PHOTO - Nazrin Hassan, chief executive officer, Cradle Fund.
Cradle Fund (Cradle), an agency under Malaysian Ministry of Finance, is ramping up its mission of developing the local angel investment community in the second half of 2012. Following the co-organising of the Asian Business Angels Forum 2012 (ABAF 2012) last month, Cradle announced plans for the rest of the year.
"From ABAF 2012, we have shown the world that Malaysia has good quality deal flows suitable for angel investment, which was in fact one of our key objectives for ABAF 2012," said Cradle chief executive officer, Nazrin Hassan. "We also proved that we are on the right track in developing our technopreneur ecosystem, evidenced by the positive feedback we have received regarding the quality of our entrepreneurs."
"Very importantly, we are using the knowledge gained from ABAF to grow the angel investment ecosystem in Malaysia," said Nazrin. "ABAF 2012 provided copious insights into what worked in other markets and how we can adapt this to our own ecosystem, such as angel investment training and tax incentives."
"It has been reported that there are currently about 39,000 millionaires in Malaysia, and many of them have been investing in traditional sectors, so we have much to do to tap this relatively big pool of investors, many of whom believe that start-up technology companies are risky," said Cradle vice president for commercialisation and ventures, Johnathan Lee.
"Education and incentives to invest in early stage companies are among Cradle's priorities for potential angel investors, and we have been talking to many current angel investors, both at ABAF 2012 and beyond, to catalyse the Malaysian Business Angel Network (MBAN), which will be established by Cradle by the end of 2012, as announced by the Minister of Finance. With MBAN, we can have a unique Malaysian brand of angel investment, besides facilitating cross border angel investment exchanges and further encouraging growth by assisting interested parties in kick starting their own angel investment organisations around Malaysia," said Lee.
Cradle was the co-organiser of ABAF 2012 with local angel investment group ViC, while the Malaysian government served as host and primary sponsor. ABAF 2012 was the biggest edition of the event to date, with 30 speakers and more than 400 delegates.
Push for entrepreneurs
"Cradle is honoured by the mandate to set up the MBAN, and we believe such a network, which can represent Malaysia's angel investment platform regionally and internationally, will also support our push for entrepreneurs to plan for regional collaborations and growth," said Nazrin.
"The ASEAN markets are opening up from 2015, and we should be collaborating to benefit from our respective strengths and to eliminate or ameliorate our weaknesses," he said. "Across Asia, a young population is poised to bring on a wave of new innovations.
"Indeed the fact that they come from young innovation ecosystems has spurred them to be more creative in overcoming obstacles, which will serve them well even as they begin to have greater access to funding and assistance," said Nazrin. "In competing with more established ecosystems in the West, there have also been good examples of the value in cross-border deal flows, where angel investments are made in neighbouring countries, spurring market access collaborations and enlarging the collective pie. I believe we should never forget to collaborate, even as we're competing, and I hope the angel investors will be in the forefront in making this happen."
"In the short term, I hope that the Ministry of Finance will approve our tax incentive proposal, which they are currently reviewing," he said. "Our proposal is supported by the Malaysia Venture Capital Development Council (MVCDC) and the Malaysian Industrial Development Authority (MIDA), and we are confident it will boost angel investments in Malaysia."
"The Malaysian government aims to gradually reduce dependence on grants within the next five to seven years and to let the private sector lead the way in early stage technology investments," said Nazrin. "As the Minister of Finance II Dato' Seri Ahmad Husni Hanadzlah said, there was a 19.4 percent growth in private sector investment worth RM94 billion [US$29.75 billion] in 2011, almost double of the 10.2 percent total investment growth in 2011, which augurs well for the target of getting the private sector to contribute 92 percent of our country's total investment needs by 2020."
"Thus within that period, it is crucial for Malaysia to take correct and timely steps in building the angel investment community," he said. "For Cradle, we hope that in five years, at least 50 percent of early stage funding will originate from private investors."
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