MALAYSIA Venture Capital Management Bhd (Mavcap) has appointed three local venture capital companies (VCs) to manage RM75 million of the RM500 million Pioneer Venture Capital Fund allocated under Budget 2001.
The three VCs are DTA Ventures Management Sdn Bhd, iSpring Venture Management Sdn Bhd and Photonics Venture Capital Sdn Bhd.
Mavcap is the company mandated by the Finance Ministry on April 19 this year to drive, develop and nurture the information and communications technology (ICT) sector and venture capital industries. Mavcap chairman to the board of advisor, Datuk Mustapa Mohamed, said the appointment of the three VCs expedites the Government's effort to identify, spur and nurture more technology-based start-ups in the near future. "The Government has long since identified the ICT and biotechnology sectors as the next engine of growth for Malaysia's economy and we will strive to develop the sectors," Mustapa told reporters in Kuala Lumpur yesterday.
During the signing, Mavcap was represented by its chairman of the board of directors Dr Abdul Samad Alias and its chief executive Mohd Azwar Mahmud.
Mavcap is actively pursuing seven investment domains which are communications and networking, electronics, semiconductors, Internet, information technology (excluding the Internet), biotechnology and life sciences, medical and health services, devices and equipment and others.
"Towards that end, Mavcap will further appoint one more VC by March next year with emphasis on the VC to manage funds in start-ups delving in biotechnology and life sciences," said Mohd Azwar. He added that currently three VCs have been short-listed and are under due dilligence.
The local outsourcing programme is introduced as an effort to help spur the growth of the local venture capital industry.
When asked when will the RM500 million be fully distributed, Mohd Azwar said to date, Mavcap has received a total of 196 business proposals or an average of 1.8 business applications a day from all sectors.
"A lot of time and work is required to process and study all genuine business proposals, but we have a success rate of 10 per cent," he said.
Mavcap was incorporated by the Government under the direct purview of the Ministry of Finance to manage the RM500 million Pioneer Venture Capital Fund which was tabled in Budget 2001. The fund was set up to cater for the funding requirement of the ICT sector through the development of the local venture capital industry. It is aimed for companies to invest in the venture capital sector for the Government helps to nurture. It also provides alternative source of risk capital to the ICT and high-growth sectors, particularly for start-ups and early-stage companies.
Mustapa added that according to the AVC Journal 2000, the source of venture capital funds raised in 1999 were 45 per cent provided by the Government, whereas corporations constitute 30 per cent and banks 17 per cent. Others are institutional investors such as insurance companies at 5 per cent, provident and pension funds at 1 per cent as well as unit trust and asset management companies at 2 per cent.
Malaysia had 33 venture capital companies last year with a majority of these companies managing funds small in size and with limited global network. Comparatively, there were 132 venture capital companies in Taiwan, 131 in South Korea, 124 in Australia and 85 in Singapore in 1999.
Mustapa said the number of venture capital professionals in 1999 was 78 with most of them with less than five years related work experience with 453 in Singapore, 435 in Korea, 421 in Australia, 381 in Taiwan and 178 in Indonesia.
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