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MSC Malaysia Industry Dialogue
Financing ICT SMEs & Micro SMEs

8 April 2010
Berjaya Hotel & Convention Center, KL

Published in: Economy & Finance
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  1. 1. CRADLE INVESTMENT PROGRAMME © Copyright 2010 Cradle Fund Sdn Bhd
  2. 2. “… entrepreneurship is the practice of consistently converting good ideas into profitable commercial ventures” - Peter F. Drucker - This is what CRADLE does! © Copyright 2010 Cradle Fund Sdn Bhd
  3. 3. Who is Cradle? • Cradle Fund Sdn Bhd (Cradle) is an agency under the Ministry of Finance, Malaysia (MOF) which manages the Cradle Investment Programme (CIP) since its inception in 2003. • “Entrepreneurs for Entrepreneurs” What is our mission? New technology (and its Commercialisation The leading Growth Innovation Catalyst related) ideas Catalyst in sustainable developmental & The innovation funnel technology funding supporting platform for individuals, ecosystem. for all funding research, corporations, Employment creation agencies and forms, institutes and esp. Angel universities Investments. Addressing market funding gaps and industry expectations © Copyright 2010 Cradle Fund Sdn Bhd
  4. 4. Who are our recipients? Individuals/start-ups with  innovative ideas but have insufficient funds to realize Pre-Seed & Seed Conditional Grants their ventures Industrial Guidance Aspiring entrepreneurs  needing funds and mentoring to grow Industrial Collaboration Market Access  Inventors /researchers needing funds and guidance to Competency Building commercialize their ventures © Copyright 2010 Cradle Fund Sdn Bhd
  5. 5. What is our developmental focus? • Pre-seed (CIP Catalyst & U-CIP Catalyst) Proof of Concept / Idea Stage Lab or Industrial Prototype Development • Seed/Commercialisation (CIP 500) Proof of Concept / Commercialisation of Lab or Industrial Product / Service Prototype Development Cradle funds Technology Innovation with Commercial Value © Copyright 2010 Cradle Fund Sdn Bhd
  6. 6. What is our investment focus? • Technology-based ideas or innovations with commercial value in the following industries: ICT Non-ICT Others • Mobile/Wireless Tech • Biotechnology • Semi conductors • Creative Multimedia & • Advanced Materials • Life sciences Content Development • Advanced Manufacturing- • Clean technology • Shared Services Outsourcing related Tech • Hardware Design • Renewable Energy/ Waste • Software Development Management / Recycling • Internet-based Businesses Tech • High-Technology Consumer & Business Products Cradle funds Technology Innovation with Commercial Value © Copyright 2010 Cradle Fund Sdn Bhd
  7. 7. SEED/COMMERCIALISATION GRANT © Copyright 2010 Cradle Fund Sdn Bhd
  8. 8. What the programme offers 85% of Pathway 1 Total Project Cost Outright (Up to RM500K) (12- 18 mths) Non-Matching Disbursement to Entrepreneur Methodology Pathway Entrepreneur 2 (1:1) Matching* (12-18 mths) 85% of * Applicable where RM500,000 is Total Project Cost insufficient to kick start commercialisation (Up to RM500K) * CIP 500 is a hybrid between CFSB’s speedy and automated pre-seed evaluation process (50%) and the investment evaluation process by a venture capitalist (50%). © Copyright 2010 Cradle Fund Sdn Bhd
  9. 9. Eligibility criteria Seed/Commercialisation (CIP 500) • Any budding company which meets the below criteria:  At least 51% of the company’s equity is held by Malaysians, and  Company in operations for less than 3 years, and  Company’s total revenue is not more than RM5mil in its total financial history, and  Company owns the Intellectual Property (IP) rights of the products and/or services, which is intended for commercialisation  Company already has a prototype which only requires another 8% to 10% product refinement work to meet market & industry expectations/demands © Copyright 2010 Cradle Fund Sdn Bhd
  10. 10. CIP500 Application Process Application Offer Letter Full Due Diligence * Initial Process to take 60 – 90 * Inc. Advisory Panel; to take days till this point up to approximately 2 months Approval Committee Finalization of Pre-Screening Meeting Offer & * Requires Evaluation Weightage & Short listing * Pitch is led by Entrepreneur; Agreement (1 VP & 1 IM) Process Supported by IM Evaluation Final Outcomes: (Feasibility Study) Disbursement &  Succeed Recommendation Monitoring  Survive * Requires RFC & Investment Summary Process to Reject or Meeting  Fail Accept © Copyright 2010 Cradle Fund Sdn Bhd
  11. 11. Structure and process flow 90 days* 12 - 18 months 12 months Application Milestone 1 Milestone 2 Milestone 3 Ideas Bank Performance Performance * Subject to * Subject to *10% misc provision per *10% misc provision per *10% misc provision per drawdown drawdown drawdown * Upon receiving Deliverables  Exit & applicants’  Business Plan Refinement  Business Plan – if  Business Plan – if Fundraising Completion Graduation first reply to Approval the ‘Request  Product Refinement applicable applicable Strategies via For  Ready Product  Sales Build-Up  Sales Build-Up local, regional Clarification’.  Infrastructure  Achieve 1st Sales  Support of Final and  Strategy Development (via LOI, etc) requirements and/or international  Developing Market Traction  Customisation of Working Capital Venture & Expansion Product according to Capitalists Development  Sales & Marketing Strategy Sales Contract and/or Phase market Example Control Measures for Funding Allocations: a) Direct Disbursement to Suppliers b) Disbursement of Expenditures Claims mapped against Milestone Achievements; according to business needs c) Milestones act as Tracking Stage-gates Pre-Investment Due Diligence Costs: a) Upon Investment Decision, Cost of External Financial, Technical & Legal Validation would be absorbed by the CIP 500 Grant upon Success Basis © Copyright 2010 Cradle Fund Sdn Bhd
  12. 12. Additional requirements • Resumes of key managers • Pictures and/or graphic architecture, blueprints of products and/or services • Professional references • Market studies (if any) • Pertinent published information (if any) • Patents (if any) • Beta customers list (if any) • Potential pipeline deals (if any) • Etc NOTE: More details available at CIP 500 application form ( © Copyright 2010 Cradle Fund Sdn Bhd
  13. 13. Allowable expenditure • Product refinement, market testing, and customised packaging • Marketing expenses (inc. collaterals, travel where necessary, etc) • IP search & registration as well as Market research & feasibility studies • Pay package of employees (up to 30% of total funding amount only) • Rental and utilities • Purchase of hardware and software (min. 3 quotations)  Disbursement to Supplier needs Delivery Order, Purchase Order & Invoice  Disbursement to be gradual – a) Deposit, b) Remaining Payment  Where there is no invoice avail, on case-to-case basis, allow mobilisation/forward funding with ceiling • Training (if necessary) • Business Plan Refinement • Technology licensing/acquisition (if necessary) • Mentoring/coaching expenses & Professional Fees (Outsourcing Fees, etc) • Production related expenses (if necessary) • Contingency Expenses – Insurance, Tax, Duties, Licensing, etc © Copyright 2010 Cradle Fund Sdn Bhd
  14. 14. How do I apply? Online Application Applications only accepted online! • No Mail-in or Email • No Attachments Helpline: • Email: • Cust. Relations: +603.21664730 © Copyright 2010 Cradle Fund Sdn Bhd
  15. 15. THANK YOU +603-2166.4730 © Copyright 2010 Cradle Fund Sdn Bhd