Life.SREDA, MDEC in strategic partnership to launch US$20 million joint fintech fund

Mon Mar 20, 2017 - 11:04am GMT+0000
Life.SREDA, MDEC in strategic partnership to launch US$20 million joint fintech fund
Fintech VC Life.SREDA to launch co-working space in Kuala Lumpur, Malaysia

Life.SREDA, a Singapore-based venture capital (VC) firm with Russian origins, made an announcement that it has entered into a strategic partnership with Malaysia Digital Economy Corporation (MDEC) to launch a joint fintech investment fund. The fund will have its first close at US$20 million, while aiming to reach its hard close of US$50 million by the end of the year.

The announcement also came alongside Life.SREDA’s expansion as it aims to open a new co-working location in Malaysia’s commercial capital Kuala Lumpur. The basis for launching the fund and space, according to Igor Pesin – a partner at Life.SREDA, is due to the overall Malaysian market and fintech ecosystem which has been deemed suitable for real fintech development.

“Regarding the Malaysian market, it looks really promising for fintech prosperity, and in the future can be considered as an ‘Asian platform’ for leading fintech startups from different countries to land for a few reasons,” Pesin said.

He cited several market advantages including the diversity of the Malaysian market to be a testbed for new products and business models originating from different environments. There is also diversity in terms of the people’s income and wealth, banking products, and services penetration, urban and rural customer behavior etc., which allows making pilot projects in “real” environment and then to scale the product across different countries in SE Asia – both developed – Singapore, Hong Kong, Japan, South Korea – and emerging – Indonesia, Vietnam, Philippines, Thailand.

Another reason also includes the youthful and active population with a high demand for new technologies and services, as well as that Malaysia offered a high availability of technical talents, English language penetration, with no major issues related to working visas. This is coupled with a relatively low cost of leaving and doing business.

On Malaysia’s fintech space, Pesin also said: “It’s already quite developed and vibrant, especially after MDEC came into play. Now you can see that new fintech startups are widely launching or expanding from other markets, new regulations and licenses for fintech are being introduced by Central Bank of Malaysia.”

“Traditional leading banks are also becoming more open and closer to fintech startups (i.e. CIMB, Maybank, RHB, Hong Leong and others) and they are really motivated to innovate themselves and cooperate with new non-bank players, and in general Government supports fintech industry on a national level which positively influence to all parts of ecosystem,” he said.

Strategically, Life.SREDA is aiming to diversify its presence and build a footprint across an array of fintech markets, with a presence in Singapore, Russia, UK, and US.

“It doesn’t mean that we will anyhow slow down our business in Singapore. Instead, we see a great synergy of having operations on both neighbor markets and building a bridge between them as well as with other countries of our presence. In the future, we plan for our further geographical expansion in order to facilitate the growth of fintech to other markets. We operate in a digital world and digital world should not have any geographical limitations and barriers,” he said.

“It means that the fintech sector can be 100X bigger than it is now and both Singapore and Malaysia has enormous opportunities for growth. Basically, countries in Southeast Asia are not competing in the fintech space, but collaborating and helping each other,” he added.

With several cross-country initiatives happening in both the public and private sectors, in addition to various new multinational projects which are occurring in 2017, Pesin believes that there will be significant enhancements in the domain of “unified regulation and cross-border connectivity” between banks and fin tech across the region in the short to medium term.

By Vivian Foo, VCNewsNetwork