As a startup lawyer, we regularly get feedback from overseas clients that navigating the different government entities and accessing the support system can feel overwhelming considering the vast number of entities which also raises questions about potential overlap in duties.
This article looks at several government agencies and their respective functions. We hope that they may be useful for you in pinpointing the correct entity when you need to access support such as funding or other assistance.
Ministry of Science, Technology and Innovation (MOSTI)
MOSTI acts as the central authority, spearheading national policy and initiatives that will help startups thrive in the country.
The latest national agenda is the Malaysia Startup Ecosystem Roadmap (SUPER) 2021–2030, which aims to make Malaysia a preferred startup ecosystem in the region for the next decade. The top-down approach usually entails guidance for other agencies to comply and follow from time to time.
Cradle Fund Sdn Bhd (Cradle)
As a funding agency, Cradle serves as a critical source of capital for pre-seed or seed startups.
In the past, Cradle has experimented with different funding products, ranging from cash grants to equity financing using redeemable preference shares. Presently, Cradle offers 2 funding products, namely CIP Spark, which funds up to RM150,000 (US$32,250) and CIP Sprint, which is a form of conditional convertible grant of up to RM600,000 (US$129,000) for commercialisation initiatives.
Additionally, Cradle is in charge of MYStartup portal, a new centralised platform offering valuable information known as the ‘Single Window Initiative’. MYStartup portal is aimed toward anyone from aspiring founders to VCs new to the startup scene in Malaysia seeking resources, and connections to navigate Malaysia’s startup ecosystem. For instance, Cradle regularly organises events such as startup accelerator and investor matching events.
Malaysia Digital Economy Corporation (MDEC)
Founded in 1996, MDEC was formed as the lead agency to implement the MSC Malaysia initiative. takes the lead in propelling the growth of the digital economy in Malaysia.
As an agency, the entity also conducts activities ranging from talent development and market access to activities designed to get people involved in the digital economy.
As a foreign founder, MDEC plays key functions in helping foreign companies, such as obtaining work visas, especially for technopreneurs who want to start a company or move their existing company to Malaysia. For a company, MDEC also assists in the Malaysia Digital Status (formerly known as MSC Status), which usually entails specific tax incentives for its successful recipients.
Also Read: Gear up and grow: Key regulatory updates for Malaysian startups in H1 2024
Malaysia Venture Capital Management Berhad (MAVCAP)
This government-owned VC firm provides equity financing to high-growth Malaysian companies, primarily focusing on later-stage startups (Series A onwards). As the government’s VC, MAVCAP may invest directly or via a “fund-of-funds” structure by investing in other leading VCs such as Gobi Partners and 500 Global.
MAVCAP also deploy capital via the “fund of funds” structure, especially to first-time fund managers and regularly comes in as an anchor investor, which seeks to further grow the local venture capital ecosystem.
Malaysian Research Accelerator for Technology & Innovation (MRANTI)
MRANTI is a newly merged entity of two former government entities, Technology Park Malaysia (TPM Corp) and the Malaysian Global Innovation and Creativity Center (MaGIC). MRANTI is Malaysia’s central research commercialisation agency, helping high-technology adoption in the country.
MRANTI is headquartered at MRANTI Park, an extensive 686 acres in Kuala Lumpur, supporting the growth of smart manufacturing, biotech, agritech, smart city, green tech and enabling technology clusters and offers leasing of the space for interested tenants.
According to a local news article, the entity may be in the midst of another rebranding exercise, so we may likely have to wait if it will also entail any change in the entity’s mandate.
Khazanah Malaysia Berhad
Khazanah, Malaysia’s sovereign wealth fund of Malaysia is expected to play a more active role in the startup space it announced the Dana Impak (‘Impact Fund’) in 2023, an RM6 billion (US$1.29 billion) commitment over five years aiming to address critical national challenges such as healthcare, social mobility, food and energy security, and climate change via capital investment.
Also Read: How can Malaysia leverage AI for growth and not see it as a threat?
At the KL20 Summit 2024 this year, the prime minister announced that Khazanah would provide an initial RM1 billion (US$215 million) allocation via a national “fund of funds” to invest in Malaysian companies.
Therefore, we may likely foresee further announcements in the future on other partnerships, such as VCs that may be selected as the fund manager to be deployed by Khazanah.
To date, the sovereign wealth fund has announced several partnerships with VCs such as Gobi Partners, 500 Global, Antler, and ecosystem players like Plug and Play as investors in view of getting more local startups funded. In addition to the “fund of funds” structure, Khazanah may also invest directly in startups (which may likely involve larger ticket sizes, such as from Series B onwards, such as recently in PolicyStreet, an insurtech startup).
The government also announced that present government’s “fund of funds” funding entities such as MAVCAP and Penjana Kapital will be under Khazanah’s supervision, which indicate bigger role that the fund will be involved in the startup ecosystem.
Malaysian Technology Development Corporation (MTDC)
Since 1992, MTDC has been the first government VC to invest in SMEs. The present funding mandates include early-stage technology companies that are involved in deep-tech or present peripheries that may complement the government’s current initiatives.
The funding structures usually entail equity financing in the investee via Redeemable Convertible Preference Shares (RCPS).
Malaysia Debt Ventures Berhad (MDV)
MDV was established in 2002 to offer more flexible and innovative financing products to develop the technology sector. MDV ordinarily provides venture debt or quasi-debt financing to selected companies that fulfil its funding conditions.
Final thoughts
It is crucial to note that Malaysia has an extensive network of other government agencies that may also be available and relevant. Therefore, it is crucial for you to understand the specific functions and objectives of these government entities so that you can figure out the necessary resources and programmes available from them.
As a founder, it is worthwhile to stay up to date on the latest initiatives launched by these entities so that you can leverage specific insights that may be beneficial to your startup.
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This article was first published on July 26, 2024
The post A startup’s roadmap to success in Malaysia: Key government agencies and their support systems appeared first on e27.