The reality for Malaysian startups is that the domestic market is too small. Therefore, local startups need to look outside the country to take their business forward, according to ecosystem builders.
“For aspiring founders in Malaysia, they need to try and learn as much as possible from friends around the region. If not, it can be hard to think out of the box,” said Jeffrey Paine, managing partner at Golden Gate Ventures, to an audience of investors and startups on Wednesday at the BaseConference 2020 in Iskandar, Malaysia.
Speaking at a panel session titled “The Reality & Truth of Fundraising In Malaysia,” Paine further advised Malaysian entrepreneurs to “listen more to people outside of your own country,” as many entrepreneurs usually don’t know what’s going on outside of Malaysia.
Paine’s fellow panelist Amiruddin Abdul Shukor, who is an executive director of finance and corporate services at the Malaysian Global Innovation & Creativity Centre, advised Malaysian entrepreneurs to avoid relying on grants. “If you have one, it is a bonus; but try hard to ensure you can sustain the business for the longest time ever,” he said.
Amiruddin added that investors are keen on sustainable businesses, and emphasized that startup founders need to be very knowledgeable in their area and have a wide network of contacts.
Azman Hood, vice president of investment at Cradle Fund, has a different point of view. “I think getting a grant, venture capital (VC), or angel investment will discipline you. Having outside money will give you a new viewpoint and force you to have a longer-term plan,” he said.
According to Paine, 99% of startups should not take VC money. “The number one problem is that 99% think that they’re the 1%. Investors also think the same way. They overthink and miss all the targets, and after four years, angels are afraid to invest again because they have been burned,” he said.
On the challenges facing the Malaysian startup ecosystem, Cradle’s Azman said that the small domestic market can be seen as a benefit and a constraint at the same time. It can be good to prove an idea and get traction, but however, companies must have extensive data of surrounding markets and a regional strategy, he added.
“A lot of the money is in Singapore, so rather than being too sentimental, have a strategy to set up offices in Singapore and Indonesia. It is a small market, so if you want to be a sustainable business, you need to move out,” he said, citing the example of Grab, which Cradle had once funded.
Paine urged startup founders to up their game by equipping the local talent pool with the right knowledge. “Your idea is not a Malaysian idea. Malaysian entrepreneurs tend to be more streetwise than Singaporeans—try to figure out who the players are in other countries before you even start your company. Go regional, if possible,” he added.
“Be a bit greedy, go big. Startups are hard, so aim higher,” Paine concluded.
KrASIA is a media partner.
