The Malaysian startup scene is growing at an intense pace according to 2016 statistics. Investments were up to US$1.45 billion (MYR6.5 billion) in 2016, according to the Malaysia’s Security Commission Annual Report 2016. This is almost double the investment in 2006. Though not exponential growth, this does represent an improving startup scene.
This growth is further shown by the increase in the VC and PE activity in the country from 91 registered VC and PE outfits in 2006 to 109 in 2016.
Many things can be attributed to the growth over the last decade, not least being attempts by the Malaysian government to offer incentives for foreign companies to base their operations in Malaysia. This is also supported by organisations dedicated to improving the local startup scene, such as MaGic, Cradle, MBAN, MDEC, PlatCom, and many others.
What do start-ups say
However, to get a clearer sense of how the startup scene in Malaysia is faring, it is important to look at the startups on-ground and get their input and experience. We spoke to two entrepreneurs in Malaysia to get a better sense of the scene from a first person’s perspective.
The first entrepreneur is David Wong, the Malaysian CEO and Founder of Deemples, a mobile service for golfers in Southeast Asia. Headquartered in Malaysia, David has expanded from Malaysia to Singapore, Brunei, and the Indonesian islands.
We also spoke to entrepreneur Ginny Truc To, Co-Founder and CEO of Shoe Mo, a shoe cleaning and customisation service based in Kuala Lumpur. Her company also recently launched an eCommerce service selling shoe hygiene products in Malaysia and Singapore.
1) Do you believe the startup scene in Malaysia is doing well?
David (D): I’ve definitely seen more people want to start some business themselves. The more successful ones seem to start offline businesses such as F&B companies or sell stuff online via eCommerce platforms or using their IG accounts. Only a few seem to want to get into tech IP since it’s much harder to execute and therefore much riskier.
Ginny (G): Yes we do. Malaysia is attracting more startups in recent years, which I think is partly due to government’s effort to endorse and support new business.
2) Have you used the available resources from governments and if so, what resources or funds have you used?
D: We’ve applied for the Cradle CIP300 and Deemples has been shortlisted, so we’re waiting to hear from them. Also applied for the AmBank BizRACE fund, and will hear from them Dec 15. However, I think the best option would be to go straight to potential investors and pitch the hell of out it.
G: We haven’t applied for any because I’m a foreigner and Shoe Mo doesn’t fall into tech category. The government has some grants for Malay owned business and MSC status for tech-related companies whereas you can employ foreign workers and have up to 10 years tax exemption.
3) What has the been the biggest drawback of the Malaysian startup ecosystem?
D: There’s only a drawback if you think there is. I’d say just ignore the cons and work on the pros.
G: It’s the same problem that affects most of the region. The hiring of great talent continues to be a challenge. Even though the government has introduced lots of initiatives and programmes to support startups, hiring remains extremely hard and cost of labour is high.
4) Do you plan to expand anytime soon and why?
D: Yes. Malaysia and Singapore are good testing grounds, but for a tech business that is possible to scale across multi-markets, why stick just to two markets?
G: Yes, we are expanding to more outlets across Malaysia and more products in our portfolio. We’ll be considering regional expansion shortly, but is still a lot of opportunity locally.
Start-ups in Malaysia are in a better position to succeed more than ever before, but there is room for improvement. There is a lot of positive sentiment and optimism in the industry, but challenges still remain.
For many companies, expansion continues to be key to success. If the government is looking to promote and build upon the existing Malaysian startup ecosystem, it is crucial that they continue to support entrepreneurs and encourage global expansion.