MESTECC minister asks founders to focus on revenue, profits not valuation

  • Restructure of five funding agencies under purview of MESTECC
  • 70% of funds come from government but access to network and market are limiting factors

MESTEEC minister, Yeo Bee Yin with Dr V Sivapalan of Proficeo at the launch of Scaleup Malaysia accelerator.

When Yeo Bee Yin became minister of energy, science, technology, environment and climate change (MESTECC), one goal she had in mind was to help build businesses with sustainable revenue models. “That is the business that government wants to invest resources in – whether coaching or funds.”

At the launch of Proficeo’s ScaleUp Malaysia accelerator in Found8 KL Sentral yesterday, she took the podium to share some pertinent points on further promoting a healthy tech ecosystem in the country, while a roomful of founders, investors and ecosystem builders listened keenly.

While she commended the founders of Proficeo, Renuka Sena  and Dr V Sivapalan on the launch to help local businesses scale up and generate sustainable revenue, Yeo highlighted that the focus of many startup founders today lays in landing the largest valuation they can get instead of reaping big revenues and profits.

“There is pressure because there are people who want to see Malaysia create unicorns and businesses with high valuation but many businesses are [without] a profit model,” she said, adding that these businesses do not add lasting value to the Malaysian economy.

Funding agencies under the MESTECC portfolio are Cradle Fund Sdn Bhd, Malaysia Debt Ventures Bhd, Malaysian Technology Development Corp (MTDC), Malaysia Venture Capital Management Bhd and Kumpulan Model Perdana Sdn Bhd.

Sharing results of a recently approved cabinet paper, Yeo touched on the restructuring of these agencies. One change is that Cradle will no longer offer venture capital funding and instead, will focus on “giving out grants and offer coaching.”

Meanwhile, the strategy laid out for MAVCAP is the fund of fund model which is a joint fund between government and private venture capitalists. She shared that one predicament faced by the government is the lack of acumen in choosing companies to invest in whereas the fund of fund approach works much better. “Whenever we do a fund of funds model where private VCs invest with the government, we get [good returns].”

On tax incentives, Yeo encouraged investors to take advantage of the RM20 million deductible for corporates or high net worth individuals to invest in venture capital funds. As a matter of fact, the incentive duration has been extended to 2023. “After three years, whether the fund is disbursed or not, they will be able to make a tax claim.”

For the government, Yeo says the question raised is often whether there are good quality founders and businesses to invest in. Sharing some data points, Yeo said 70% of funds come from the government but “access to network and markets” are limiting factors to investee growth.

The goal of growing Malaysia’s digital economy is tied to a practical reason, she said. Malaysia’s digital economy is growing at a 9% rate annually. “If the digital economy grows, Malaysia will be able to achieve a better growth rate,” she says pointing out that MESTEEC will do everything it can to further help propel this growth rate and strengthen the digital economy ecosystem.

Related stories:

Proficeo targets ecosystem gap with Scaleup Malaysia accelerator

MESTECC pushes for US$4.85m corporate tax incentive to be introduced before year end
‘My task is to ensure this country excels as a great nation’


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