March 2, 2017 —
KUALA LUMPUR, MALAYSIA – 27 FEBRUARY 2017 – Cradle Fund Sdn Bhd (Cradle) the early stage start-up influencer, today announced its new investment product called DEQ800, following its investment portfolio expansion effective February 2017. DEQ800 is the abbreviation for Direct Equity 800, a form of equity investment that offers capital injection of between RM 300,000 to RM 800,000 for local early stage tech start-ups.
DEQ800 comes as the next phase of product offering after Cradle’s co-investment programme that was first introduced in 2014. The launch marks Cradle’s new direction in supporting tech start-ups, particularly those at early stage.
According to Nazrin Hassan, Group CEO of Cradle, the new direction is in line with the government’s intent to wean the market off grants in funding early stage start-up noting that half of Cradle’s total allocation in 2017 given by the Ministry of Finance, is in the form of equity funding as the agency gradually evolves from its grant funding model to equity investment model.
He further viewed the new direction and launch of DEQ800 as a testament to Cradle’s continuous commitment to fund start-ups with strong growth potential and elevate Malaysian start-up ecosystem to greater heights.
‘‘The launch of our new product clearly demonstrates our relentless passion and tenacity to build great Malaysian start-ups and fortify the nation’s start-up ecosystem, ultimately. We believe DEQ800 will serve as a crisp avenue for start-ups with clear growth and good exit potentials at pre-seed and seed stages to raise capital for their businesses and help achieve these objectives,’’ he said.
Focused investment sectors under this initiative include areas within the National Key Economic Areas (NKEA) such as Financial Services; Tourism; Business Service; Electrical & Electronics; Wholesale and Retail; Education; Healthcare; Communications Content and Infrastructure; Oil, Gas and Energy; and Agriculture. In addition, Cradle shall also include ICT and Non-ICT sectors under its radar.
Meanwhile, targeted and potential investee companies are start-ups with tech-based products or services.
Nazrin later shared that Cradle’s DEQ800 brings more value to the table than capital injection alone.
“Our strong entrepreneurial heritage and extensive experience in pre-seed and seed stages will give us the upper hand in catering to the start-ups’ needs for growth. Rather than just putting money in their ventures, the product, through various subject matter experts, will help build them through various value-added services such as in the areas of mentoring, commercialisation support and many others,’’ he explained.
Additionally, Nazrin said having the access to ecosystem players is also amongst the key benefits start-ups get to enjoy when they receive investment under DEQ800.
He added, ‘‘one major advantage of getting seed funded by Cradle is that our start-ups can look forward to leverage our ecosystem of diversified investor groups which can add value to their knowledge and experience as they strive to scale beyond their home market.’’
With regard to the product outcome, Nazrin hoped that DEQ800 could serve as an alternative to stimulate the growth of high-potential Malaysian tech start-ups and make the early stage funding ecosystem in Malaysia, more robust, albeit the current economic downturn and government’s stance on reducing dependence on grants.
Additionally, he wished to look forward to the day where DEQ800 could close the funding gap in the nation’s seed stage where there are very few players that invest below RM 800,000.
On a strategic side, Cradle plans to invest in up to 10 start-ups under direct equity and close 3 co-investment deals in 2017.
Prior to this, Cradle’s equity investment was practised via one-to-one partnership. However, following the portfolio expansion, the co-investment initiative will see a significant change with the introduction of two-to-one ratio. This means Cradle will double every matching contribution with its partners on their co-investment deals.
In relation to this, the ticket size for co-investment also sees a little rise to RM 800,000 from RM 500,000 from previous years.
Cradle Fund Sdn Bhd (Cradle), an agency under the Ministry of Finance Malaysia (MOF) is the organisation that manages the Cradle Investment Programme. The MOF had allocated RM100 million to Cradle for this programme since it began in 2003.
The agency was awarded with an additional allocation of RM175 million for the 2011-2015 period, under the 10th Malaysia Plan. Cradle now runs the Coach and Grow Programme (CGP), a market-driven programme to train entrepreneurs and also administers the Angel Tax Incentive, which was designed for angel investors to be accorded a tax deduction of up to RM500,000.
The organisation has been expanding its capacity by venturing in co-investment partnership. Since its inception, Cradle has helped over 700 Malaysian tech start-ups and holds the highest commercialisation rate amongst government grants in the country.
Cradle Seed Ventures (CSV) is a subsidiary of the venture capital arm of Cradle Fund Sdn Bhd focusing on early stage venture fund based out of Malaysia. CSV has added strength of being able to leverage Cradle’s experience in supporting early-stage start-ups, understanding their funding and operational needs and also be by their side when they scale in their local Malaysian market and to foreign shores.
For more information on Cradle, please visit www.cradle.com.my
For media queries relating to Cradle’s DEQ800, please contact Ashraff Taharim at 019-278 9760 or email firstname.lastname@example.org
This news is published on Reuters.