It’s been approximately six months since the COVID-19 pandemic started. Back then, in Malaysia, Prime Minister Muhyiddin Yassin issued the Movement Control Order (MCO) in an official speech that would greatly leave a dent in the local startup ecosystem.
During the MCO, many startups have learnt to adapt to new setups such as the work-from-home scheme, which enables them to balance their safety and business operations. For Malaysian startups working in the logistics or travel sector, which are directly impacted by the situation, they even found themselves having to adapt their business strategy.
Back then, it seemed like the startups had found the band-aid solution for the looming crisis. However, they quickly burned through their runway to maintain business operations as their revenue got affected by halted projects, a decline in consumer confidence, and even outstanding long term office rental and employee salaries.
In order for these startups to sustain themselves today and potentially thrive post-pandemic, they need funding, resources and cost-effective measures.
Assistance in fundraising needs
According to The Malaysia Digital Economy Corporation (MDEC), funding was a major issue for many startups during the pandemic. The organisation was also mindful that many entrepreneurs may not be successful in obtaining bank loans, government grants and other financial aids. There are reasons why this can happen, but generally, it is due to their inability to meet the requirements.
Also Read: Malaysia’s JurisTech acquires financial products comparison platform iMoney
MDEC’s Global Growth Acceleration division had then come up with several initiatives to assist with the startup’s fundraising needs. The initiatives range from partnering with local equity crowdfunding (ECF) and P2P platforms, M&A workshops, startup-investor business matching with KK-Fund and collaborating with Malaysia Debt Venture Berhad (MDV) to facilitate MYR100 million (US$23 million) funds to address startups cash flow issues by the Ministry of Science, Technology and Innovation.
These are some of the many opportunities for startups to consider to help sustain their business.
The pandemic has also affected established startups, especially in continuing their business operations as they were faced with difficulties such as paying high rental costs and long-term contract durations. With these startups looking to have a flexible and cost-effective option for an office, MDEC has partnered with the Malaysia Digital Hub operators to provide startups with an affordable “Digital Hub Pass” to assist them with coworking spaces and resources to drive growth.
In total, there are seven certified Malaysian Digital Hubs supporting over 400 startups and through these hubs, startups can access vital assistance such as mentorship, funding opportunities, accelerator programmes, corporate partnership and other business and digital development programmes. These are all possible with partners such as Google, Amazon, Microsoft, Cradle, Gobi Partners.
What is next for the Malaysian startup ecosystem?
The Malaysian startup ecosystem certainly was not alone in facing this pandemic. Regionally, in Southeast Asia, startup funding throughout the COVID-19 outbreak fell 13 per cent to US$5.6 billion in H1 2020.
But this is not the first time the world has gone through a crisis. Throughout history, we have even seen in various markets how the startup ecosystem actually experienced massive growth right after a crisis of such level. An example given by CB Insights is of the Zika pandemic several years ago, where the Latin American startup ecosystem experienced growth as soon as the disease was contained.
For the Malaysian startup ecosystem, its prospect of survival is strengthened by the fact that Kuala Lumpur has recently been ranked as the 11th emerging startup ecosystem and fourth emerging ecosystem in Asia Pacific in the Global Startup Ecosystem Report 2020 (GSER2020) by Startup Genome.
We will continue to remain hopeful and optimistic about the Malaysian startup ecosystem.
—
Image Credit: Ishan @seefromthesky on Unsplash
The post Out of the woods: Why the Malaysian startup ecosystem will survive this pandemic appeared first on e27.