Abut 58% of companies and 70% of investment funds in Malaysia met or exceeded their goals. This shows that business angels are successful, says Sivapalan (Pic by Hafzi Mohamed/TMR)

June 8, 2016 – Angel investment practices are emerging to become a significant alternative for local businesses to seek financial assistance, says the Malaysian Business Angel Network (MBAN).

Its president Dr. Sivapalan Vivekarajah said angel investments are becoming more common among businesses based on the recent MBAN's study involving 20 angel investors.

"About 58% of companies and 70% of investment funds in Malaysia met or exceeded their goals. This shows that business angels are successful and they can be a good alternative as an investment instrument," Sivapalan said yesterday.

The study, entitled "The Emerging Business Angel Market in Malaysia: A State of the Nation' Report 2016", was conducted last year.

Despite the growth in Malaysia, other ASEAN countries like the Philippines and Thailand both recorded 79% of their investment funds met or exceeded the goals, while Vietnam hit more than 80%.

"These countries have practised angel investment for the past 10 to 15 years compared to us (Malaysia) which has just done it about five years," he said.

The study also found that business angel investment is still at a very young stage and is often misunderstood due to the lack of visibility. 

"Usually angels would not publicise their contributions. Angel investors invest their own money as a way of contributing back to the society as well as helping the emerging young entrepreneurs," Sivapalan said adding these business angels are highly educated and they effectively co-invest primarily in seed and early-stage companies. 

Sivapalan said MBAN has about 120 angels members, and is looking to increase to 200 members by the end of 2017.

He also said more individuals and companies are interested to attend MBAN's pitching sessions and in the last 12 months (June 2015 to May 2016), about 93 people and companies pitched for angels' assistance.

Presently, bout 95% of fund pitching involves technology-related activities.

"Currently, only individual investors in the technology segment are entitled for tax incentives. This is because the government wants to nurture more technology-advanced companies," Sivapalan said.

However, he noted that MBAN is in talks with related authorities to widen the tax incentives scope as to encourage more participation in both technology and non-technology segments.

MBAN is responsible for the accreditation of individual angel investors and angel investors clubs, creating awareness and training for angel investors, as well as angel investment statistics in Malaysia.

It is a body that functions like a trade organisations, driving regional and international linkages between angel investors form different countries. Cradle Fund Sdn Bhd, through its Angel Tax Incentive Office, acts as the secretariat for MBAN.

 

Source from The Malaysian Reserve