Cradle gets even more co-investment partners, 5 of them ECF operators
By Lum Ka Kay June 24, 2016
- Total amount of funds available for co-investments brought up to about US$40mil
- ‘Cradle will play the role of an institutional angel on ECF platforms,’ says CEO
EARLY stage grant provider Cradle Fund Sdn Bhd has signed on another six co-investment partners, bringing its partner tally up to 26.
The new partners are Alix Global, ATA Plus, Crowdo, Propellar Crowd+, pitchIN and China-based venture capital (VC) firm Quest Ventures. All but the last are equity crowdfunding (ECF) operators.
The partnership with Quest Ventures sees an additional RM2 million (US$495,000) – half of it from Quest Ventures, and the other half from Cradle – bringing the total amount of funds available for co-investments in startups to RM161.2 million (US$38.9 million).
According to Cradle, although the other five partners’ contributions are undisclosed, each of them is looking to close between two and 20 deals in 2016 and 2017.
Before this latest round, the cumulative funds available under Cradle’s co-investment programme stood at about RM159.2 million.
Cradle is a non-profit under Malaysia’s Ministry of Finance that seeks to develop startups and the ecosystem.
Why ECF operators?
Cradle chief executive officer (CEO) Nazrin Hassan (pic) acknowledged the shift in partner selection for its co-investment programme, with Quest Ventures being the only party that is not an ECF operator in this latest round.
“Investors in crowdfunding platforms may look at deals differently as opposed to how typical investors see them,” he said at an event announcing the new partners, in Kuala Lumpur on June 23.
“What is deemed unsexy to VCs may actually be a high potential early stage business that attracts immediate buy-in from the public, who can also become investors via the [ECF] platform.
“This system is not new at all – in the United Kingdom, angel investors have led the funding of deals on ECF platforms, so we are replicating the model here.
“This means Cradle will play the role of an institutional angel on ECF platforms, and we hope more companies will be able to finance their businesses through ECF,” he added.
ECF just kicking in
Meanwhile, Cradle chief investment officer Juliana Jan (pic) admitted that the investment landscape has slowed down “a bit” compared with last year.
“Some investors are a bit cautious and have decided to take a ‘look and see’ approach – they are not sure if they should invest now or wait till the second half of the year.
“There are still investments being done, but compared with 2015, it has slowed down a little,” she told a press conference after the announcement.
Ata Plus cofounder Elaine Lockman said although her platform has yet to list any deals, she hopes to close at least two by end-2016, and a minimum of six next year.
Crowdo and CrowdPlus.asia are both hoping to close one to two deals each month. Bryan Chung, chief operating officer of Propellar Crowd+ which operates CrowdPlus.asia, said he hopes to double that amount in 2017.
Alix Global, which operates Sweden-based ECF platform FundedByMe, has one deal listed on its platform so far. Its founder and CEO Angelld Quah said the company is targeting to do at least six deals by end-2016, and 15 in 2017.
Finally, pitchIN cofounder and CEO Sam Shafie said its ECF platform pitchIN Equity will seek to close at least seven deals this year, and 14 next year.
The five ECF operators were amongst the six approved by the Securities Commission of Malaysia a year ago. ECF has been slow getting off the ground in Malaysia, and now has to face weakening investor sentiment and an economic slowdown.
Sam was unfazed, saying that the ECF “has just started,” while Quah concurred, saying that the ECF market “is not losing any momentum” despite the sluggish economy.
Crowdo cofounder and CEO Leo Shimada said that ECF in Malaysia has a “very, very bright” future.
In April, Malaysian family theme park operator The ParentHood successfully raised RM2.65 million (US$640,000), while wedding and motherhood e-commerce startup Nuren Group raised RM246,000 on the same day its ECF offer went live earlier this month – both on Crowdo’s platform.
Six more partners, Cradle co-investment funds reach nearly US$38mil