Private investment’s bridge funding gap in tandem with government grant reduction
Cradle Fund Sdn Bhd (Cradle)’s co-organisation of the Asian Business Angel Forum (ABAF) 2012 is its biggest milestone yet, in Cradle’s on-going mission to fulfil its mandate to grow the angel investment community in Malaysia.
“Our continued effort to promote more angel investments aims to generate more funds to accelerate growth, increase the number of technology start-ups in Malaysia for a more vibrant technopreneur landscape, and drive Malaysia’s economic development towards a high-income knowledge-based economy. In the longer term, this is also in line with Cradle’s plans for a venture capital arm as angel investors are ideal co-investors for bridging the gap between early stage grants and later stage grants and later stage venture capital investment,” said Nazrin Hassan, Chief Executive Officer of Cradle Fund Sdn Bhd, a non-profit agency under the Ministry of Finance.
“The organisation of ABAF 2012 is in accordance with the Government’s aim to spur more private individual investment into early stage companies, as well as the Government’s intent to gradually reduce grants to a minimum by 2015. Beyond organising ABAF 2012, Cradle is working full-time with the Virtuous Investment Circle (VIC) to encourage private investments and to ensure that Malaysian start-ups have a substitute funding avenue that will allow them to grow. In particular, Cradle has been proposing for the Government to introduce tax incentives for angel investors, to help spur private investments by individuals, within the National Innovation Movement Year 2012. This will be a key step in the right direction and it will greatly help in reducing reliance on Government funding within the medium to long term,” Nazrin added.
“Leading technopreneur ecosystems around the world such as Silicon Valley have shown us that private investments are key to increasing the number of innovative start-ups, which are an important funnel to build more global and regional companies. However, in general, entrepreneurs have it tough in Malaysia – 21% of business failures in Malaysia are due to difficulties in securing additional financing. This situation is a result of the lack of private funding alternatives in the early stage of a company’s lifecycle,” Nazrin further explained.
Last year, during the tabling of the 2012 Budget, Prime Minister Datuk Seri Najib Tun Razak announced that Cradle, which manages the Cradle Investment Programme and the Coach and Grow Programme under the Ministry of Finance’s purview, would be co-organising ABAF 2012 with local angel investment group VIC, while the Malaysian government will serve as host and primary sponsor.
ABAF 2012 has recently been announced as the biggest edition to date, featuring 30 yop speakers including renowned angel investors, business leaders, venture capitalist and start-up specialists, as well as 500 delegates comprising top entrepreneurs and other angel investors.
ABAF aims to raise awareness of business angels and educate potential individual investors in early stage private equity investment, beside encouraging cross-border investments and lobbying for conducive policies to encourage angel investments.