Orbit Malaysia : Helping Early-Stage Malaysian And Southeast Asian Companies Expand
In early November, Sunway Group, one of Malaysia’s largest conglomerates and venture capita Kejora Capital (Kejora) launched the USD25 million Orbit Malaysia fund, with an aim to actively invest in Series A, industry-leading companies operating in the Fintech, Agritech, E-Commerce, Edutech and Healthtech sectors.
Orbit Malaysia will be led by Raymond Hor, who will be overseeing the fund as Managing Director. In his role, Raymond will leverage on the vast network of seasoned business leaders and multi-sector industry experts from Sunway and Kejora Capital to help early-stage Malaysian and Southeast Asian companies expand their market base through regional expansion.
The fund will also see participation from Malaysia Venture Capital Management Berhad (MAVCAP) as anchor investor and will invest in early-stage startups in Malaysia and Southeast Asia.
We speak to Raymond to find out more on the direction of the fund, his thoughts on the growing startup ecosystem, what’s needed to facilitate the growth of the startup and the Jakarta Express strategic angle.
But before you go on to read our Q&A with Raymond, here are some news and announcements. Till our next issue, be sure to stay safe and stay healthy!
Flood-relief Donations
Malaysians nationwide have been impacted by the floods that have submerged properties and impacted livelihoods. Help is needed to provide the necessary flood relief.
MDEC signs MoU with Beyond4 and Digital Penang
MDEC signed a Memorandum of Understanding (MoU) with Digital Penang and Beyond4 to scale the digital economy ecosystem in Penang.
Regarded as the first official collaboration between the three parties, this partnership will look to promote innovative approaches and collaboration in digital trade, encourage ideas and mentoring, support funding opportunities and address challenges of digitalisation.
For more information on MDEC's efforts to grow the Malaysian startup ecosystem, visit https://mdec.my/gain/
A One-stop Platform For Malaysian Startup Data, Resources, News and Insights.
Muru-ku is a one-stop platform for Malaysian startup data, resources, news and insights. The platform contains more than 660 Malaysian Startups and is a platform filled with resources such as The VC List, Grant List, Startup Events & Problem Statements to solve.
Visit https://muru-ku.com to learn more and submit your startup if it’s not already listed.
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Q&A with Raymond Hor
Sunway Group and Kejora Capital have launched the US$25 million fund together. What role will both institutions play in regard to investing in startups. Are there different key focus areas?
Orbit Malaysia was launched together with Sunway Group, with the Malaysia Venture Capital Management Berhad (MAVCAP) as anchor investor. The funds from Orbit Malaysia will be used to actively invest in Series A, industry-leading companies operating in the FinTech, AgriTech, eCommerce, EdTech and HealthTech sectors in Malaysia and other high-growth Southeast Asian countries.
Through Orbit Malaysia, both Kejora Capital and Sunway Group will bring in different value propositions based on their own ecosystems. Here at Kejora Capital, we have a series of early, growth and late-stage funds that can provide potential subsequent funding and synergy for its existing regional portfolio of companies operating in the FinTech, logistics, eCommerce, and EdTech sectors.
Likewise, Sunway Group will complement this with its twelve business divisions operating in property, healthcare, education, construction, retail, and hospitality. Orbit Malaysia is an extension of Kejora Capital and Sunway Group’s unique innovation ecosystem and startup funding funnel, allowing both companies to invest in category leading companies while at the same time, create real social and sustainable impact across markets.
As such, companies will be able to leverage on a vast network of seasoned business leaders and multi-sector industry experts from both Kejora Capital and Sunway Group to help early-stage Malaysian and Southeast Asian companies expand their market base through regional expansion.
Orbit Malaysia will actively invest in Series A companies in FinTech, AgriTech, eCommerce, EdTech and HealthTech. What are your rationale and factors in choosing companies behind these selected industries and is the fund only restricted to these industries?
These identified sectors are likely to be the region's 'bright spots’ as the world navigates around the impacts of the COVID-19 pandemic and has the potential and opportunity to create positive social impact. With a renewed emphasis on the need for digitalisation and changing old methods of work, technology will become the catalyst for growth within Malaysia. Orbit Malaysia has therefore been set up to identify startups that offer solutions within these sectors that are best placed to succeed.
What role will MAVCAP play in supporting the fund?
MAVCAP is a sovereign fund, and it has a wide network of VCs (and their startup portfolio). This provides Orbit Malaysia industry insights and potential collaboration within the MAVCAP ecosystem.
What are your thoughts on the growing startup ecosystem in Malaysia in comparison to Singapore?
Rather than comparing which country is more advance, I would like to shift the focus on how different SEA countries can leverage on each other strength. While Singapore’s startup ecosystem is more mature compared to the rest of Southeast Asia, it is, however, a small market. It has to work with the ecosystem in neighbouring countries in the long term.
Each country’s ecosystem will have its own strengths and weaknesses. For example, Indonesia is about huge market size and high growth opportunity; Singapore is well-positioned for high-end skillsets and funding ecosystem; and Malaysia strength is being a launching pad with decent market size, wide diversities in consumers of different races, cultures, and religions, with a very manageable cost structure.
Thailand, Vietnam, and the Philippines also have their own unique opportunities that complement the whole region, and soon Cambodia and Myanmar too. We need to look at the long-term history of a country to understand how to harness its strength. Malaysia used to be and still is a key outsourcing industry players for software development due to the presence of MNC’s for enterprise software development, data centres, etc. for the past 30 years. Such skilled workforce has provided startups with a good supply of talent when it comes to Enterprise solution.
For example, one of Kejora’s portfolio is Aerodyne, a world leading Drone-as-a-Service company which outcompetes many US or European drone service companies as Aerodyne has a strong team of engineers who can provide enterprise grade solutions at a much more competitive cost structure.
In the Malaysia context, the country is ranked, according to the World Bank’s 2020 Doing Business Report, 12th out of 190 countries in terms of ease of business and accessibility for startups. This places Malaysia as having the second highest score in Southeast Asia, coming in after Singapore. However, I expect Malaysia to continuously climb the ladder over the next decade, and eventually catch up with Singapore.
The various government initiatives launched by the Malaysia Digital Economy Corporation, such as the Global Acceleration and Innovation Network program and Malaysia Tech Entrepreneur Program is testament of the country's long-term goal to develop its local startup scene.
While the ecosystem in Malaysia is still in its nascent stage, I believe that with the nation's young, digitally savvy population, a growing technology adoption rate and the government's focused reform agenda to keep the economy competitive, we will be able to uncover more "diamonds in the rough'' and soon see SEA's next unicorn born out of Malaysia.
What factors would you say are required by startups to truly elevate themselves and become unicorns?
I would say that having the right people, right business model and the right timing are all important factors to elevate a startup. Firstly, choosing the perfect timing is akin to choosing the best moment for taking off because you need to figure out if the market is ready for your idea.
Secondly, a great team that can thoroughly execute the idea. As Henry Ford once said “If everyone is moving forward together then success takes care of itself.” Adding on, a good business model is a very strategic tool as it helps entrepreneurs figure out elements like business concept, how to create customer value, what problem is the company addressing and how can the business stay competitive.
Lastly, startups need have an in-depth understanding of their customers’ needs and demands and be agile enough to innovate and address these needs. Only through this understanding, can a startup pivot for success as their customers’ taste and preferences change.
What more can the government do to facilitate the growth of startups in the country? Are ongoing efforts sufficient?
Governments play a key role in promoting the growth of the startup ecosystem and helping startups succeed. Some SEA governments have been proactive in creating various agencies and program to help the startups. However, the key challenge is to coordinate various government agencies and programs into a single “coherent” mechanism that can work together, rather than in silos.
Governments should create a conducive environment for startups and establish networks and ecosystems to support hub establishment and encourage innovation. This can come in the form of providing sufficient access to capital to enable growth across a startup’s funding stages, as well as sufficient localised investors with networks and a local understanding to help startups’ go-to-market strategies. Government-linked funds and initiatives also play an important role in kickstarting the startup ecosystem and supporting startups.
For example, the Malaysian Startup Ecosystem Roadmap (SUPER) 2021 – 2030 was recently launched with a plan aimed at setting a target to build and develop a conducive startup ecosystem to drive local innovation and achieving the ultimate goal of establishing Malaysia as one of the top 20 global startup ecosystems. This will help unifiy players at an ecosystem level and create collaborations to ensure that startups have the resources to develop and grow. The Cradle Fund Sdn Bhd has also been allocated RM 20 million through the Startup Action Strategy Programme to support the development of startups.
Through these initiatives, the Malaysian government has helped bridge the funding gap and will reinvigorate Malaysia as the next startup hub of the region and attract global and regional venture capital firms and investors into the country.
Can you share more about the Jakarta Express strategic angle?
Kejora Capital places a strong emphasis on utilising cross-border collaboration for growth and development. The Jakarta Express strategy therefore aims to allow Orbit Malaysia’s portfolio companies to tap on the expertise, knowledge, and network of Kejora Capital's partners in Indonesia to expand into the high growth Indonesia market. This will allow certain Malaysian startups to have an early access to Indonesia.
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