Startup Funding Malaysia: Guide To Getting Cash For Your Start-up Or SME In Malaysia 2019

by Aiman

Startup Funding Malaysia

They say money is everything, well, if you are looking to start up a business, it is. Oh, and of course, your motivation and ambition are needed too, bring those along as well.

How can I get funds for my Small Business or Start-UP?

There are several ways which Malaysian SMEs and Star-Ups can fund themselves to grow. From government supported programmes to generous philanthropists, we look at the number of ways which you can find funds for your Startup or SME.

Be sure to also check out our article on How To Register a Company in Malaysia with Suruhanjaya Syarikat Malaysia (SSM) as a Foreigner.

Let’s go.

Government Loans

startup funding malaysia Government
Source: Wikipedia

With its support for SMEs in the country, the Malaysian government has a number of financing schemes to help SMEs start and develop their businesses.

With the absence of profit rates and processing fees for government loans, SMEs and startups see this method as a popular choice when obtaining funding.

Right now, 4 of the 7 funding schemes from the Malaysian government is directed at helping the growth of SMEs and startups. They are:

Graduate Entrepreneur Fund

The goal of this fund is to help young entrepreneurs grow their businesses and the SME Bank in Malaysia contributes to these funds.

Loan Amount

The maximum loan size is RM500,000, but, funding can go up to RM750,000 for acquisitions of a company.

A low interest of 4 percent is offered and there is a grace period of 48 months. But once those 48 months are up, businesses are required to make their repayments.

If the loan is less than RM100,000, no guarantor is required. However, in the case where a guarantor is required, they can only guarantee 20 percent.

Who can apply?

Malaysians below 40 years of age, who hold at least a diploma and has graduated for not more than 15 years can apply.

Existing businesses can also apply for this loan. But, applicants who are starting a new business may be required to take an INKSEN course. This is a government provided course that is free of charge and teaches applicants about entrepreneurship.

Once the course is finished, and the applicant gets approved by the INKSEN course leader, they will be proposed to the SME Bank, but, if applicants fail the course, they will have their loan rejected.

Business owners who own SMEs for more than two years can skip the course.

Young Entrepreneurship Fund

This scheme is set up by the SME Bank and uses venture capital funds and the working capitals of a company. It is similar to the Graduate Entrepreneur Fund, but the application criteria is lower.

Loan Amount

The maximum limit for this fund is RM100,000 and the interest is at 5 percent.

Who can apply?

Those applying must at least have a certificate qualification and must be between the ages of 18 to 30.

However, if those without certificates want to apply, then they will have to take a training course conducted by the SME Bank and get a certificate of completion once they are done.

The application process is lengthy but those who complete it will enjoy low interest.

Green Technology Financing Scheme (GTFS)

startup funding malaysia green technology
Source: R&D

As we become more environmentally conscious, more companies are going green, so this fund helps those companies who aim to have a low carbon footprint in the industry.

Loan Amount

The amount offered for the loan is very large, ranging from RM50 Million for a producing company such as a factory and up to RM10 Million for companies catering to the consumers, such as retailing stores.

Who can apply?

This scheme is for businesses under the energy sector, water and waste management sector, green building sector and the transport sector.

A GTFS certificate is required to apply for this scheme and it will only be issued when your company fulfills the requirements listed by the Green Technology Corporation.

Halal Industry Fund

This scheme is set up by the collaboration of both SME Bank and the Halal Development Corporation and aims to help support businesses in the halal industry.

Loan Size

There is no specific loans size mentined, but the SME bank has allocated RM200 million to help these halal SMEs.

Who can apply?

Businesses that serve no alcohol and no pork can apply for this scheme and that business should not be a subsidiary of a Government Link Company (GLC) or a Multinational Company (MNC).

They should also have 60 percent Malaysian equity.

Other SME Loan Schemes

startup funding malaysia KL business district
Source: EdgeProp

Besides getting government loans, SME owners can seek to obtain loans from banks and other financial services that offer them.

Like government loans, the types of schemes can vary on various factors, such as the type of SME, the amount needed and for how long etc. The amount given can also depend on the SME owner’s credit score and banking records.

Loan Scheme Comparisons

#1. SME Bank Business Accelerator Program

This financial assistance program by SME Bank, in collaboration with SME Corp, is to to help support the growth of the startup and SME industry in Malaysia.

Loan Amount

The program offers to finance from a minimum of RM50,000 to a maximum of RM1,000,000 at a flat profit rate of 4%p.a. and can be used to finance working capital and fixed asset purchases.

There is an extra RM10 for stamp duty and a 1% late payment penalty fee from the outstanding amount.

Borrowing Period

If business owners seek to finance their working capital needs, they can repay the facility in monthly installments for up to 7 years, whereas a maximum of 10 years is capped for purchase of assets.

Who can apply?

Applicants for this loan must be full-time business operators and owners of Small to Medium Enterprises, with a qualifying rating of SCORE 2 or above.

Malaysian ownership of said company must be at least 60% during the period of financing and has been in operation for at least 6 months.

The applicant’s business must also have a minimum sales turnover of RM300,000

The applicant and their business must be financially sound at the time of loan application, so proof of their latest 3-years audited account must be given.

#2. MIDF Soft Loan Scheme for Small & Medium Enterprises

This scheme can assist both existing and newly start-up enterprises who are looking for accessible financing for working capital and fixed asset acquisition such as premises, machinery and software.

The loan can also be used to cover the cost of renovating the business premise or upgrading the storefront for retail trade.

Loan Amount

The amount of financing that can be given all comes down to what it’s intended purpose is, however, the minimum loan amount is RM50,000.

For project and fixed asset financing, the maximum amount is RM5 million, RM3 million is capped for working capital and RM500,000 for IT hardware and software upgrades.

MIDF can provide up to 90% margin of financing for fixed assets and IT and Software financing.

However, the margin of financing for working capital ranges between 80% – 100%, but regardless of margin and the amount borrowed, the interest rate will still remain at 4% p.a.

There is also an additional RM10 charge for stamp duty.

Borrowing Period

The borrowing period for the financing of capital purposes is 3 years, with a grace period of 6 months.

The period for financing fixed assets and IT and Software is 7 years with a grace period of 1 year.

Who Can Apply?

The company must be an incorporated SME and registered under the Company Act 1956 or Registration of Business Ordinance.

Minimum sales turnover for the applying business must be RM300,000 while the maximum sales turnover must be RM50,000,000.

The company must, of course, also hold a valid premise license and have a 60% equity held by Malaysians.

#3. BSN Microplus

This conventional business loan offered by Bank Simpanan Nasional to micro and small businesses and provides the opportunity for small business owners to expand and grow their businesses.

Businesses in the manufacturing, service, retail and wholesale sectors can use this loan to help grow their business. They can choose to spend it on various categories, from machinery to managing daily expenses.

Loan Amount

The loan scheme can allow business owners to borrow any amount between  RM50,000 to RM250,000 with a flat profit rate of 9.95% p.a.

An extra fee of RM10 is given for stamp duty and there is a 1% charge as a penalty for late repayments from the outstanding amount.

Borrowing Period

The financing period for the BSN Microplus scheme is 1 to 7 years.

Who can apply?

Businesses applying for this loan must meet the definition of Micro, Small or Medium Enterprises as given by the National SME Development Council.

The owners of these businesses must be a Malaysian citizen between the age of 21 and 60.

Their businesses must have been operating continuously for a minimum of 3 years under the same industry and must also be an existing customer of BSN Micro finance.

Their minimum sales turnover must be RM300,000 while the maximum sales turnover must be at RM50,000,000.

Businesses must possess a valid registration certificate and license provided by the Companies Commission of Malaysia (CCM) or by local government authorities and bodies.

They must also be at least 51% Malaysian owned.

#4. UOB BizMoney Business Loan

The loan is for small or micro businesses who want to extend their reach and grow their companies.

It offers a higher borrowing amount and no requirements for collateral, and competitive interest rate.

The loan application process is simple and without a loan-processing fee.

A guarantee from shareholders or directors of your business is needed since there is no need for collateral.

Loan Amount

Applicants can borrow between RM100,000 to RM500,000 with an interest rate of 6.48% p.a., but this can vary depending on the amount borrowed.

Loan Period

Applicants can borrow between 3 to 5 years.

Who can apply?

The scheme is available to Sole Proprietors, Partnerships or Private Limited Companies, registered in Malaysia and run by Malaysian Citizens or Residents with PR with the exception of Singaporeans.

The company must also have been in operation for at least 3 years and must be 51% Malaysian owned.

Applicants must provide these documentations:

  1. BizMoney Application Form.
  2. Keyman Income – latest Borang B/BE (not more than 2 years).
  3. Sdn. Bhd: Form 24 and 49. If change in shareholder, Annual Return/Form32A
  4. Sole Proprietor & Partnership: Business Registration Certificate issued by Registrar of Companies (SSM)/Trading License (East Malaysia only)/Limited Liability Partnership Agreement (Limited Liability Partnership only).
  5. NRIC/Passport of all Directors and Guarantors.
  6. 3 years Financial Reports (Audited/Management).
  7. Latest (not more than 60 days) 6 months Bank Statements of top 3 most active Current Accounts and all OD Accounts

#5. Maybank Small Business Loan

This loan is provided to SMEs in the manufacturing and service sectors and helps fund working capitals.

Loan Amount

Applicants can borrow between RM50,000 to RM3,000,000 with and interest rate of 5% p.a., however, the rate is subject to change depending on Bank Negara.

Loan Period

Loan period is 1 to 3 years.

Who can apply?

Applicant’s respective business must not have shareholder funds exceeding RM10 million.

Malaysian between the ages of 18-60 can apply and the minimum sales turnover of their company must be RM3,000.

The company must be fully Malaysian owned with at least 4 full time staff.

The company must be in operation for no less than 3 years.

Loan Amount (RM)Borrowing PeriodLowest Interest Rate*Annual Sales TurnoverMalaysian EquityAdditional Charges
UOB BizMoney100,000 – 500,0003 to 5 years6.48% p.a.min. RM300,00051%Documentation
BSN Microplus50,000 – 250,0001 to 7 years9.95% p.a.min. RM300,00051%RM10 Stamp Duty
MIDF Soft Loan Scheme50,000 – 5,000,000**3 to 7 years4% p.a.min. RM300,00060%RM10 Stamp Duty
SME Bank Business Accelerator Program50,000 – 1,000,0007 to 10 years4% p.a.min. RM300,00060%RM10 Stamp Duty
Maybank Small Business Loan50,000 – 3,000,0001 to 3 years5% p.a.min. RM3,000100%RM10 Stamp Duty

*Can change depending on amount borrowed.
** project and fixed asset financing, the max amount is RM5 million, RM3 million capped for working capital and RM500,000 for IT hardware and software upgrades.

Startup funding malaysia Bank Negara
Source: Reuters

Government Grants

A grant, unlike a loan, requires no repayment. It is usually given by the Government if your business aims to benefit the community.

It is like a gift. However, there is no technical assistance or financial assistance given in most grant schemes.

Before 2009, there were a large number of grants up for takes, but now only selected industries are given grants.

There are two levels when receiving a Government grant:

Pre-Seed

This is for those businesses who are at the concept stage of their business. An idea is there and if the Government likes that idea, they will offer a grant scheme.

Seed

This is for those businesses who have their idea set in motion and has evidently been beneficial.

Government Grant Programs

Cradle Fund

This early stage startup influencer has helped over 900 Malaysian tech start-ups and holds the highest commercialization rate among other government grants in Malaysia.

Their programs include:

1. Cradle Investment Programme 300 (CIP300)

  • Pre-seed program.
  • Provides financial and value-added assistance up to RM300,000
  • For entrepreneurs who want to start innovative technology based businesses.

2. DEQ 800

  • Equity investment up to RM800,000
  • For local early stage start-ups with high potential in tech.

3. Cradle Seed Ventures (CSV)

  • Venture capital arm of Cradle.
  • Manages an early stage venture fund based out of Malaysia.
  • Always seeking out start-ups with high growth potential.

4. Coach and Grow Programme (CGP)

  • Market driven coaching program
  • Brings together key players in the entrepreneurial sphere to support and fortify technology entrepreneurs.
  • They can help these businesses grow to larger heights.

5. Angel Tax Incentive

  • Designed for Angel Investors to be given a tax deduction of up to RM500,000 in the third year.
  • It aims to encourage Angel Investments for the private sector and technology-based start-ups.

Malaysia Digital Economy Corporation Sdn. Bhd. (MDEC)

The MDEC is a government-owned agency, founded in 1996, that aims to be a big player in the transformation of Malaysia’s digital economy.

MDEC’s Digital Content Fund is a government funding program that was created to support Malaysian creative content production companies in developing, producing or co-producing digital content in animations and games.

There are three funds available for interested parties:

1. Development Fund

  • Involved in the development stages.
  • So the project is still at the idea stage and planning stage.

2. Production Fund

  • Like the name implies, it is involved in the production stage of a project

3. Co-Production Fund

  • Provides financial assistance to a project within the Eligible Project Category.
  • A project must be co-produced by a Malaysian company and one or more foreign companies.

Malaysian Technology Development Corporation (MTDC)

The MTDC has played an important role in the commercialization of technology in Malaysia, along with encouraging the implementation of technologies by local companies.

Their funding programs include:

1. Technology Acquisition Fund (TAD)

  • Provides the finances for Malaysian-owned companies who wish to gain access to various foreign technology and to commercialise said foreign technology.
  • The technology in question must already been proven to be effective in its country of origin.

2. Commercialization of Research and Development Fund (CRDF)

  • Funds the commercialisation of locally developed technologies undertaken by Malaysian-owed companies.
  • The technology can also be developed by the public sector.
  • They can also still be in the research and development stage within these companies.

3. Business Start-Up Fund (BSF)

  • Funds new start-up companies which are technology based.
  • Incorporates elements of loan and equity.
  • This means the funding is more flexible

4. Business Growth Fund (BGF)

  • Focuses on the funding that helps the growth of companies.
  • Looks at the production output of the company
  • Also inspects the company’s internal readiness towards professionalism and corporate governance.
  • And how ready the company is to move up the ladder.

5.Halal Technology Development Fund (HTDF)

  • Specifically for the financing and nurturing of SME’s in Malaysia for long term growth.
  • The SME must be involved in Halal compliant activities.

Grant or Loan?

The main difference between a grant and a loan is that a grant does not require the grantee to pay back. But here are the advantages of both:

Advantages of Grants

  • You don’t have to pay back the money given by grants, it’s yours!
  • No need to worry about monthly payments.
  • It is a no-risk solution for obtaining money.
  • It seeks to only better your business
  • But because there is no repayment, grants are more valuable than loans.

Advantages of Loans

However, the advantages of loans, as compared to grants, are:

  • Grants are limited in number, but loans can be offered by more parties. (Banks, Investors, individuals, etc.)
  • There are a large variety of loan schemes, compared to grants, so this gives more opportunities.

In all…

Grants are perfect if your small company has potential that the government takes interest in, and the fact that you don’t need to pay back is a big plus.

However, because grants are given by the government, they can only offer a limited amount each year. So it’s all based on how well of an idea your company has and how you choose to put those ideas to work.

These are the factors which make loans a more popular choice to source funds. That along side the fact that grants are more of a gift than an essential finance pool.

Equity Crowdfunding Sites

Startup funding malaysia equity crowdfunding
Source: StartupNation.co

This method is essentially seeking help from other people or ‘the crowd’ to fund your startup.

It is essentially a website where a startup can create an account on. From there, they can offer information on the company, their products and services etc.

You can post a link to various people that can direct them straight to the funding page, or they can stumble on it themselves.

People can then choose how much to give to the company or the company can provided packages that award the investors.

For example, a start-up perfume company could offer samples with their RM40 donation package.

Crowdfunding sites can usually show how much a company has earned from people, and companies can even set a financial goal they wish to achieve so investors can see their progress.

Equity crowdfunding in Malaysia became mainstream when the Securities Commission Malaysia was one of the first within the region to introduce guidelines to regulate the the funding option.

This essentially allows SMEs and startups to have more access to capital.

Here are 4 crowdfunding platforms you can check out:

startup funding malaysia ataplus

#1. Ata Plus

Ata Plus is among Malaysia’s first Online Equity Crowdfunding platforms and strives to democratise wealth and financial inclusion in the ‘new economy’.

They believe that matching capital with exciting business ventures has far reaching, productive, social and economical outcomes.

The Ata Plus sphere consists of a network of key players and communities. It is designed to help the partnership between the investors and the entrepreneurs by lowering the barriers for both to move forward.

Ata Plus encourages risk-sharing and increasing financial inclusion of those with savings.

Their model therefore, will not only bring wider business access to financing but also helps stimulate positive social benefits through entrepreneurship.

Who can campaign?

Any company from various sectors and growth stages can pitch their business on the platform.

However, the company must be a locally incorporated private company or a limited liability partnership.

How it works

Level 1 Screening
This stage takes a look into the credit-worthiness of businesses and it’s primary team members. 

An online form stating the main contact details, company information and address, as well as a list of your team members identifications must be completed and will take 3 business days to process the information provided.

The applicant will then get notified when they’ve got the report indicating whether they cleared the first screening process. 

Level 2 Pitching
Applicants will now post information on their business, state their funding requirements and what they will be using the funds for. Ata Plus suggests that putting up a 3-year financial projection.

In order to support the information provided, applicants will also need to enclose their business plan together with your application.

It should take up to 15 business days to process the pitch application.

Ata Plus will then inform the applicants on whether their application is qualified to be listed on the platform.

However, if applicants do not make it through Level 2, they are encouraged to resubmit the application within the next 45 days.

Signing up as a member is free, however, there will be processing fees involved when screening your business

startup funding malaysia pitchIN
Source: Fintechnews.my

#2. pitchIn

PitchIn describes itself as Malaysia’s national crowdfunding platform.

Since its founding in 2012, the pitchIN rewards venture has become the most successful rewards crowdfunding platform in South East Asia.

PitchIn has successfully built up a range of amazing crowdfunding projects. It holds records for projects that raised the most funds and for the most number of backers for a single project.

These projects include the Indie festival in Penang, TAPAUfest, the movie Movie GoGo project, the pitchIN-MaGIC Challenge, the MDEC’s social project to assist the flood victims in East Malaysia, TeeSomethingNice, the tee-shirt project in celebration of Hari Malaysia and Merdeka 2014 and they helped to secure a permanent place for Wok It, a Malaysian mobile kitchen that serves quick and customised meals to raise finances to build their kitchen and to set up a permanent home.

Their associated partners include Crade Fund, Multimedia Development Corporation (MDEC), Cyberview Living Lab, Malaysian Global Innovation and Creativity Centre (MaGIC) and the Malaysian Business Angel Network (MBAN).

Who can campaign?

Malaysian registered private limited companies with paid up capital totaling to less than RM5 million are allowed to launch equity crowdfunding campaigns on the platform.

Companies which are barred from equity crowdfunding include commercially or financially complex firms like investment fund companies, subsidiaries of public listed companies and companies with no specific business plan.

How it works.

The applicant will have to provide information on their company, shareholders and Directors.

They will also have to state why the funds are required and provide the relevant business cases and projections.

Depending on the amount of money intended to be raised, the business must meet Security Commissions guidelines for various levels of audited or certified financial information.

Campaigns will usually run between 30 to 60 days and if the funds are successfully raised and agreements are made between all the shareholders, the funds are then transferred over to the company.

PitchIN charges companies a flat fee of 7% for funds successfully raised on the platform.

This fee includes the due diligence process, an escrow account to receive the funds, the setting up of a nominee structure and first year administration of this nominee service, as well as access to their legal document’s templates.

startup funding malaysia mystartr

#3. MyStartr

MyStartr is a reward-based crowdfunding platform that aims to help the growth of creative projects. They are home to films, games, music, art, design and technology.

Projects owners are required to provide products or services as rewards to supporters instead of monetary rewards. For example a limited edition copy of a book their writing or an early pass ticket to a film.

They have funded RM1 million worth of projects since it’s establishment in 2012.

Who can apply?

Anyone who wishes to start a creative project, be it a movie, an indie-game, a web-comic, album, etc. can apply for a MyStartr campaign.

How it works.

There are two parties involved. A Creator and a Backer.

creator or creators can be a person or team behind the creation of a project and every project creator sets their project’s funding goal and deadline. 

Backers are those who help provide funding to the creators for their project.

But before starting the campaign, creators need to prepare a proposal regarding the information of their project along with the rewards they provide for the supporters.

The proposal should include the details of the project, the objectives and the budget breakdown.

Images and videos are encouraged to be included in the proposal as this can enrich the content of your proposal.

Once applicants have submitted their proposal, the MyStartr team will contact them within 3 working days and after reviewing their project, the team will give advice and suggestions on how creators can enhance their proposal in order to make it more appealing.

The project can then be launched once the content of the proposal is complete and has enough information.

Creators can choose between two types of funding: Flexible and Fixed.

A flexible funding approach entitles the project owner to the amount raised throughout the funding period through the platform.

A fixed funding approach entitles the project owner to the funds based on the agreed set target amount.

But in an unfortunate scenario where a project does not reach the stated funding target, MyStartr will refund all backers of that project.

As a rule, Creators need to offer rewards to Backers to show that they appreciate the support they are getting, these rewards usually come in the form of limited or special editions of a project.

A 10% service fee is charged by MyStartr from the amount a project has raised.

startup funding malaysia crowdplus asia

#4. CrowdPlus.asia

CrowdPlus.asia is an equity crowdfunding platform backed by the Netrove Ventures Group, which is a regional tech-based venture capital firm.

The platform implements its own selection process and deals sourcing
, to provide the crowd quality deals for funding.

The platform has its own QMI feature which brings in qualified mentors and investors from across the region to achieve greater value creation and enhance the success for companies funded through CrowdPlus.asia.

CrowdPlus uses Malaysia as the equity crowdfunding hub for ASEAN and works with various government agencies within the country and the region.

They then tap into various early-stage incubators and investing networking groups across the region to build an sphere for entrepreneurs to be mixing with the “right crowd”.

Who can apply?

Owners of locally incorporated start-up, early and growth-stage businesses that lack funding can apply on the platform.

How it works.

First applicants will need to sign up on the website and once they have done that, they will be guided through the setup process where they are required to enter relevant business and financial information about their company.

After this, the information is reviewed to ensure it meets the criteria and if the information provided is satisfactory, applicants will be notified for the next step.

The maximum funding amount applicants can request is RM3 million.

Applicants are also given the option to keep information about their company confidential. This means that only a brief description of the company will be shown at the funding page.

From a campaign’s launch day, companies are given 30-days to raise their capital. But an extension of an extra 30-days can be given for special cases.

Once the funding amount that the applicant needs has been reached, no further capital can be raised.

A 7% fee is charged from the total amount a campaign has raised, but if the campaign is not successful, there will be no fee charged and all funds will be refunded back to the investors.

startup funding malaysia Umadx

#5. Umadx

Umadx is another Asian based platform which has a massive community.

The platform harnesses the region’s high digital availability, proven business infrastructures and skyrocketing entrepreneurial ecosystem to seek out the best talent.

Umadx states that they embrace ideas from all backgrounds and interest categories and wants to establish itself as the launch-pad for extraordinary projects.

But like all the other platforms mentioned, Umadx will not host any project that is in violation of the law.

How it works.

As always, applicants will need to sign-up an register on the platform and create a project. They then must create a project title and tagline along with a project description. They have the option to customize their project page and add payment details. Photos and videos can be added too and is encouraged.

On the page, the applicant must then put a minimum funding target and a maximum funding target, as well as a set funding period.

The applicant can set up mile-stones to really show viewers how far they have come in the funding period. They must also offer rewards to those who are backing their projects.

Once all the steps above are done the applicant can then submit their project proposal to Umadx where they will first review it themselves and then send it to professional external reviewers. This should take 2 to 3 days. If they approve, the project can be launched.

A fee of 10% of the amount raised is only charged once the project hits its minimum funding goal. A fee of 5% is charged from the amount raised if a project reaches its maximum funding goal.

As a personal touch, applicants are recommended to thank their backers for providing them with funds, showing appreciation can leave a good taste.

Applicants may need a PayPal account to get any sort of funding from the platform or make any payments.

startup funding malaysia LaunchGood

#6. LaunchGood

LaunchGood is a global crowdfunding platform to support Muslims all across the world by helping them raise funds for their campaigns.

It started as a community and ecosystem to revive the spirit of creativity and entrepreneur-ism that elevated Muslims globally for centuries.

LaunchGood believes in an community of individuals that help each other for global good, and that good things connect to other good things to create even greater things.

They believe that each being has a place in the system and that one thing cannot function at its best without the other.

They invest in people as they believe people are everything and that at within the core of any idea or movement, are committed people who share the same values and are set on working towards the same thing and through this, they can reach their goals.

LaunchGood believes that each campaign on their platform is one chapter in the big global storybook of who Muslims are and what they’re capable of. They are proud of the Muslim’s ancestor’s heritage as pioneers, inventors, entrepreneurs and bearers of all things good.

The platform firmly believes that a Muslim could write the next Harry Potter novel, create the next Lord of the Rings trilogy, or discover the next great vaccine, and they will be there to help them do that.

Currently, the platform has 483,763 users over 163 countries and has supported 8,519 campaigns. A total of RM396,396,203 has gone into funding these various projects.

LaunchGood provides a dedicated campaign coach to each project. The coach offers help along the way and helps applicants projects to become twice as likely to reach their goal.

They can also bring in offline donations, like cheques, into the total amount a campaign wants to raise. They provide flexibility so that campaigns can extend their funding period and even change their funding goal.

Their platform has been recognised by various organisations and government body’s from around the world, such as The White House, Al-Jazeera, CNN and more.

Who Can Apply?

Because LaunchGood is dedicated to helping Muslim campaigns around the world, those who apply will have to be of the Muslim faith. But campaign projects can be set with the goal of serving all people and benefiting communities.

LaunchGood is used just to support Muslims doing benefits to society and does not take interest in getting into polemical discussions, labels, sects, politics, etc.

The types of campaigns and projects that can be listed on the platform can include quick funding for individuals or people in distress, launching new technologies like apps, creating non-profit companies like clinics, charity work, helping communities, arts and so on.

LaunchGood does not allow campaigns that are in violation of any laws and that have the potential to create problems. They are set on making sure the world can become a better place with the help of Muslim entrepreneurs.

How it works.

After signing up and creating the campaign by putting all necessary details, applicants are then paired up with an expert coach who will give them a call to offer feedback on their campaign and share the best strategies for success.

Once that has been done, the project campaign will then go live.

A 5% service fee is charged by the platform, but supporters can opt to use their given funds to pay for that fee as well.

startup funding malaysia fundaztic

#7. Fundaztic

Fundaztic is fully owned and managed by Peoplender Sdn Bhd which is a Recognised Market Operator registered by the Securities Commission of Malaysia.

Fundaztic aims to have an influence on technology to enhance access to both financing and investment for businesses and individuals with low entry barriers.

Their issuers can have access to easy financing through a fast and simple online application process, while their investors provide the funds to multiple investment ventures in exchange for the attractive return of said investments.

The platform intends to transform the financing ecosystem into a more transparent, simple, and fair online marketplace in order to help people and businesses achieve their financial goals every day. 

Their Board and Management team brings about more than 50 years of combined expertise in finance, legal and technology.

Who can apply?

The applicant’s business must be incorporated in Malaysia and registered with SSM ( Suruhanjaya Syarikat Malaysia). Their business can be registered as a Sole proprietor/Partnership or as a Private limited company.

If the company is a private limited one, there needs to be a minimum paid up capital of RM20,000 and one guarantor who holds a minimum of 50% shareholding.

How it works.

After applicants sign up on the platform, they need to provide the relevant information for their business, like its name, it’s type, the registration number along with the necessary contact details and bank details.

Fundaztic will then perform a credit check to the bank account, the applicant will have to check the amount that has been credited to them in their online bank account statement and write down the amount to complete the application.

Applicants can raise between RM20,000 – RM200,000 on the platform.

However, during the funding application process, the requested funding amount will be evaluated and may be adjusted accordingly alongside other factors such as the size of the business, credit background, existing loans, etc.

The final terms and conditions of an approved application will be sent online for acceptance by the applicant before it can be listed for funding. This means, they will be fully aware of the modifications made during credit evaluation and can decide to accept the modifications and other terms offered.

The funding period for a campaign is 10 days and if the fundraising campaign is successful, the funding amount will be placed into the applicants bank account.

Information on fees is provided during the application process.

startup funding malaysia gogetfunding

#8. GoGet Funding

GoGet Funding is dedicated to making the lives of campaign owners, donors and visitors happier and enriched.

This could range from helping applicants raise money for critical medical expenses, a once-in-a-lifetime volunteer trip or to launch an exciting new business.

Their involvement with many personal and powerful plans and projects is what motivates GoGet to provide the service to the people.

The features that GoGet has includes the easy sharing of the applicant’s page where they can track visitors & donations.

Applicants can launch a timed, ongoing, public or private campaign where they can add video, pictures, links & more.

GoGet is a proven platform which has managed to raise millions in total.

They also provide applicants their own personal fundraising coach to be there every step of the way and there are no penalties for missing a goal.

The platform is mobile friendly and secure, and it only takes just 4 minutes to set up a campaign.

Applicants can get paid in multiple currencies and can accept donations instantly if they choose so.

Campaign owners can assign team members with their own tasks and have the ability to collect & download donor info.

And to instantly show appreciation, applicants can set up a system to send out automatic emails to those who donate.

How does it work?

OK, so like all of the platforms, an account is required. Once that has been created you can choose which payment methods you want to accept. You will be able customize your page to your liking.

On the campaign, you should explain what it is that you are trying to do and how you will do it. You need to talk about how the funds will be used and the relevant information about you or if applicable, the people in your team.

The more information you share, the more your backers will likely be able to help you out of their trust.

As per usual, it’s free to start a campaign but GoGet funding does charge a rate of 4% on the amount raised in your campaign and the processing fees are an average of 2.9%.

Donations received via GoGetFunding Card Payments can be withdrawn from the campaign’s eWallet and deposited into the your bank account once a 7 day clearing period for each donation has lapsed.

A standard verification process must be done before you withdraw those funds however.

Fundraisers that raise at least RM420 can be featured publicly on GoGet’s website. This is to ensure that only active campaigns are displayed. 

Ultimately, GoGet decides who to feature based on a number of elements, which includes how well the fundraiser is put together with multiple pictures, an interesting story, a video or thoughtful reward. And how many donations a campaign has been able to drive from their personal networks. 

GoGet also assesses which fundraisers to feature on a regular basis. However, if applicants would like to make themselves known to GoGet, they can get in contact with them.

GoGet also regularly highlights different campaigns on their Facebook and Twitter pages even if they’re not in the featured section.

If a campaign reaches its funding goal before the time expires and the applicants have not allowed over-funding, the campaign will not be able to receive any further donations and it will be listed as a successful campaign.

But if they have allowed over-funding, they will be able to receive additional donations until your campaign expires. But, with ongoing campaigns can accept donations for as long as they want. 

Even if the fundraising goal is not reached, applicants can still keep all of the funds raised (minus the industry fees).

Some sites return money to donors if they don’t reach their goal with the assumption that they won’t be able to complete their plans with only some of the money.

Advantages of Crowdfunding

Provides easy access to capital

  • Easy the application processes.
  • Great for small businesses as products don’t require assets and collateral.
  • Creditworthiness is mostly assessed through business health and financial data.
  • It takes just minutes to put up your campaign and information onto an online crowdfunding platform when you are ready.
  • You can skip lengthy processes at the banks or other government financial agencies.

Great marketing tool

  • Great way of introducing a new product or your business to the market via an online-based platform.
  • It’s free! And can be easily linked to social media to get more people to know about your business.

Quick funding

  • Bank financing can take months before approved funds are given.
  • With crowdfunding, you can obtain the desired amount in days, hours even! So long as your product is appealing.

Investment diversification

  • Anyone can invest!
  • On a Crowdfunding platform, investors are free to choose which companies and businesses to invest in and how much they want to invest.
  • This type of investment spreads investors’ risk and is great for teaching beginning investors on the importance of diversification.

Angel Investors

Startup Funding Malaysia Angel Investors
Source: Nexea

An Angel Investor is an individual who can provide financial backing, industry knowledge, as well as industry or business experience to early stage startups or entrepreneurs.

Angel Investors in Malaysia are usually found in Angel Investment Groups or Networks.

Some of the best angel investors are known to have been in involved in funding startups during tough times.

Malaysia has no shortage of Angel investors. There will be at least 100 of them ready to help fund your company.

These investors are looking to help businesses succeed rather than look for profit.

This is because Angel Investors are usually people who do not need money as they are already well-off or have their own successful business and just want to help others grow too.

Most of these investors in Malaysia are usually retired, so they do not contribute much to the operations of the business they’re helping, instead, they can use their own experiences to give the startup owners some advice on how they can run.

Angel Investors are also very ‘founder-friendly’ and usually makes an investment because of the potential that a founder might have themselves, rather than looking at the business.

The investors usually do not take more than 10-20% equity when investing in a Start-Up as this gives them the right incentive and alignment with the founder to help grow the business in the right direction, while not taking too much away from the founders as well.

You can connect with Angel Investors on these platforms:

  • Angel Investment Network
  • Capital
  • BizAngel
  • Cradle Fund

Angel Investment Network

It was the year 2004 and lots of people, with amazing ideas were trying to start their own businesses. But they were struggling to find the funding necessary to grow.

So the founders of Angel Investment Network figured out that this issue was clearly damaging the startup scene as they saw great ideas being put away and not lifting off.

So they decided to solve this issue by building an online platform that helps connect startups with a global network of angel investors.

The network now has 30 branches and extends to 80 different countries. It has 1,226,679 registered member,s with 216,228 investors and 1,010,449 entrepreneurs. This makes them the largest angel investment community in the world, and they are still growing!

How it works.

First, applicants need to sign up on the platform in order to start connecting with investors and start funding their startup.

Then applicants will add a pitch for their business using AINs tried-and-tested template which will guide them through the steps. The platform provides a number of useful resources to help if they get stuck.

A pitch can take up to 48 hours to be reviewed but the applicant can select the ‘immediate release’ option to get the pitch online straight away.

When the applicant’s pitch has been approved, it will be listed on the site for various investors to browse and evaluate. You can have your pitch emailed to investors and personalise it for everyone of them

If an investor takes a liking to the your pitch, you shall receive an email asking to connect. You will then gain access to the investors contact details to continue discussions, schedule calls, fix meetings and close investment.

Applicants can accept funds from investors at any time and they do not have to reach any funding target.

When it comes to the rates charged and the fundraising period, you have 4 options to choose for your pitch:

The Novice option is free and the period is 30 days. Your pitch can still get local online exposure and an investor’s contact details with this package.

The Pro option costs around RM210 and the period is 90 days. With this package, you can place your company details to let investors know more about it. Your pitch will get local email exposure and increased exposure which allows more traffic. You also now have the option to upload your company’s logo, add images, videos and documents. A refund is guaranteed if things don’t go as expected.

The Global Pro option is similar to the Pro option but costs RM1260. But with that money, your project receives global online exposure and global email exposure to further reach more angel investors around the world.

The Executive option gives you 120 days to raise funds and offers all of the features listed in the above options, with the addition of getting of giving your project a featured listing, provision of consultancy and executive mail-outs. This package costs RM5470.

#1. BizAngel

BizAngel’s objective is to help their angel investor members acquire a profitable return on their angel ventures. They provide the best entrepreneurs in innovation and real estate portfolio while supporting their members who invest in businesses that meet their criteria. For investors, this makes it simple for them own shares in early-stage or close-stage companies which may potentially be the next big thing.

Creative entrepreneurs looking for financial and strategic influence can introduce their ideas to a group of qualified angel investors using this platform

All investments are based on a strategic evaluation process which allows BizAngel and its members to effectively select the best venture opportunities.

BizAngel searches for entrepreneurs with amazing business credentials, who have a reputation of leadership and execution, either in a specific industry or in earlier entrepreneurial ventures.

Team passion and commitment towards the business idea is what is appealing to investors, alongside the your capabilities and confidence to inspire future stakeholders, investors, employees and potential customers. Your team must be open to receive any input shared by BizAngel’s angel investors.

On average, individual angel investors could invest between RM25,000 and RM1mil per project. Group investors will invest between RM200,000 and RM2mil per project. Businesses are generally valued at between RM1mil and RM5mil.

Usually, each angel investor will enter into several investment projects per year and will have a portfolio of between 3 and 10 companies. Angels might have many active investments at any one time.

Angel investors normally accept a 4 to 7 year investment horizon before an exit.

#2. CAPITAL.com.my

CAPITAL was launched to provide a simple, effective and affordable business introduction platform for wholesale, sophisticated and professional investors to directly invest in funding private equity in startups and high growth businesses.

The platform has a large network of long-standing partner relationships with like-minded advisory firms, investors and specialized professionals, all based in strategic locations around the world.

CAPITAL is managed by Crypstone Capital, an independent financial advisory group that focuses on capital raising, angel investing, private placement, IPO, merger and acquisition advisory services.

How it works.

First, the applicant must submit an investment proposal or funding request online on CAPITAL’s platform. Upon receiving the funding request, CAPITAL will assess and make suggestions, if any, about the fund-ability of the proposal. It will then match it with our member-investors database.

Then the applicant’s executive summary of their funding request will be sent as an email to the relevant investors and a synopsis of the proposal will be featured on CAPITAL’s website for maximum exposure (with or without your company identity as per the applicant’s instruction).

If an investor takes an interest in the applicant’s proposal, he or she will then contact them directly to discuss the details further or they will notify CAPITAL of their interest, in which they will then notify the applicant.

Both parties will then provide CAPITAL with confidential feedback so that they can monitor the progress. The feedback also assists CAPITAL to match files more closely.

CAPITAL can also offer applicants various other funding options that they might be eligible for, including government financing schemes, grants, loans, venture capital, etc.

Applicant must meet 13 points in CAPITAL’s checklist to become eligible, these are:

  1. An experienced team which is driven, coach-able, and willing to give up some control and decision-making authority to take advice from outside investors.
  2. Your company must have an identifiable market segment. It must show a demonstrable and significant demand for your proposed product or service.
  3. Your company must show promising growth potential.
  4. Your company must identify its respective and potential competition and must know what makes them stand out.
  5. Their product must have a proven concept that can be confirmed with data or by experts. Along with a comprehensive business plan to commercialise the technology or product must be created and presented.
  6. The product must be listed as protected intellectual property.
  7. The company must have a plan to achieve widespread market penetration for their products and services. They may need to create an internal, direct sales team, or they might rely on external channel partners.
  8. Companies will need to demonstrate how high margins and consistent cash flow growth will be achieved.
  9. The company will use funds acquired to finance growth activities, including product development, recruiting key staff, launching sales and marketing activity.
  10. You will need to provide developed and reasonable financial projections. This may come in the form of an income statement, cash flow and balance sheet or other supporting spreadsheets that are based on logical and realistic assumptions.
  11. Your company must have a clear exit strategy that will enable angel investors to generate a return of at least ten times their initial investment within five to seven years.
  12. You must have a comprehensive business plan that articulates your key business strategies for how you will grow your venture.
  13. You must also know how much your business is worth and how you got to that figure along with understanding whether your valuation would fit within an Investor’s risk and return expectations for their investment.

When it comes to fees, the online matching services are free of charge for those seeking to apply for funds. However, fees may apply if you choose the Capital Advisory Services in which investors and industry professionals can give advice to entrepreneurs.

Cradle Angel Tax Incentive

The Angel Tax Incentive is designed to bridge the early stage investment gaps by encouraging qualified individual investors to invest in funding early stage technology startups in Malaysia and to boost the growth of startups.

It is administered by the Angel Tax Incentive Office (ATIO) which is a unit under Cradle.

Their role is to ensure that startup companies in the technology sector who are seeking investments from accredited angel investors are eligible and that investments made into these companies are genuine.

In order for a startup to be eligible for the Angel Tax Incentive, they must be certified as an Investee Company by the Angel Tax Incentive Office at Cradle. The criteria for an Investee company are:

  1. Malaysian individual(s) that hold at least 51% of equity interest in the company;
  2. A private company limited by shares, incorporated in Malaysia and is a residing within Malaysia.
  3. Their core business, product or service must fall into one of the following sectors approved by the Ministry of Finance: Advanced Electronics and Information technology; Telecommunications; Equipment/instrumentation, automation and flexible manufacturing systems; Healthcare;Electro-optics, non-linear optics; Advanced materials; Transportation; Value-add services; and Emerging Technologies.
  4. The increasing revenue of the company must be less than RM5 million and has been in operation for three years or less.
  5. The investee company must not be wound-up or and/or liquidated.

The period that a company can be listed as an Investee under Cradle is two years.

The Tax Incentive allows Investees to claim a tax deduction for Investee companies in 6 steps:

  1. Submitting an application form (Form ATI-2),
  2. Providing an Accreditation letter from the Malaysian Business Angel Network (MBAN), the company’s bank statement, it’s financial statement (audited & draft) the shareholder’s agreement and term Sheet, Form 24 (latest), Form 32A (if necessary) and Form 49.
  3. Submitting the form and all documents to the MBAN Secretariat at Cradle.
  4. Paying the processing fee of RM800 to Cradle Fund Sdn Bhd.
  5. Waiting for the process which will take 25 calendar days from the date of completing the submissions.
  6. And receiving a letter of approval for the investment from the Ministry of Finance.

Malaysian Business Angel Network

The Malaysian Business Angel Network (MBAN) is the official trade association and governing body for angel investors and angel clubs in Malaysia.

It strives and aims to put forward the agenda of angel investing in an all-inclusive manner for the benefit of members, the angel ecosystem and startups.

They are responsible for the certification of individual angel investors and angel investors clubs, creating awareness and training for angel investors, as well as monitoring angel investment

The network works like a trade organisation, driving regional and international ties between angel investors from different countries.

Cradle, the company mentioned above, through its Angel Tax Incentive Office, acts as the bureau for MBAN.

MBAN hopes to become the official voice of the Malaysian angel investor community as well as a platform for engagement and knowledge sharing for domestic and international angel investors.

The Malaysian Business Angel Network supports investors and the angel investor ecosystem by running their quarterly Angels in the City Investor Workshops and their bi-annual Wadwhani Foundation ‘deep dive’ courses.

They also organize their monthly Angels in the City Pitch Sessions where they select and showcase potential deal flows to their members.

MBAN works closely with agencies such as Cradle Fund, which gives them the opportunity to connect with the wider start-up ecosystem in both the public and private sectors.

Overall, their main objective is:

  • To provide the vision and direction to drive the development of the angel investment ecosystem.
  • To verify and certify angel investors and/or clubs in Malaysia.
  • To track the development and growth of angel investments within the country.
  • To facilitate the setting up of angel clubs in Malaysia.
  • To run angel investment training and development programs for both new and experienced angel investors.
  • To advise the Government on issues regarding angel investments in Malaysia.
  • To encourage high income earners and high net-worth individuals to get involved in angel investing.
  • To lobby for policies and incentives that encourage angel investments in Malaysia.
  • To develop a platform in order to allow deal flows and investment proposal submissions.
  • To disseminate and share deal flows, investment proposals and submissions.
  • To organise regular networking events in order to create a tighter angel investor community and also to foster best practices.
  • To conduct other necessary initiatives for the benefit of the association.
  • To provide education and to create awareness on angel investment in Malaysia to spur the growth of business angels in the country.

Venture Capital

startup funding malaysia venture capital
Source: SloanReview

Venture capital is funding given by investors to startups and SMEs who have the potential to grow in the long-term.

Similar to Angel Investments, financing from Venture Capital can also come from well-off investors, but can also come from investment banks and any other financial institutions.

And it is not just in financial form, venture capital can also offer managerial and technical expertise.

Like Angel Investors, Venture Capital Investors also get equity, however this time, they get a say in company decisions too.

Companies who invest in an SME in Venture Capital financing are usually in the same market.

Angel vs Venture

It was previously thought that Venture Capital can offer more for SMEs in terms of finance. As larger companies or a number of them, tend to have the money to spare.

But now Angel Investors in Malaysia invest in varying amounts as compared to Venture Capital.

There are even groups of Angel Investors that have been putting down investments as large as early stage Venture Capital investment sizes.

Venture Capital

  • A Venture Capital investor seeks strong products or services that have good competitive advantages, a talented management team and a wide potential market.
  • Venture Capital investors can also invest in established companies.
  • Venture Capital investors also keep their own focus and benefit in mind when investing.
  • They invest in those who also have a proven track record.

Asking From Family and Friends

startup funding malaysia friends and family

And finally, if you don’t wanna head to the banks, the government or some generous rich people, then why not consider those closest to you! Why not ask your family and friends to help in funding your startup?

But beware, this form of financing may be unsafe and lacks any form of financial security. Here are the advantages and disadvantages of asking friends and family.

Advantages

If one or a few of them is business savvy, this will be beneficial.

Bringing them on as investors transform them into motivated advisors.

Plus, they will likely be more forgiving than outside investors when it comes to your business’ ups and downs.

Raising money from your personal network can also be a step toward securing money from future investors, because if your family and friends are invested into it, then it must be worth looking at for the larger investors.

Disadvantages

You may risk losing friends if your business doesn’t succeed.

You might also put a strain on your family relations, so the next Hari Raya, Chinese New Year gathering or Deepavali might be a bit awkward if your proposed business has failed on all you friends and family’s money was put to waste.

There is a lot of social pressure as your loved ones are putting faith in your business. And their money.

And knowing how we are in Malaysia, there will be that one auntie who would just gossip about her niece or nephews failed business and how they have wasted her time and money. Auntie can’t seem to give you a break.

Conclusion

Hopefully, by the time you finished reading this article, you can have a good idea of what options you have for startup funding in Malaysia. And there are quite a few ways which Malaysian SMEs and startups can finance themselves to grow.

From government supported programmes, grants, loans generous philanthropists, the generosity of the general public and your own friends and family. The options for acquiring funds are aplenty.

But, opening up a business is never easy, you can’t just rely on these options to keep your business alive. There are a lot of risks to be considered and a lot of motivation is needed to keep going, to meet ends meet and to keep your business afloat.

Many small businesses, unfortunately, are very vulnerable to fail, so the question comes, what is the chances of my business getting off?

We can’t say for sure, because there are many factors which are different, but what we can tell you is that the only thing which can make it any different is you, only you and perhaps your team members have the potential to increase the amount you can earn, you have the power to make your business stand out and appeal to investors and the masses.

These options are just aides to help you, though they may be very beneficial, the true important factor that can make all the changes and determine a business’s future will always be the ambitions of the owners themselves.

A business will be nothing if no ambition, no thought and no plan is put into it.

Thanks for sticking around if you have managed to reach the end of this article, so that being said, be sure to check out blog where we have more business articles lined up for you to gaze your eyes on. And it’s not just limited to business! We have articles on food, lifestyle and entertainment just waiting to be read, so what are you waiting for? Go ahead, go there! Read our articles here!

Sterrific Agency is a creative digital agency with a range of services we provide that are web designbranding, SEO, copywriting and more!

0 comment
0

Related Posts