fortunate to have such strong government support. “But it is time for the private sector to step up now and this is where creating a vibrant and very strong angel network is critical.”
The two-day programme was aimed at removing any fears that private investors may have about angel investing and to provide them with tips and best practices on how to become effective and smarter angel investors.
Richard Wong (pic), MBAN’s president said that one of the goals of the organization is to try and change mindsets and make people more receptive to investing in tech entrepreneurs and to not just stick to property investments.
“But it will be a challenge as I know the members of my Vistage Angels Club have a number of questions on their minds,” said Wong who is founder and chief listener of Vistage, an organization that helps chief executive officers develop and enrich their corporate and life skills.
Among the questions his Angel’s Club members, which number almost 180, have are:
Where do you find these emerging startups?
How do you evaluate them?
What are the risks?
In helping them answer these questions, attendees at the Learning to Fly event were exposed to panel discussions led by experienced angels from the European and Asia Pacific regions.
They were also exposed to pitches by a small group of eight selected entrepreneurs, just to give them a flavour of what happens at typical pitches, to appreciate the quality of companies in the market and also learn from the questions that more seasoned investors asked.
Mohandeep Singh, an entrepreneur who runs Second CRM, found the event very useful.
“The event is the right step as far as making angel investment tick in Malaysia. Yet, I also found it great, from another angle.
“As most of the invited angels (or potential angels) are pretty solid businessmen, I got a chance to pitch our ideas and not just for money, even for partnership deals, which in some cases is even more critical for the long term sustainability of your startup,” he added
This was a key point Raiyo stressed, that the private sector has more to offer than money. For one, startups can learn from their mistakes – “the cheaper and easier way to learn by” – he noted.
At the same time angels can offer advice, open doors to get appointments, set up meetings, help penetrate new markets overseas and just offer advice in building and growing a business.
Wong points to another value-add that comes from giving advice and mentoring entrepreneurs – reverse learning. “I think our Vistage members who become angels and start mentoring startups will, as long as they keep an open mind, probably learn a lot from the young entrepreneurs too.”
The non-monetary value will be stressed as well in the programmes that MBAN organises. In fact, MBAN will also connect angels with entrepreneurs who are not ready to raise money but need advice.
“We want MBAN to be a facilitator to support the various activities that are already going on such as hackathons and accelerator programs,” said Raiyo.
In terms of the incentive offered through the Angel Tax Incentive, angel investors are allowed to claim a tax allowance of up to RM500,000 a year on their personal income tax, but only after a two year holding period.
The other condition being that they cannot own more than 30% equity in any startup, which is designed to protect the interests of the startups.
One other startup that attended the event also came away as impressed as Mohandeep. For Shanker Joyrama, founder of mobile dating app Kehmistry, it was an excellent platform for startups like them to raise its profile amongst angel investors.
“We wish for more such sessions as it’s really good for the ecosystem (both on the startup and angel side of things,” he said.
A giant leap for angel investing in Malaysia