For grassroot entrepreneurs without a wealthy family background, funding is always one of the biggest challenges apart from the right product and talents. Based on my 10 years of entrepreneurship experience, I have compiled the following list which could be helpful for new startup entrepreneurs looking for funding:
- Government grants, such as Cradle: Cradle is offering 2 types of grants CIP Spark (RM150,000) and CIP Sprint (RM600,000) – https://cradle.com.my/grants/cip-spark/. We have some clients successfully obtained the grants, such as Valuing IP and Next Property.
- Equity crowdfunding (ECF): Basically offering your shares to investors who invest in your company, it could start from a small cheque size, say RM1,000. There are 10 approved ECFs in Malaysia, pitchIN, Leet Capital and MyStartr are among the more popular platforms. (https://www.sc.com.my/development/digital/digital-initiatives) Thanks to MyCIF, government will also co-invest with the investment ratio of 1:4 (https://www.sc.com.my/mycif) pitchIN is also launching the first secondary market for ECF in Malaysia, which will potentially increase the liquidity of the ECF shares and create more values for ECF investment
- Initial Exchange Offering (IEO): Unlike ECF is giving shares, IEO is giving the investors cryptocurrency/Blockchain tokens based on the proposed tokenomics. There are only 2 approved IEO operators in Malaysia – pitchIN and KapitalDX. This fundraising is only applicable if you have some innovative ideas can be achieved via Blockchain technology (https://www.sc.com.my/development/digital/digital-initiatives) Like ECF, IEO will also have its secondary market where allows users to trade the tokens after IEO, which are likely to happen with the registered Digital Asset Exchange. (DAX)
- Peer-to-Peer Financing: P2P financing is giving the investors interests based on an agreed repayment period. There are 11 approved P2P operators in Malaysia. https://www.sc.com.my/development/digital/digital-initiatives With the new Mid-Tier Companies (MTC) guidelines, It is also suitable for a more mature company as a fundraising channel. https://www.bernama.com/en/business/news.php?id=2133728
- Malaysian Business Angel Network (MBAN): Business Angels are affluent individuals who have extra money to invest in startups. The registered Angel is entitled to Angel Tax Incentive for investment of startup: https://www.mban.com.my/
- VC: There are different VCs in Malaysia, depends on the stage of the startups, and note that some has mandate/preferences to invest in specific portfolio only, such as SaaS, healthtech, AI, Blockchain and so on https://www.mystartup.gov.my/funding
- Private Equities: These are mainly for late stage companies, active PEs in Malaysia are Creador, Navis Capital, KV Asia Capital.
- MAVCAP: They have different programs based on the stage of the companies (https://www.mavcap.com/)
- Saving: Before you ask money from others, it is always good to show that you are serious by investing your own money.
- Friends and Family: Before you pitch for money from outsiders, it might be good for you to pitch to your friends and family if you can convince them with your business proposals
Happy fundraising everyone! If you are a tech startup/software house fundraising now, feel free to email us at [email protected], we have Agmo Capital which is an investment arm focusing in startups investment/M&A.
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