Malaysia’s unicorn target centres around MDEC’s FOX
By Geraldine Wong & Karamjit Singh April 4, 2023
- Decision on which 20 companies picked will be made in May
- Besides Endeavor Malaysia, KPMG, other partners will be roped in
Presently, there are more than 1,200 unicorns globally, according to Jan data from CB Insights, a market intelligence firm that tracks venture capital and startups globally. The number of unicorns a country has, is often used as a proxy for how robust its startup ecosystem is.
Since Malaysia welcomed its first homegrown unicorn in 2021 in the form of integrated car e-commerce platform, Carsome, the country has potential unicorns in the making, as outlined in a joint report by KPMG and HSBC titled “Emerging Giants in Asia Pacific” but has yet to see any new one materialize.
Any which way you cut it, Malaysia has clearly done poorly by this yardstick, leading to the government in Sept 2021 declaring that it would target to create five unicorns by 2025.
Aiming to create more Malaysian unicorns
While the announced target of five unicorns did not excite the startup ecosystem, mainly due to the recognition that government cannot magically conjure up startups valued at US$1 billion just because it sets a target, two recent developments from Malaysia Digital Economy Corporation (MDEC) suggest that a more concentrated effort is being executed around MDEC’s soon to be launched Founders Centre of Excellence (FOX) programme with the hopes of accelerating growth of 20 companies towards unicorn path.
While MDEC declined to comment about how the companies will be picked and who will be involved in the selection process, DNA has learnt that all 20 companies will be announced in one month with the 20 companies selected from a pool of around 30 companies MDEC has identified.
The first development came in Feb when Endeavor Malaysia issued a statement about its support for MDEC’s Fox programme, a new initiative guided by the goals set in Malaysia Digital, designed to support the growth of high potential tech companies.
In a commercial arrangement with MDEC, Endeavor Malaysia will tap its formidable network of founders, both tech and non-tech to design a six-month Global Mentoring Programme for 10 high growth tech companies that have the potential to become unicorns or achieve an IPO in the near future (by 2025).
To be eligible, companies must be headquartered in Malaysia and have a digital technology platform or service as a core offering. Additionally, they must have raised at least Series A funding with revenue exceeding US$4.5 million (RM20 million) a year. The companies selected by MDEC will include those involved in SaaS, AI and IoT, Fintech, Insuretech, Healthtech, E-commerce, Proptech and IC Design.
KPMG throws its support behind unicorn push
The second development came last month when KPMG Malaysia and MDEC announced their collaboration around the Fox programme to accelerate the growth of high potential Malaysian technology companies to become unicorns by 2025.
What’s interesting is that KPMG will help 20 Fox companies versus Endeavor Malaysia’s 10. MDEC will decide later which 10 of the 20 selected companies will benefit the most from Endeavor Malaysia’s Global Mentoring Programme.
Explaining the increase to 20 companies, an executive familiar with the programme tells DNA that MDEC is devoting more resources to the initiative.
KPMG will provide customized consulting and advisory support for a period of two years expected to start around June 2023 once the companies have been selected.
KPMG tells DNA that the partnership with MDEC is not based on a commercial arrangement but rather a collaboration that demonstrates that KPMG is invested in nurturing Malaysia’s next generation of unicorns via its expertise in advisory and consulting support.
According to Johan Idris (pic), Managing Partner of KPMG in Malaysia, “Malaysia as a nation has all the right ingredients for technology companies to grow, supported by modern infrastructure, progressive policies for business, skilled workforce, a tech savvy customer base and geographic proximity to a fast-growing Asia Pacific region.”
Expressing his confidence in the tremendous potential for homegrown companies to grow beyond Malaysia’s borders and make their mark in the global map, Johan added, “Therefore, KPMG is ready and excited to contribute towards building up our national heroes one success story at a time.”
In a press release that accompanied the KPMG collaboration, Ts. Mahadhir Aziz (pic), CEO of MDEC said, “MDEC's objective is to grow five unicorns out of Malaysia by 2025 by focusing on a 2-pronged strategy, namely capability building and enhancement programs for all tech founders that are looking to accelerate their growth, and customized support through six key pillars of the Fox intervention that includes policy intervention, business expansion, high-value investment, amplification and consultancy, talent acquisition and mentoring.”
MDEC is expected to announce more collaborations with global and Malaysian partners as it creates a strong support structure around Fox, including with EY and Talent Corp.
Meanwhile all the attention is one which companies will get selected and how they were picked. A lot will be riding on their ability to grow rapidly over the next 2+ years. As for hitting the coveted unicorn status, the government may need to reset its timeline. 2025 will likely be too early a target.
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