Cradle hits 32 co-investment partnerships, plans to go direct as well from 2017
By Karamjit Singh December 7, 2016
- Sees move as offering another option to Malaysian startups
- Notes that regional investment fervour has subsided
WITH the introduction on Monday of six more equity co-investment partners, Cradle Fund Sdn Bhd, now has a total of RM190.2 million committed to its co-investment partnerships, with Cradle committing 50% of the amount into the initiative launched in 2014.
“We are delighted that there are investors open to work together with Cradle to seek opportunities in co-investing as we see the number of partners has now grown to 32 and with US$42.8 million (RM190.2 million) in total committed funds. We do hope that this will convert into investments especially with the flip side of regional slowdown, where valuations are coming down to a more palatable level,” said Nazrin Hassan, CEO of Cradle Fund Sdn Bhd.
Those investments however have been slow in coming through with only four startups receiving funds over the two year period of the programme – BeMalas, MauKerja, Sync Media and SupplyCart – with RM6.075 million in total investment. Undaunted by that and the slower pace of investment activities into startups, from 2017 Cradle is upping the pace by introducing direct equity investments.
Not only will this give Cradle the opportunity to follow on co-investment deals but also to directly lead the round of funding. Under this effort, Cradle will channel 50% of its funding allocation to co-investing initiatives and the remaining 50% for direct grants in 2017.
Currently how the co-investment deals work is that Cradle relies on its 32 partners to vet all the deals and bring startups they are ready to put money into for Cradle to evaluate if it wants to co-invest. With the direct approach, Cradle will source for startups on its own.
Cradle believes the direct approach will also help Malaysian startups in a slow economic growth period. “This year, the investment scene has been quite slow as compared to last year. It is apparent that the regional investment has subsided and it has affected investments into Malaysian startups,” said Nazrin.
At the same time, the broad category of investors in its co-investment initiative has helped soften the pain of a slow investing environment. The 32 partners range from venture capitalists and institutional investors to five Equity Crowd Funding (ECF) platforms whose investors consist of sophisticated angels who are no strangers to funding early stage businesses.
As Nazrin notes, “Investors in crowdfunding platforms might be looking at deals at different angle as opposed to how typical investors see them. What is considered unattractive deal to VCs, may actually be a high potential early stage business that attracts immediate buy-ins from the public who can also happen to be investors in the platform. This approach, indirectly, will enable Cradle to be conscious of the presence of high potential deals in the ECF platforms that we could place under our wing,” he adds.
Six new partners
The six new equity co-investment partners – RHL Ventures (RM5 million), TinkBig Venture (RM5 million), Biz Angel Network (RM2 million), EIX Group (RM2 million), Segnel Ventures (RM500,000) and PlaTCom Ventures (through its Angel’s Group) – will invest a combined RM14.5 million with Cradle, investing up to another RM14. 5 million.
While it has not specified any investment commitment, Biruntha Mooruthi, vice president at PlaTCOM Ventures Sdn Bhd tells DNA that, “Our angels will invest on deal by deal basis which can range from RM 100,000 to up to RM 1 million.” For Biz Angel Network, its co-founder, Samantha Tee says that members will invest up to a max of RM500,000 per deal, either individually or as a team.
Prior to this announcement, a total of RM161.2 million was raised from the previous six cycles of Cradle’s co-investment partnership.
This latest inclusion will bring the number of Cradle’s equity co-investment partners from 25 to 31. Cradle’s existing co-investment partners include Fatfish Ventures Sdn Bhd, OSK Ventures International Berhad, Golden Gate Ventures, CoENT Ventures Partners Ltd, Crystal Horse Investment Pte Ltd, Captii Ventures Pte Ltd, Kathrein Ventures Sdn Bhd, KK Fund, Start Up Nation Sdn Bhd, Mercatus Ventures Sdn Bhd, Senior Marketing System Asia Pte Ltd (SMS Asia), East Ventures SEA 2, MOC Capital Berhad (MOCC), Qeerad Holdings Sdn Bhd, Marna Capital Sdn Bhd (Marna), Nexea Angels (Nexea), 1337 Ventures Sdn Bhd (1337), IV Gagasan Sdn Bhd (Infinite Ventures), IMJ Investment Partners Pte Ltd (IMJ), N Capital Partners Sdn Bhd (NCP), Crowdo, CrowdPlus Asia, PitchIN, FundedbyMe, ATA Plus and Quest Ventures.
Since its inception, Cradle has funded over 700 Malaysian tech startups and the number is increasing through its CIP Catalyst product development grant and its CIP500 product commercialisation grant.
Funded company include taxi booking mobile application, MyTeksi or now known as Grab, financial planning website, Intelligent Money, infographic design web tool, Piktochart and hypoglycaemic-shock alert bracelet, Hypoband.