Photo - (from left) Johnathan Lee, Vice President - Commercialisation and Ventures, Cradle Fund Sdn Bhd & Pro-tem Committee Member for the Malaysian Business Angel Network (MBAN); Madam Wong Wen Miin, Deputy Under Secretary, Housing Loan Division, Ministry of Finance Malaysia & Board Member of Cradle Fund; Dato' Mohd Sallehuddin Othman, Chairman, Cradle Fund; Dato' Sri Ahmad Husni Hanadzlah, Minister of Finance II Malaysia; Nazrin Hassan, Chief Executive Officer, Cradle Fund; and Shaik Taufik Shaik Yusoff, Senior Vice President, Malaysia Venture Capital Management Bhd & Board Member of Cradle Fund.
Malaysian Ministry of Finance agency Cradle Fund has launched the Malaysian Business Angel Network (MBAN) to encourage the growth of accredited angel investors in Malaysia with education and training support.
The MBAN initiative, which was announced earlier during the April Asian Business Angel Forum 2012, is part of the Malaysian government's aim to build a framework, said Cradle Fund chief executive officer Nazrin Hassan.
"In line with the Prime Minister's aim to empower and to build a supportive, competitive and vibrant entrepreneurial ecosystem in Malaysia to compete on a global scale, Cradle was tasked to undertake the challenge of growing more angel investors and encouraging more angel investment locally. Angel investment has increasingly gained recognition in recent years and has now grown to be a real potential source of capital for young companies," said Nazrin.
"MBAN expands upon previous efforts that Cradle has been involved in, such as ABAF 2012 and the angel investment tax incentive that we've lobbied for in the past few years, which was announced by the Prime Minister for Budget 2013," he said.
"MBAN is an umbrella body that functions like a trade organisation, driving regional and international linkages between angel investors," said Nazrin. "It formalises and coalesces angel investment in Malaysia - currently informal and somewhat unstandardised."
"By bringing together angel investment resources in Malaysia, we hope to recruit more investors and increase investment values to help bridge the early stage investment gap," he said. "MBAN is responsible for the accreditation of individual angel investors and angel investor clubs, creating awareness and training for investors, and monitoring angel investment statistics in Malaysia - as there is no organisation tracking these statistics currently. Via MBAN, we are already building linkages with Singapore, India, Hong Kong, China, Australia and New Zealand and pursuing linkages to networks in the United Kingdom and the United States in the near future."
About 150 angels in Malaysia
Nazrin said Cradle served as the interim secretariat for MBAN. "The network is managed by a pro-tem committee comprising various government agencies and angel groups including the Virtuous Investment Circle (ViC), the Pikom Angels Chapter and the AIPO Business Angels Club, with the aim of having the secretariat run by the private sector in the near future."
"Currently, there are four angel clubs in Malaysia and an estimated 150 angels in Malaysia, with a total investment of close to RM10 million [US$3, 315 million] in the last two years," he said. "Investments have been made in various industries including e-commerce, fashion, communication, services and business-to-business enterprises. In addition to funding, angel investors are mentoring the start-ups, and giving them access to business networks to help them realise their full potential."
"The Minister of Finance II Dato' Seri Ahmad Husni Hanadzlah has previously revealed that there was a 19.4 percent growth in private sector investment worth RM94 billion [US$31.16 billion] in 2011, almost double of the 10.2 percent total investment growth in 2011, a development that augurs well for the target of getting the private sector to contribute 92 percent of our country's total investment needs by 2020," said Nazrin.
"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 while in 10 years, angel investment will grow to such a significant extent that funding for early stage technology companies will be led by the private sector, in line with the Government's plans."
"The MBAN is not looking at only multi-millionaires and billionaires as potential angel investors," said Nazrin. "Anyone with income of RM15,000 [US$4,973] a month is the starting point [For more details, visit the Cradle website]. Research has shown that the risks involved are reasonable when compared to the potential returns. Overall returns as high as 2.6 times in 3.5 years in the USA and 2.2 times over a period of about four years in the United Kingdom have been recorded."
"More importantly, angel investors are making a difference to all Malaysians," he said. "Growth in angel investments will positively impact Malaysian technology development and innovation by generating more funds to accelerate growth, increase the number of technology start-ups in Malaysia for a more vibrant technopreneur landscape, and drive Malaysia's economic development towards a high-income knowledge-based economy. For example, in the USA, it is estimated that companies backed by angel investments have created approximately five percent of new jobs in the USA in a year. Young companies that receive angel funding also have an increased probability of survival and improved growth by 30-50 percent."
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