Sync, MauKerja raise RM1mil each from Cradle co-investment pact
By Goh Thean Eu May 28, 2015
- Cradle and OSK pump in funds to help both startups expand business, presence
- Cradle hopes to secure five to seven new co-investment partners next quarter
EDUCATION services provider Sync and recruitment portal MauKerja have each raised approximately RM1 million (US$275,000) from Cradle Fund Sdn Bhd and OSK Technology Ventures Sdn Bhd, a wholly-owned unit of OSK Ventures International Bhd (OSKVI).
This comes on the back of a co-investment partnership deal signed by Cradle, a non-profit under Malaysia’s Ministry of Finance (MOF), and OSKVI last November.
The Sync and MauKerja investments are also the first such deals since Cradle embarked on co-investment partnerships last year.
It is unclear how the deals are structured, or how much equity OSKVI and Cradle are getting in each startup. However, it was revealed that OSKVI has the right to appoint a representative to the board of the two companies.
“Whether or not we will appoint [someone to the board] … is subject to further discussions,” said an OSKVI representative who declined to be named, speaking on the sidelines of a media briefing in Petaling Jaya earlier today (May 28).
For Sync, the funds will go towards sales and marketing efforts to boost revenue, as well as to support its expansion plan.
“Currently, our efforts are focused on urban schools in the Klang Valley. By 2017, we are looking to expand to the greater South-East Asian region by leveraging on Cradle and OSKVI,” said Sync Media founder Zharif Sharif.
For MauKerja, the funds will be used to renew its marketing efforts and hire new talents to support its growth.
“We plan to expand our team, particularly in product development and marketing. We will continue to focus on the Malaysian market before expanding beyond our shores,” said its founder Ray Teng.
Cradle vice president of investment and relationship management Juliana Jan said that the MOF company is currently in talks with a few startups and hopes to have more co-investment deals finalised by year-end.
Besides OSKVI, Cradle is also partners with nine other venture capital companies on similar co-investment initiatives, under which Cradle and its partners have raised a combined RM56.7 million (US$16 million).
All of these initiatives involve one-to-one matching funds, where Cradle will fund up to RM500,000 (US$137,000) and its partner will invest the same amount or the equivalent in Singaporean dollars.
By the end of this year, Cradle hopes to have 21 co-investment partners.
“We hope to have another five to seven new co-investment partners coming on-stream next quarter,” said Juliana.
Cradle began these co-investment initiatives to also prepare for an expected gradual reduction of public funds being allocated for investing in early-stage businesses.
By 2017, Cradle targets 70% of its allocated funds to be channelled towards funding equity co-investment deals while the remaining 30% will be reserved for grant funding.
Over the past 10 years, it has funded almost 700 Malaysian tech startups through its CIP Catalyst product development grant and its CIP 500 product commercialisation grant. Companies funded by these programmes include MyTeksi (later GrabTaxi), iMoney, Piktochart and Hypoband.
Cradle claims a commercialisation rate of 58% for its investee companies, deemed to be the highest amongst all government grant agencies.
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