MSC Malaysia InnoTech Johor - MAVCAPPresentation Transcript
Family and friends
Funding to grow business sufficiently to outsiders
First step towards exposing business to investors
Give money without expecting much returns
May invest in idea/ plan, but for smaller amount of money
Some are professional angels – assist in developing business and access to further funding
The “real” thing
Equity investor (Cash for Shares)
Early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company
Compliment bank lending/facilities to finance innovative (high-risk) SMEs at various stages of life cycle (seed to expansion/late)
Provide alternative source of financing especially for early stage SMEs in ICT sector, biotech, ..
Enhance “bankability” of SMEs, entrepreneurship, corporate governance, marketing, product development and technology enhancement.
New companies with limited operating history
Too small to raise capital in the public markets
Too immature to secure a bank loan or complete a debt offering.
In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the company's ownership (and consequently value).
Market Expansion Product Expansion Listing or Sale Commercialization TIME Concept Alpha Beta Early Adopter Seed Early Expansion Late FUNDING (RM) <2M Pre-Seed <50K Co Formation 3-6 months 12-24 months 24-60 months
Preferably when there is more than idea to fund – funding of ideas only works in US
Pre-seed or research money is the first step – not necessarily VC funding
VCs are in no hurry to invest: Intro-to-investment may take 3 – 12 months
Try to develop a relationship with a VC with the intention of talking about the investment in the future
Product and/ or technology review
Can the team execute?
Estimated market size: growing/ shrinking rate?
Customer acquisition potential
Are costs an issue?
What are the competitive advantages? Sustainable?
What are the risks and mitigating factors?
What is the exit potential?
Point to note! A good business may not necessarily be a good VC investment
Market Potential / Access
Is it growing ?
Are drivers known ?
Acceptance of new products ?
Are there dominant suppliers ?
Funding / Capital Markets
What is the need for further funding ?
Are grants available ?
Availability of further funding ?
Access to capital markets for exit ?
Product / Service
Is value proposition defined ?
How will value proposition develop ?
Is product locally or globally benchmarked ?
What are competitive offering ?
No proper understanding of the business
Value proposition is “unclear” and hence cannot be communicated.
Focus on valuation & funding
Focus on technology
No customer engagement
No sales (revenue) focus
Unable to manage the business
Financial and other controls
“ Hire fast” but “fire slow”
Team not rowing in the same direction.
Rewards are possible
Requires blood, sweat and tears
Risks are also REAL – especially for the investor
Real possibility: One small mistake and all is lost
A technology venture capital company
Wholly-owned by Minister of Finance Inc.
Launched in April 2001
RM1 billion currently under management
Invests in ICT related domain and high-growth sectors
More than 90 portfolio companies in the past 7 years
IPO - UnrealMind, MEMs, GPRO Technologies, ISS consulting
Trade sale - Ada Cellworks, Leinet Technology, iNavigate, INix Technologies
Empower entrepreneurs to create new wealth
Invests in ICT and high-growth sectors
Develop the local VC industry
Outsource Partners Program 1 (RM100 mil) 4 VC funds
Outsource Partners Program 2 (RM200mil) up to 7 VC funds
Information Technology (CMC inclusive)
Communications & Networking
Other high-growth technology businesses
Invest in technology-based private startup companies
3-5 year investment horizon
Board seat, participate/drive key decisions
Seed and early-stage
Initial investments of RM$1-3Mil
Typical for Mezzanine ~ RM5 - 10Mil
Initial investments and follow-on rounds to fund company through to exit
Mainly in Malaysian incorporated companies
Foreign companies with Malaysian angle (technology, regional expansion, etc) for strategic reasons