PETALING JAYA: Penjana Kapital Sdn Bhd in collaboration with Permodalan Negeri Selangor Bhd (PNSB) and Selangor Information Technology and Digital Economy Corporation (Sidec) have signed a memorandum of understanding (MoU) to establish the first corporate venture capital (VC) initiative in Malaysia, Dana Penjana Selangor, which is supported by the federal government and the Selangor state government.
In a joint statement, it said that strategic partnerships and initiatives such as fund-of-fund programmes have proven effective in reducing the risk of investments in startups and promoting private capital flows.
Penjana Kapital's VC fund-of-funds programme has been successful at the federal level, and there is hope that other states may adopt the approach. These programmes pool together capital from various sources to create dedicated funds that invest in a portfolio of venture capital funds, providing diversification and risk management.
Dana Penjana Selangor demonstrates the commitment of the Selangor state government and Federal government to foster a thriving startup ecosystem. Through this initiative, corporates and other potential limited partners can gain exposure to a diversified portfolio of high potential startups, managed by experienced venture capital fund managers.
Overall, the establishment of Dana Penjana Selangor represents a cooperative effort to maximise the startup ecosystem's potential and build a vibrant, innovation-driven economy in Selangor and Malaysia as a whole.
Deputy finance minister Steven Sim Chee Keong expressed that through the collaboration, the creation of the federal-state partnership mechanism for venture capital investment is able to benefit local start-ups.
“This federal-state partnership for coinvestment should be strengthened to achieve at-scale pooled fund. I hope this collaborative endeavour will crowd in private capital to invest alongside government via venture capital funds and stimulate growth of alternative fundraising in Malaysia,” he said in a statement today.
Meanwhile, Securities Commission chairman Datuk Seri Dr Awang Adek that given the importance of small and medium-sized enterprises (SME) to the economy, it is crucial to address the supply demand gap for financing these businesses.
“On the supply side, SME have difficulty in accessing sustainable funding for their business. Traditional bank loans may also have limitations in meeting their financing needs.
“On the demand side, SME, particularly startups, often face higher risks and lower survival rates than larger firms. This leads to a pattern of high entry and exit rates across various economic sectors, which causes financial institutions to view them as riskier loan prospects. This dynamic further hinders SME’s access to financing,” he said.
In addition, the initiative signals the importance of venture capital and private equity (PE) as an essential part of the funding ecosystem in the Malaysian capital market. Over the years, the Securities Commission (SC) has enabled a comprehensive “funding escalator”, offering various options for startups to raise funding across the growth lifecycle.
These include crowdfunding platforms such as equity crowdfunding (ECF) and peer-to-peer financing platforms, as well as facilitative frameworks for VC and PE managers. The SC’s framework remains facilitative at various segments of the business growth cycle of a company in their journey to grow and scale up.
To that end, the SC has been working closely with industry stakeholders and various government agencies in Penang, Selangor and several other states to create a vibrant and sustainable alternative financing ecosystem.
“SC is committed to facilitate and support initiatives that develop the startup ecosystem in Malaysia. We recognise that startups are a vital source of innovation, job creation, and economic growth. By fostering a multi-stakeholder approach and encouraging public-private partnerships and co-investment models in startups, we can unlock the potential of Malaysia's startup ecosystem and pave the way for a thriving innovation-driven economy,” said Awang.
