 Family and friends

◦ Funding to grow business sufficiently to outsiders

◦ First step towards exposing business to investors
 Angel
◦ Give money without expecting much returns
◦ May invest in idea/ plan, but for smaller amount
of money
◦ Some are professional angels – assist in
developing business and access to further funding
 Venture capital
◦ The “real” thing
 Equity investor (Cash for Shares)
 Early-stage, high-potential, growth companies in
the interest of generating a return through an eventual
realization event such as an IPO or trade sale of the
company
 Compliment bank lending/facilities to finance innovative
(high-risk) SMEs at various stages of life cycle (seed to
expansion/late)
 Provide alternative source of financing especially for early
stage SMEs in ICT sector, biotech, ..
 Enhance “bankability” of SMEs, entrepreneurship,
corporate governance, marketing, product development
and technology enhancement.
 New companies with limited operating history
 Too small to raise capital in the public markets
 Too immature to secure a bank loan or complete
a debt offering.

 In exchange for the high risk that venture

capitalists assume by investing in smaller and
less mature companies, venture capitalists
usually get significant control over company
decisions, in addition to a significant portion of
the company's ownership (and consequently
value).
 (RM)
FUNDING
Concept

<50K
Co Formation

Alpha

<2M
Beta
3-6 months

Early Adopter
12-24 months

Commercialization

Product Expansion

Market Expansion

Listing or Sale
24-60 months

TIME
 Preferably when there is more than idea to
fund – funding of ideas only works in US
 Pre-seed or research money is the first step

– not necessarily VC funding

 VCs are in no hurry to invest: Intro-to-

investment may take 3 – 12 months

 Try to develop a relationship with a VC with

the intention of talking about the

investment in the future
 Product and/ or technology review
 Management team
◦ Can the team execute?
 Business review
◦ Estimated market size: growing/ shrinking rate?
◦ Customer acquisition potential
◦ Are costs an issue?
 Risk factors
◦ What are the competitive advantages? Sustainable?
◦ What are the risks and mitigating factors?
◦ What is the exit potential?

 Point to note! A good business may not necessarily

be a good VC investment
 Product / Service
 Is value proposition defined ?
 How will value proposition develop ?
Is product locally or globally benchmarked ?
What are competitive offering ?

Mgmt
Market Potential / Access
 Is it growing ?
 Are drivers known ?
 Acceptance of new products ?
 Are there dominant suppliers ?
Funding / Capital Markets
 What is the need for further funding ?
 Are grants available ?
 Availability of further funding ?
 Access to capital markets for exit ?
 VC Funding
Value Per Share

$2,000,000 for
40,000 shares
at $50 each.

Family & Friends

$200,000 for
20,000 shares
at $10 each.

Seed Capital Time

$50,000 for 20,000
shares at $2.50
each,
with Founder getting
30,000 “free
shares”.
Value Per Share

Financing Rounds

Shareholder No of Share Amount Seed Angel VC Company

Shares Price Raised Pctg. Pctg. Pctg Value
Founder 30,000 60% 42% 27%
Seed Investor 20,000 2.50 50,000 40% 29% 18% 125,000
F&F Investor 20,000 10.00 200,000 29% 18% 700,000
VC Investor 40,000 50.00 2,000,000 Time 37% 5,500,000
Total 110,000 2,250,000 100
 Family &
Value Per Share

Friends
$200,000 for Bail-out Funding
20,000 shares $400,000 for
at $10 each. 100,000 shares
at $4 each.

No of Share Amount Company

Seed Capital Shareholder Shares Price Time
Raised Pctg. Value
$50,000 for 20,000 Founder 30,000 18%
shares at $2.50
each, Seed Investor 20,000 2.50 50,000 12% 125,000
with Founder getting F&F Investor 20,000 10.00 200,000 12% 700,000
30,000 “free
Bail Out 100,000 4.00 400,000 58% 680,000
shares”.
Total 170,000 650,000 100%
 No proper understanding of the business
 Value proposition is “unclear” and hence cannot be
communicated.
 Wrong focus
 Focus on valuation & funding
 Focus on technology
 No customer engagement
 No sales (revenue) focus
 Unable to manage the business
 Financial and other controls
 “Hire fast” but “fire slow”
 Team not rowing in the same direction.
 A technology venture capital company
 Wholly-owned by Minister of Finance Inc.
 Launched in April 2001
 RM1 billion currently under management
 Invests in ICT related domain and high-growth
sectors
 More than 90 portfolio companies in the past 7
years
 Successful exits:
◦ IPO - UnrealMind, MEMs, GPRO Technologies, ISS
consulting
◦ Trade sale - Ada Cellworks, Leinet Technology,
iNavigate, INix Technologies
 Empower entrepreneurs to create new
wealth
◦ Invests in ICT and high-growth sectors
◦ Seed  pre-IPO

 Develop the local VC industry

◦ Outsource Partners Program 1 (RM100
mil) 4 VC funds
◦ Outsource Partners Program 2
(RM200mil) up to 7 VC funds
 Information Technology (CMC inclusive)
 Internet
 Electronics/Semiconductor
 Communications & Networking
 Other high-growth technology businesses
 Invest in technology-based private startup
companies
 3-5 year investment horizon
 Board seat, participate/drive key decisions
 Seed and early-stage
◦ Initial investments of RM$1-3Mil
◦ Typical for Mezzanine ~ RM5 - 10Mil
 Initial investments and follow-on rounds to fund
company through to exit
 Geographical Focus
◦ Mainly in Malaysian incorporated companies
◦ Foreign companies with Malaysian angle (technology,
regional expansion, etc) for strategic reasons
 Proactive value-adding
 Corporate governance
 Management team
 Network and portfolio linkage
 Operating experience (insights)
 Commercialization strategies
 Fundraising strategy
 THANK YOU

Visit us at www.mavcap.com
Tel : +603.2050.3000
Fax : +603.2698.3800