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Malaysia's Cradle Fund ventures into equity investment market

AvantiKumar | Oct. 25, 2013
National seed funding agency for startups sets up a new fund worth more than US$19 million as the result of a public-private partnership with e-government services provider My EG Services.

Signing Ceremony Between Cradle Fund and MYEG modified 

Photo  - (Front) Cradle Fund Sdn Bhd Group CEO Nazrin Hassan (on left) shakes hands with MY E.G. Services Bhd Executive Chairperson Y. Bhg Dato' Dr Norraesah Hj Mohamad after signing the MOU to launch Cradle Seed Ventures. The ceremony was witnessed by (standing behind from left) Cradle Fund Chairman Y. Bhg Dato' Sallehudin Othman; Malaysian Investment Development Authority (MIDA) Deputy CEO  Y. Bhg Dato' Azman Mahmud,; and a representative from MyEG -  Dato' P.S. Jaya.

 

Following a memorandum of agreement signed with e-government services provider My EG Services (MyEG), Malaysian national seed funding agency Cradle Fund is expanding its funding services into early stage venture capital with the proposed establishment of Cradle Seed Ventures Fund 1 worth RM60 million (US$19.2 million).

Under the public-private partnership agreement, Cradle will invest RM40 million (US$12.68 million), while the MSC (Multimedia Supercorridor) Malaysia status firm MyEG will add RM20 million (US$6.34 million) into the fund that will be disbursed through a privately owned company, Cradle Seed Ventures Fund 1 (CF 1), said the partners.

In addition, Cradle intends to form a private limited company, Cradle Seed Ventures (CSV), which will be responsible for mining deal flows and selecting recipients for CF1. said Cradle group chief executive officer Nazrin Hassan, who added this new company will also prepare Cradle to enter the equity investment market.

"With this fund, we can provide an alternative to local technology startups and stem the outflow of early stage deals to Singapore," Nazrin said. "Cradle has been successful in providing funding via grants and this would be a natural evolution for us to enter into the venture capital space by providing early growth stage funding."

CSV should help Cradle become sustainable in its role to support technology startups, he added. CF1 will be disbursed in amounts of between RM1 million (US$320,000) and RM3 million (US$950,000) to support high potential technology startups particularly in the Information Communications Technology (ICT), telecommunications and engineering fields within the specified National Key Economic Areas (NKEA), namely electrical and electronics, healthcare, business services, financial services, wholesale and retail; and medical.

He said up to 30 percent of the fund can also be used to fund overseas startups with the intention of bringing talent and technology knowledge back to Malaysia. "With this, we hope to also strengthen Malaysia's pool of knowledge workers that will enable Malaysia to be competitive in terms of innovation advancement in Southeast Asia."

A good partner in MyEG

Nazrin said MyEG and Cradle shared the same intention in strengthening the early stage ecosystem. "We also felt that MyEG has the experience to add value to CF1. In its 13 years experience of enabling the delivery of e-services to Malaysians in a convenient yet secure manner, we believe MyEG can better work with us to engage both the Government and public sector on how to further improve the development of Malaysian technology startups," he said, adding that Cradle has found a good partner in MyEG.

"We have been collaborating to support startups for a while now, so I think it is only logical that we partner up again to help startups but this time on a larger scale," said Nazrin, as two organisations have been funding finalists from the business pitch television show, Make the Pitch, since 2011. Among the companies they have collaborated to fund are Fashionvalet, I-Money and Piktochart.

MyEG executive chairperson Dato' Dr Norraesah Hj Mohamad said MyEG and Cradle have opened "a new door for early stage technopreneurs who are seeking funds and support to bring up their products and businesses."
 
"Malaysian technopreneurs today have limited avenues to raise early stage capital. Hopefully we can provide an additional avenue for them and help them compete more effectively with their regional counterparts," said Norraesah.

Cradle Fund, which is an agency under Malaysia's Ministry of Finance, manages the Cradle Investment Programme as well as the Coach and Grow, a market driven programme to train entrepreneurs.

 

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