KUALA LUMPUR, 22 September 2015: Cradle Fund Sdn Bhd, which had raised RM107mil in seed capital fundings, plans to use 70% of the money it manages to take up equity stakes in promising start-up firms.
Only 30% of its funds will be allocated as direct grants.
“The Government intends to gradually reduce grant funding over the next five years. What we need to see is more equity investments and private funding. This is what Cradle is doing now – we are evolving our grant funding model to an equity investment model as well as raining co-investments so that the pipeline of investments stay healthy in spite of the Government cutting back on its approval,” its chief executive officer Nazrin Hassan told StarBiz at its signing ceremony with four new co-investment partners for Malaysian technology start-ups.
The co-investment initiatives by the agency under the Finance Ministry were meant to reduce dependency on government grants in funding the early stages of start-ups.
Co-investing would also provide Malaysian technopreneurs with a stronger support by having private partners help them with their ventures in the global market, he said.
The four equity co-investment partners – Senior Marketing System Asia Pte Ltd (SMS Asia), East Ventures SEA 2, MOC Capital Bhd (MOCC) and Qeerad Holdings – have each agreed to participate in the funding of Malaysian technology-based start-ups in a one-to-one equity co-investment exercise with Cradle, investing up to RM500,000.
Currently, Cradle, which also signed a grant co-investment partnership with Singapore-based seed funder Golden Gate Ventures last June, has nine other co-investment partners, so the additional four will bring the total to 13.
They join existing co-investment partners such as Fatfish Ventures Sdn Bhd, OSK Ventures International Bhd and CoEnt Ventures Partners Ltd.
Collectively, Cradle and the four new partners bring in RM50.5mil to the table, whereas RM56.7mil was raised in the previous three batches of partners.
Together with Cradle’s matching contributions, the partners have to date raised a total of RM107.2mil to support Malaysian technology start-ups.
“We aim to forge partnerships with 21 investors – locally and globally by 2017,” Nazrin said.
Cradle had funded some 600 ideas since 2003 and more than 120 commercialisations from its utilisation funding, he said.