Malaysia’s Startup Dream

Malaysia wants to become one of the top 20 global startup centers .?

To begin with, the country is aiming to house 5,000 startups , including five billion dollar companies or unicorns, by 2025. But for that to happen, local entrepreneurs need money.?

A major part of that money will come from the government-backed funds. Earlier this month, state-owned VC firm Malaysia Venture Capital Management (Mavcap) announced a goal of doubling VC investments in the country to US$1.4 billion by 2030. VC funding for local startups stood at US$758 million across 165 deals in 2022.

A plan to increase venture capital inflow would also involve seeding new VCs, launching a centralized platform for VCs, and inviting a dozen international firms to set shop in Malaysia.

Notably,?Mavcap reports to Malaysia’s sovereign wealth fund Khazanah Nasional. Last week, Bloomberg reported that Khazanah Nasional is setting up a venture capital of up to 3 billion ringgit (US$627 million) with local pension fund Kumpulan Wang Persaraan Diperbadankan, or KWAP, and Blue Chip Venture Capital.

This fund will target not only local startups but also firms across Southeast Asia.?

The overarching idea is to woo global and regional startups, global tech companies, and international VCs to Malaysia and make the country a preferred choice for them to establish their base.?

This will create high-skilled and high-value jobs as well as develop a pipeline of future entrepreneurs and senior leaders in tech. In turn, this will help build a robust startup ecosystem that will spur economic growth and increase company listings in Kuala Lumpur.

To make that happen, Malaysia has rolled out the Unicorn Golden Pass for global tech firms and unicorns that will offer them a host of benefits like exempted fees for employment passes for senior management, subsidized rental, and concessionary tax rates on corporate profits.?

Global semiconductor giant Arm Holdings and chemical firm OCI Holdings are among those who have already shown interest in investing in the country.

The government has also launched the VC Golden Pass program targeting venture capital firms, which includes an exemption of work visa fees for senior VC executives and speeds up license approval for setting up funds in the country.?

Aside from the government support, what makes the local startup ecosystem promising is the country’s robust economic fundamentals, expanding middle class, and a massive increase in the purchasing power of consumers.?

Plus, Malaysia's strategic location in Southeast Asia positions it as an ideal gateway for startups aiming to expand into other regional markets. Startups can leverage the shared language with Indonesia to facilitate entry into the Indonesian market. Furthermore, Malaysia's cultural diversity enables easier expansion into markets like India and China.

On that note, let’s dive into this week’s recap.?

Buzzing Deals

Indonesian coffee startup Jago Coffee has just raised US$6 million in a series A investment. Beenext Accelerate and Intudo Ventures led the round, while Orzon Ventures and D Global Ventures chipped in. Set up in 2020, Jago Coffee operates a fleet of electric coffee carts roaming around Jakarta. Customers can use the Jago app to order directly from these mobile cafes and their coffees delivered within 15 minutes. With the latest funding,? Jago Coffee aims to expand its coverage in Jakarta to 50% from 7% by 2024. It will also upgrade to machine learning models to find new areas to open.

Singapore-headquartered SWAT Mobility has secured an additional US$3.8 million from NEC & Translink Orchestrating Future Fund and NX Global Innovation Fund to expand its AI-powered transportation platform across Asia. This takes up its total capital raised in this round to US$7.2 million. Founded in 2015, the company helps clients in the mobility space across Singapore, Thailand, the Philippines, and Japan, with efficient travel routes. It has also designed a delivery system for logistics companies and an on-demand transportation system.?

Indonesian biotech startup PathGen Diagnostik Teknologi has received undisclosed funding from East Ventures and Royal Group Indonesia . Founded in 2020, PathGen is developing next-generation sequencing for the diagnosis of cancer and other diseases affordably. To this end, it has developed easy-to-use, PCR-based genetic testing kits for cancers. The firm will use new capital in research and development, technological upgrades, market growth, and other operational aspects. The startup is also developing a digital pathology and AI platform to increase diagnosis accuracy and precision.

Apple, Nvidia bet big on Southeast Asia

American giants Apple and Nvidia have big hopes from Southeast Asia as the race to AI dominance heats up. These two companies are investing generously in AI in the region.?

Vietnam's most valuable tech firm FPT has joined hands with chip giant Nvidia to build a US$200 million AI factory .

Currently, the US$5.5 billion FPT offers a variety of AI, cloud, and big data services. With the help of Nvidia, FPT will advance AI research to develop AI applications for generative AI and autonomous driving at the new facility.?The idea is to make this AI factory a one-stop shop for AI products, GPU infrastructure, tech experts, and domain expertise for clients.?

FPT and Nvidia have also signed a comprehensive strategic partnership. FPT aims to turn Vietnam into an AI hub by partnering with Nvidia for technology, business development, and training. As per the plan, FPT will set up AI facilities in Vietnam and other potential markets including Japan and South Korea.

According to a Reuters report, Nvidia has invested over US$250 million in Vietnam. However, whether the new partnership would increase its investment in the country is unclear.?

Meanwhile, Apple is deepening its presence in Singapore , an emerging AI hub in Asia. The US tech giant will invest over US$250 million to expand its campus in Singapore. As per the company, the expansion will provide “space for growth and new roles” in AI and other key functions. The iPhone maker has been present in Singapore for 43 years and has more than 3,600 employees in the city-state.

Beyond Southeast Asia, Oracle Corporation has committed over US$8 billion to be spent over the next decade on cloud computing and AI infrastructure in Japan. This move follows Microsoft's announcement to invest US$2.9 billion to enhance its cloud computing and AI capabilities in Japan.?

M&As Surge in Southeast Asia

The Southeast Asia market is seeing robust mergers and acquisitions of late.?

Thunes Goes to the US: Singapore-headquartered cross-border payment firm Thunes is set to acquire Tilia, a US-based payments provider for online games, virtual worlds, and creator economies for an undisclosed amount. Thunes, which helps businesses send and accept payments across different countries, has offices in London, Shanghai, Beijing, Dubai, Hong Kong, and Miami. The deal would allow the company to offer its services to US merchants, including Tilia’s customers. Once regulators approve the deal, San Francisco-headquartered Tilia will take on the Thunes brand.

Biotech M&A in Indonesia : Jakarta-based listed laboratory chain Diagnos Laboratorium plans to acquire a 98% stake in Asa Ren, a DNA testing company for US$24 million. Diagnos, present in five cities in Indonesia, offers a genomics lab as well as home care services. Meanwhile, Asa Ren,? incorporated in Singapore in 2016 but operating in Indonesia, claims to be the world’s most diverse biobank, with datasets on Indonesia’s many ethnicities. Its goals include expediting drug discoveries, forecasting infectious outbreaks, and optimizing personalized therapies.

Customer Experience Meets AI : Singapore-based cloud communications and customer experience (CX) solution provider Toku plans to acquire AiChat, a local conversational AI customer experience platform, although the deal size remains undisclosed. AiChat helps brands automate business processes in customer service, marketing, and e-commerce. Through this acquisition, Toku aims to enhance its product suite with conversational AI capabilities, positioning itself as a one-stop-shop CX tech firm. Toku expects a 50% revenue growth within the first year after acquiring AiChat.

And that’s the wrap for this edition of #ICYMI . We will continue to curate the weekly highlights of the Asian tech ecosystem in case you missed what made the buzz in the week that just went by. You can subscribe to #ICYMI to get it every Thursday to stay abreast of noteworthy tech developments.