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MSC Malaysia InnoTech Johor - MAVCAP


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MSC Malaysia InnoTech Johor - MAVCAP

  1. 2. <ul><li>Family and friends </li></ul><ul><ul><li>Funding to grow business sufficiently to outsiders </li></ul></ul><ul><ul><li>First step towards exposing business to investors </li></ul></ul><ul><li>Angel </li></ul><ul><ul><li>Give money without expecting much returns </li></ul></ul><ul><ul><li>May invest in idea/ plan, but for smaller amount of money </li></ul></ul><ul><ul><li>Some are professional angels – assist in developing business and access to further funding </li></ul></ul><ul><li>Venture capital </li></ul><ul><ul><li>The “real” thing </li></ul></ul>
  2. 3. <ul><ul><li>Equity investor (Cash for Shares) </li></ul></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>Compliment bank lending/facilities to finance innovative (high-risk) SMEs at various stages of life cycle (seed to expansion/late) </li></ul></ul><ul><ul><li>Provide alternative source of financing especially for early stage SMEs in ICT sector, biotech, .. </li></ul></ul><ul><ul><li>Enhance “bankability” of SMEs, entrepreneurship, corporate governance, marketing, product development and technology enhancement. </li></ul></ul>
  3. 4. <ul><li>New companies with limited operating history </li></ul><ul><li>Too small to raise capital in the public markets </li></ul><ul><li>Too immature to secure a bank loan or complete a debt offering. </li></ul><ul><li>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). </li></ul>
  4. 5. 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
  5. 6. <ul><li>Preferably when there is more than idea to fund – funding of ideas only works in US </li></ul><ul><li>Pre-seed or research money is the first step – not necessarily VC funding </li></ul><ul><li>VCs are in no hurry to invest: Intro-to-investment may take 3 – 12 months </li></ul><ul><li>Try to develop a relationship with a VC with the intention of talking about the investment in the future </li></ul>
  6. 7. <ul><li>Product and/ or technology review </li></ul><ul><li>Management team </li></ul><ul><ul><li>Can the team execute? </li></ul></ul><ul><li>Business review </li></ul><ul><ul><li>Estimated market size: growing/ shrinking rate? </li></ul></ul><ul><ul><li>Customer acquisition potential </li></ul></ul><ul><ul><li>Are costs an issue? </li></ul></ul><ul><li>Risk factors </li></ul><ul><ul><li>What are the competitive advantages? Sustainable? </li></ul></ul><ul><ul><li>What are the risks and mitigating factors? </li></ul></ul><ul><ul><li>What is the exit potential? </li></ul></ul><ul><li>Point to note! A good business may not necessarily be a good VC investment </li></ul>
  7. 8. <ul><li>Market Potential / Access </li></ul><ul><li>Is it growing ? </li></ul><ul><li>Are drivers known ? </li></ul><ul><li>Acceptance of new products ? </li></ul><ul><li>Are there dominant suppliers ? </li></ul><ul><li>Funding / Capital Markets </li></ul><ul><li>What is the need for further funding ? </li></ul><ul><li>Are grants available ? </li></ul><ul><li>Availability of further funding ? </li></ul><ul><li>Access to capital markets for exit ? </li></ul><ul><li>Product / Service </li></ul><ul><li>Is value proposition defined ? </li></ul><ul><li>How will value proposition develop ? </li></ul><ul><li>Is product locally or globally benchmarked ? </li></ul><ul><li>What are competitive offering ? </li></ul>Mgmt
  8. 9. <ul><li>No proper understanding of the business </li></ul><ul><ul><li>Value proposition is “unclear” and hence cannot be communicated. </li></ul></ul><ul><li>Wrong focus </li></ul><ul><ul><li>Focus on valuation & funding </li></ul></ul><ul><ul><li>Focus on technology </li></ul></ul><ul><ul><li>No customer engagement </li></ul></ul><ul><ul><li>No sales (revenue) focus </li></ul></ul><ul><li>Unable to manage the business </li></ul><ul><ul><li>Financial and other controls </li></ul></ul><ul><ul><li>“ Hire fast” but “fire slow” </li></ul></ul><ul><ul><li>Team not rowing in the same direction. </li></ul></ul>
  9. 10. <ul><li>Rewards are possible </li></ul><ul><li>Requires blood, sweat and tears </li></ul><ul><li>Case studies: </li></ul><ul><ul><li>IPO </li></ul></ul><ul><ul><li>M&A </li></ul></ul><ul><li>Risks are also REAL – especially for the investor </li></ul><ul><li>Real possibility: One small mistake and all is lost </li></ul><ul><li>Case studies </li></ul>
  10. 11. <ul><li>A technology venture capital company </li></ul><ul><li>Wholly-owned by Minister of Finance Inc. </li></ul><ul><li>Launched in April 2001 </li></ul><ul><li>RM1 billion currently under management </li></ul><ul><li>Invests in ICT related domain and high-growth sectors </li></ul><ul><li>More than 90 portfolio companies in the past 7 years </li></ul><ul><li>Successful exits: </li></ul><ul><ul><li>IPO - UnrealMind, MEMs, GPRO Technologies, ISS consulting </li></ul></ul><ul><ul><li>Trade sale - Ada Cellworks, Leinet Technology, iNavigate, INix Technologies </li></ul></ul>
  11. 12. <ul><li>Empower entrepreneurs to create new wealth </li></ul><ul><ul><li>Invests in ICT and high-growth sectors </li></ul></ul><ul><ul><li>Seed  pre-IPO </li></ul></ul><ul><li>Develop the local VC industry </li></ul><ul><ul><li>Outsource Partners Program 1 (RM100 mil) 4 VC funds </li></ul></ul><ul><ul><li>Outsource Partners Program 2 (RM200mil) up to 7 VC funds </li></ul></ul>
  12. 13. <ul><li>Information Technology (CMC inclusive) </li></ul><ul><li>Internet </li></ul><ul><li>Electronics/Semiconductor </li></ul><ul><li>Communications & Networking </li></ul><ul><li>Other high-growth technology businesses </li></ul>
  13. 14. <ul><li>Invest in technology-based private startup companies </li></ul><ul><li>3-5 year investment horizon </li></ul><ul><li>Board seat, participate/drive key decisions </li></ul><ul><li>Seed and early-stage </li></ul><ul><ul><li>Initial investments of RM$1-3Mil </li></ul></ul><ul><ul><li>Typical for Mezzanine ~ RM5 - 10Mil </li></ul></ul><ul><li>Initial investments and follow-on rounds to fund company through to exit </li></ul><ul><li>Geographical Focus </li></ul><ul><ul><li>Mainly in Malaysian incorporated companies </li></ul></ul><ul><ul><li>Foreign companies with Malaysian angle (technology, regional expansion, etc) for strategic reasons </li></ul></ul>
  14. 15. <ul><li>Proactive value-adding </li></ul><ul><li>Corporate governance </li></ul><ul><li>Management team </li></ul><ul><li>Network and portfolio linkage </li></ul><ul><li>Operating experience (insights) </li></ul><ul><li>Commercialization strategies </li></ul><ul><li>Fundraising strategy </li></ul>
  15. 16. <ul><li>THANK YOU </li></ul><ul><li>Visit us at </li></ul><ul><li>Tel : +603-20503000 </li></ul><ul><li>Fax : +603-26983800 </li></ul>