Malaysia:
The Future of Venture Capital
Malaysia Venture Capital Roadmap 2024-2030
Malaysia’s Venture Capital sector is poised to play a crucial role in shaping the nation’s Future. The Malaysia Venture Capital Roadmap (MVCR) for 2024-2030 positions Malaysia as an emerging venture capital hub in Southeast Asia with the vision of making it a preferred destination for VC within the region.
The roadmap aims to enhance the VC ecosystem through three Strategic Pillars, three Key Strategies, eleven Interventions and four Targets. The strategic framework and implementation strategies are not merely plans but pivotal steps towards a transformative future for Malaysia’s Venture Capital ecosystem.
The Malaysian VC landscape
Malaysia’s VC industry, despite its relative infancy has seen a remarkable uptick charting a 44% compound annual growth rate in total funding from 2018 to 2022. This growth signals a burgeoning ecosystem ripe with opportunities for scalable startups and discerning investors. The data presents a clear signal of Malaysia’s strengthening position in the regional VC market.
While Malaysia’s VC industry has experienced robust growth, it remains in a stage of catching up to the more mature VC ecosystems of its regional counterpart such as Singapore and South Korea. The data from 2018 to 2022 showcases not only the strides Malaysia has taken in nurturing its VC landscape but also the potential for further development to reach the levels of established VC hubs.
Total Funding Value, Deal Count and Venture Penetration Rate of SEA Countries 2018 to 2022 (USD mil)
Challenges facing Malaysia’s VC ecosystem
The key challenges within the VC ecosystem are centered around three strategic pillars. Each step forward in addressing these challenges not only impacts financial success but also highlights the need for continuous learning, flexibility, and collaborative progress within the dynamic economic landscape of Malaysia.
Key challenges within Malaysia’s VC ecosystem can be grouped into 3 strategic pillars:
The allocation of available funding within the ecosystem can be optimised for greater efficiency.
The current regulatory landscape can be further enhanced, to facilitate a more collaborative environment for VC operations.
Lack of exposure and depth of talent within Malaysia’s VC professional pool, given the relatively nascent VC industry.
Vision
Malaysia:
A Preferred Regional Venture Capital Hub
Cohesive Public and Private Funding Initiatives
Government resources to be deployed efficiently to drive an increase in private sector funding, in a commercial and sustainable manner.
Talent
An increasing pipeline of domestic and international high skilled fund managers.
Robust Market Environment
Regionally connected VC ecosystem which is supported by private and corporate VCs, supporting the creation of a vibrant startup ecosystem and invest in local startups.
Policies & Regulations
VC ecosystem and investment friendly policies, making it easier for foreign players to set up, operate and invest in local startups.
Mission
- Unlocking capital for innovation
- A supportive regulatory framework for growth
- Building capacity to accelerate ecosystem development
Targets
- Venture penetration rate to increase from 0.19% in 2022 to a range between 0.25%-0.35% by 2030
- Regulatory framework that supports funding at its most critical phases
- Clarity, consistency and cohesiveness of the regulatory framework across the funding lifecycle
- Increase in number of VCs in Malaysia between 15%-25%, from 116 in 2022, along with an increase in VC professionals (local and foreign)
Key Strategies and Interventions
Building from the vision to position Malaysia as a preferred regional venture capital (VC) hub by 2030, there are three key strategies and 11 interventions necessary to bring this vision to fruition. This transition from a broad, aspirational goal to concrete, actionable steps is essential in transforming Malaysia into a nexus for VC activity in the region.
These strategies and interventions are designed to address the existing challenges head-on, laying down a systematic framework that will streamline business processes, increase funding avenues, and nurture a rich pool of VC talent.
This will underscore Malaysia’s commitment in shaping the future of VC in the region.
3 Key Strategies
Improving Ease of Doing Business
- Smoothening cross-border capital flow
- A centralised platform for VCs, that facilitates VC management, monitoring and information provision
- A conducive regulatory structure for VCs; harmonising onshore/ offshore legal structures
- Alignment of onshore/ offshore tax incentives
- Increasing VC exit options
Improving Funding Acessibility
- More strategic & efficient allocation of government funds
- Enhance attractiveness of government’s matching fund-of-funds scheme
- Increase participation of GLICs, GLCs and corporates in venture investments
Elevating Malaysia’s Venture Capital Talent Pool
- Seeding of new fund managers, promoting VC-focused educational programmes and industry immersion for new talents
- Enhanced visa schemes to facilitate talent attraction
- Facilitate the development and establishment of VC support functions
11 Interventions
- Smoothening cross-border capital flow
- A centralised platform for VCs, that facilitates VC management, monitoring and information provision
- A conducive regulatory structure for VCs; harmonising onshore/ offshore legal structures
- Alignment of onshore/ offshore tax incentives
- Increasing VC exit options
- More strategic & efficient allocation of government funds
- Enhance attractiveness of government’s matching fund-of-funds scheme
- Increase participation of GLICs, GLCs and corporates in venture investments
- Seeding of new fund managers, promoting VC-focused educational programmes and industry immersion for new talents
- Enhanced visa schemes to facilitate talent attraction
- Facilitate the development and establishment of VC support functions
Malaysia Venture Capital Roadmap 2024-2030
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