The venture into risk capital

I have now served over 10 years of my life in the early stage development in the technology entrepreneur sphere, starting from plunging myself into entrepreneurship when I was 21 and receiving my first venture capital investment of 1 million Ringgit at the age of 25.

The early years being on the other side of the fence (receiving side) was somewhat different , in contrast I spent the later half of the 10 on the other side of the fence in early stage funding, giving pre seed grants and moved on to facilitating and nurturing early stage companies into the market.

For what its worth there are peers like me , and there are individuals with greater experience building companies out there. how I view things now and how I view things in those early days somewhat differs , the view you have from the entrepreneurial sit at a conference and the view you have from the speakers seat representing Government agencies in early stage funding is never the same.

However both has it weaknesses and strength , as much. I would like to delve into the weakness of our entrepreneurial ecosystem that creates somewhat a lower culture for entrepreneurship , what I will do in this note is to highlight what is wrong about our risk capital ecosystem in Malaysia.

It is all bout understanding what risk capital is all about!

What are we actually dealing with when we plunge ourselves into the venture capital industry, it all started with the Multimedia Super Corridor, we identified that there need to be a financing mechanism for growth in innovation, modeled after the success of Silicon Valley, my bosses and big bosses back then launched a Malaysian Government effort and MAVCAP was introduced together with MESDAQ a replica model of VC and Nasdaq . A great effort although I was to way down the hierarchy of the organization structure to really know how they planned it.



Almost 16 years later today , we have now a government backed Venture Capital ecosystem our one journey took a minimum of 2 cycles everywhere else around the world . friends , individuals and venture capitalist in Malaysia was majority headhunted from banks and private equity firms . the American VC model has gone many cycles , change business models and still we have yet the success that we hope we had. However entrepreneurs and Venture Capitalist will argue about success and quality of deal flows that brings me to my personal observation which I hope to simplify in these few paragraphs below :

Does the industry really understand what risk capital is all about?
have you ever asked a local VC , what is the purpose of their existence and what is their risk appetite?
amazon.com is an example of a venture that benefitted from a healthy risk capital model. It went hyped, busted and went it was black again it was again in the highlights o the media , and why I quote Amazon , is that
1. they did not have a proven business model to begin with
2. it went through a full cycle from seed financing all the way to IPO
3. Only after it is well capitalized that it started to go DOWN
4. but what Amazon have was enough money to hold on to prove their untested
business model
5. Amazon held on with sufficient money until it turn black and the company is
now profitable.

Obviously there are many more factors then what I described , a good team to make it black , a good ecosystem of funders at every stage of the growth and obviously active NASDAQ market and booming mergers and acquisition ecosystem.And off course a sustainable market place to operate.


All the above is the result of a working risk capital infrastructure. Which leads me to some questions we should ask ourselves about Malaysia.
1. have we capitalized a company at the Idea stage and nurtured it into black with sufficient capitalization on a solid financing at different levels of growth?
2. Do we have a solid business model post investment ( which means that the business model needs to be contributed by the investing VC) that we are able to push companies to the black? if we didn't have enough market why isn't local VC investing early into regional game plan from day one?

3. We don't have the talents? Jerry Yang or the google guys did not have the talents to build yahoo or google to where they are right now? the talent came from the VC ecosystem.
4. Do we have funders at every growth stage of the company, If we did do they really understand the whole risk capital game plan?
5. is the Government doing too much? Funding the entire risk capital mechanism? From grants to Venture Capital?
6. is our local homegrown big boys into acquiring talented new startups to create a healthy mergers & Acquisition ecosystem?
7. Is the mentoring done by the local VC sufficient ? Did the companies improved and went onto the black post having a VC in the company?

the point is these are upon many of the crucial points towards risk capital development and till today I learnt that the risk capital infrastructure has a collateral......... Like the bank loans need a collateral from you when you borrow money...... the Risk capital's collateral is somewhat different the collateral is not from the entrepreneur but the collateral is to be given by the VC .....the collateral is .....MENTORING.....

after all these years in early stage development , that was what we did in Cradle we emphasized on developmental nurturing even when we evaluated who to give the grants to and all the way after we gave them the money...we never stop MENTORING....

.....to be continued.......

Bootsrapping a core essential!

in most cases, we are normally challenged in the face of opportunity, life is like that! at times were pressed for money, skills or sometimes time and energy to chase the opportunity ahead. Some end up in chasing dreams that were never destined to be theirs in the first place. What I gain through these years is that you have no choice but to be in some form of control over your destiny as an entrepreneur. Being born in a lower middle income environment in Kuala Lumpur, money was never luxurious for me in those childhood days in school. Hence I am never submissive to be disadvantaged by it, I know deep in myself I will be a respectable and successfull entrepreneur,

Discovering the true meaning of bootsrapping is really inspiring, put to test I have managed to build a further the brand with the little resources to begin with. Catalyst is now accepted in the graduate business school of University Malaya and the entrepreneurial fraternity. The trigger for me to pursue further the bootstrapping technique has led to the creation of Bootsrapper's Asia on facebook for me If i can grow this community I will be directly contributing to the growth of entrepreneurs of a different breed the one that has the tenets to survive. Here is the Bootstrapper's Manifesto shared,

Bootstrapper's Manifesto - Seth Godin

I pledge to know more about my field than anyone else I will read and learn and teach. My greatest asset is the value I can add to my clients through my efforts.

I realise that treating people well on the way up will make it nicer for me on the way back down. I will be scrupulously honest and overt in my dealings, and wont use my position as a fearless bootstrapper to gain unfair advantage. My reputation will follow me wherever I go, and I will invest in it daily and and protect it fiercely

I am the underdog. I realise that others are rooting for me to succeed, and I will gratefully accept their help when offered. I also understand the power of favours, and I will offer them whenever I can.

I have less to lose than most, a fact I can turn into a significant Competitive advantage.

I am a salesperson. sooner or later , my income will depend on sales, and those sales can be made by only me , not by an emissary, not by a rep. I will sell by helping others get what they want, by identifying needs and filling them.

I am a guerilla. I will be persistent , consistent , and willing to invest in the marketing of myself and my business.

I will measure what I do , and wont lie about it to myself or my spouse . I will set strict financial goals and honestly evaluate my performance . I'll set limits on time and money and wont exceed either.

Most of all, I'll remember that the journey is the reward . I will learn and grow and enjoy every single day.

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Five Ways to Move your Startup Forward without Cash

Five Ways to Move your Startup Forward without Cash


OK, so no one has written you a check to fund your startup. What are you doing while you're waiting for that check?

If the answer is "nothing" and you think getting a check is the only way to start a business, I've got news for you. There are a lot of ways to move your startup forward without having cash in the bank.

Let's assume that it will probably take longer than you think it will to get funded, if you get a check at all. In the meantime, the more you can get done in the time you're waiting and pitching, the further along you'll be when you're ready to launch.

As a bonus, the further along you are before you get funded, the less equity you will potentially have to give up. Getting more done makes your company more valuable, which means you can command a higher premium for the equity you're about to give up!

There are countless ways to move the ball forward without cash. Here are just five:

Do all the setup stuff now. It costs next to nothing to incorporate, setup your bank accounts, draft your partnership agreements, find your hosting provider, shop for computers, locate office space, re-write your marketing plan, etc. The only reason you should avoid any of this now is if you are right in the middle of selling to your first paying customer!

Start recruiting. You don't need to wait until you have money to recruit talent. At the very least you can start having a coffee with these people and get the conversation going. Don't think of "interviewing" in the sense that you have to make a hiring decision today. You need people "on deck" so you can pull the trigger at a moment's notice.

Work on the product yourself. Even prototyping the product as best you can without cash is a big deal. It sets you further down the path of getting your product to market and gives you the opportunity to critically think about your actual product, not just your business. When the money does arrive to complete the product, you'll be further ahead of the game. Heck, you might even finish it.

Talk to prospective customers. Sure, you don't have a product now, but that's no reason to avoid talking to customers. Even if all you have are prototypes or a general concept for the product, the faster you can get some real customer feedback the better. More importantly, you're looking for your "venture customers" - the people that will invest in your idea by being the first customer to write a check. Not only will this help you raise capital, it'll put you light years ahead in your launch.

Work off of a "no cash" plan. When you write a business plan with the idea of getting funded in mind, you tend to think about your growth in terms of "if I get funded, I can start." Try writing a business plan that involves zero funding and begin putting your milestones in place for that company. This may stretch development timelines, force you to run lean, or only partially realize your true vision - but it's forward progress.

The last point about the "no cash" plan is particularly important. Funding is best used to help accelerate the growth of a business, not pay for its formation. Banking completely on funding to get going is a bad bet - focus on a plan that avoids funding until it's absolutely necessary.

B.O.D. Softlaunch 17 January 2007

Board Of Directors (B.O.D) Reality TV Show Soft Launch
“Don’t Dream It, Live It!”


17th January 2007, Kuala Lumpur – For the first time, the Cradle Investment Programme (CIP) together with Mavcap, will be embarking on a new path of producing a reality TV show tentatively titled the “Board of Directors”.

BOD is an edgy 13-episodes reality TV programme that engages participants and viewers through a dynamic experiential learning – exposing them to the passion and hardship of life at the beginning of the entrepreneurial journey.

Recruits of BOD contestants consists of aspiring entrepreneurs, innovators and professionals of varying ages and may even feature ongoing and successful Mavcap or Cradle entrepreneurs. Together, the recruits will compete with one another in the pursuit of the coveted CEO’s seat; of the one winning company that will arise amongst the four competing company teams. The Board of Directors that will scrutinize and penalize the teams based on their weekly performance will even include Kuala Lumpur Business Club (KLBC) members and other industry captain’s guest judges. Over time, recruits will be terminated gradually, leaving just one to fill in the position of the “CEO” that will run the surviving company at the end of the season.

“We want to inspire viewers to pursue their dreams, create an excitement in the community and highlight challenges facing local entrepreneurs.” says Puan Kasmawati Sulong, Vice President, Mavcap.

The BOD series will follow closely how budding Entrepreneurs innovative ideas are managed and their business plans are made. A group of entrepreneurs manage a real-time corporation from the ground up, tackling the types of corporate dilemmas and technical issues that help shape them into the successful budding entrepreneurs found in Malaysia today. If the contestants impress the Board Of Directors with their decision making skills, they are rewarded with new incentives and new tools to keep the company afloat, otherwise it's trouble, with one contestant being voted out by their own colleagues in the boardroom every week, while the rest of the groups live to work another week. Mergers, acquisitions, financial management and stressful competitive environments are just some of the ingredients in store.

For Cradle, The BOD campaign will target over 8 million viewers, bringing tremendous exposure value that will not only accelerate the awareness and profile of Cradle and its ecosystem partners, but its position as the bridge for future aspiring entrepreneurs. Cradle would be able to increase substantially its funding programme applications and deal flows derived from the extensive media coverage.

The programme would be a major platform to bridge the expectations of key stakeholders in the entrepreneurial and funding ecosystem as well. There are over RM 4 billion of funds dedicated towards assisting entrepreneurs and there are several industrial and government backed institutions providing assistance and resources to aid entrepreneurs, however the problem lies in this information not reaching the masses.

There is a limited platform that can reach out, create the awareness and convey the various incentives to the entrepreneurs on the ground and develop the human capital aspects for fundamentally strong international quality entrepreneurs. In order to generate the inflow of entrepreneurial talent needed to achieve what is aspired by the Government as a fully developed nation by 2020, a more aggressive approach has to be initiated.

For the sponsors, the BOD Reality TV Series will be an extensive avenue for companies to engage in community building via entrepreneurial development as part of their Corporate Social Responsibility (CSR). This is in line with the efforts of the Securities Commission to promote CSR as a fundamental value in the operations of Public Listed companies.

Furthermore, the weekly television episodes will provide a good branding exposure for them where entrepreneurs are required to undertake the business and skills challenges tailored to be closest to the local market environment as well as incorporate their brand and products. To yield a better value, each premium sponsor will be entitled to an episode customised to the sponsor’s challenge. Each week will be different and unpredictable.

The Cradle Investment Programme (CIP) is a conditional grant program initiated by Malaysia Venture Capital Management Berhad (Mavcap) to help entrepreneurs crystallize their technology-related ideas into commercially viable products and services. CIP offers pre-seed funding of up to RM 50, 000 for technology ideas which includes ICT, biotechnology and life sciences. Other areas such as inventions, creative content, agro tech, and technologies that help develop any industry are also considered. Ideas funded ideally should be those that are either commercially viable, with high growth and investment potential; or has a technology innovation with commercial value.

CIP is based on the philosophy of development funding, which is an alternative form of funding to venture capital funding, especially in the early stages of a venture. Development funding is not solely confined to funds per se but incorporates all other elements which strengthen the viability of early stage technology business ideas or ventures.

The objective behind CIP is to stimulate technology entrepreneurship through an environment conducive for commercialization and to bring out the innovative spirit and talent within Malaysians, especially in technology-related areas, in achieve our national goals like the MSC, Knowledge Economy and Vision 2020. CIP aims to be the catalyst to creating a critical mass of technology exporting entrepreneurs in Malaysia and amongst them, perhaps, the seeds of a few world-class companies, in the future.

Elements like domain expertise mentoring, industry-based commercialization partners, a marketplace for ideas to be matched with investors, linkages between corporate, financiers, universities, researchers and entrepreneurs, market penetration efforts and fostering intrapreneurship are all essential components that help early stage ventures succeed.

Yes, it is true that entrepreneurship is tough, but political economic research has shown that entrepreneurship does thrive where at least most, if not all of the above elements are conducive to ideas and entrepreneurship. Countries tend to prosper, where the culture of entrepreneurship is strong. BOD Reality TV Show aims to amplify, encourage and accelerate this.

4 Companies, 20 Contestants. Which company will be the best managed? Which CEO will go on to manage the business after the season is over? Who will reign supreme as the outstanding entrepreneur? Look out for the new Reality TV series, the “Board Of Directors”, daring you to “Don’t Dream It, Live it!”

About Cradle Investment Programme

Cradle Investment Programme (CIP) is Malaysia's first development fund which helps to convert raw ideas into commercial ventures.

The pre-seed funding programme provides conditional grants of up to RM50, 000 for innovative technology and bright commercial value ideas submitted by groups of individuals, focusing on diverse ICT and high growth technology industries, including software and information services; electronics and biotechnology. Funds are provided for the development of prototypes up to proof-of-concepts and business plans.

Under Cradle's mentoring program, which is done in partnership with qualified industry professionals, successful applicants are guided on how to develop their ideas, from research, developing prototypes and business plans to preparing for seed and later stage funding.

The Ideas Bank is a repository of the completed CIP projects funded for presentation to potential investors and venture capital partners for further funding.

Applications for grants are submitted online via Cradle's informative website www.cradle.com.my

Cradle is initiated under the auspices of the Ministry of Finance (MoF) and is managed by Malaysia Venture Capital Management Berhad (MAVCAP). MAVCAP is a wholly owned subsidiary of MoF. Cradle is fully supported by its community partners comprising such industry bodies and associations as:

• Multimedia Development Corporation (MDeC)
• MCA ICT Resource Centre (MIRC)
• Malaysian Biotechnology Corporation (MBC)
• Technopreneurs Association of Malaysia (TeAM)
• National Entrepreneurs Foundation (NEF)
• Talent Ideas Enterprise Malaysia Chapter (TiE)
• Association of the Computer & Multimedia Industry (PIKOM)
• National Association Women Entrepreneurs Malaysia (NAWEM)
• Malaysian Invention & Design Society (MINDS)
• MCA ICT Resource Centre (MiRC)
• Majlis Amanah Rakyat (MARA)
• Microsoft Malaysia
• Oracle and many more industry partners.



About Malaysia Venture Capital Management Bhd

MAVCAP was incorporated on 19th April 2001 by the Government of Malaysia and was allocated RM500 million by the Minister of Finance Inc for investment in, nurturing and growing the technology sector and the investing and growing of venture capital market in Malaysia. It is a bold Government-initiated and private-sector managed move to continue to bolster and spearhead the country's charge towards a complete knowledge-based economy before 2020.

MAVCAP is a truly unique venture capital company in the way it is set up and managed. It is committed purely to the ICT sectors and will invest in a mix of local and overseas businesses to bring together a successful blend of technologies and entrepreneurial skills.




About LOCOMO:

Locomo’s core service offering can be categorized in 3 different key areas , Human Capital development programs especially in entrepreneurship development and innovation, media design and strategic Innovative technology and information mapping.

Locomo is the management company of the Entrepreneur Competency Center in Kuala Lumpur University providing strategic experiental learning content delivery to breed young aspiring entrepreneurs. Via its partners Locomo provides strategic scenario planning, and unique methodologies of experiental learning in areas of entrepreneurship and technology

Locomo’s media division together with its subsidiary Amedia Sdn Bhd the operator of “Stickonme” outdoor media company brings creative design to the BOD campaign.


About WhiteLogic:

The White Logic Group of Companies provides Media Management Solutions. From Design, Advertising and Promotions Planning, Branding, Content Creation, Production, Broadcast Management, Outdoor and Ambient Media, Events, and Publishing. They provide solutions to expose your brand into full view. White Logic connects your brand with their markets, partners and peers.

White Logic recognizes the needs to adapt quickly to changing market demands. To provide maximum value for our products and services, White Logic will seek new ventures and activities that leverage on our core competencies and resources to further strengthen our value proposition to clients and our position within the industry.


Issued by Cradle Investment Programme

A Reality TV Show for Entrepreneurs

BOD is an edgy 13-episodes reality TV programme that ensconces participants (recruits) & viewers through a dynamic experiential learning – exposing them to the passion and hardship of life at the beginning of the entrepreneurial journey. The programme would be a major media platform to bridge the expectations of key stakeholders in the entrepreneurial ecosystem.

Recruits of BOD would consist of aspiring entrepreneurs, innovators and professionals. Together, the recruits would compete with one another in the pursuit of the CEO’s seat; of the one winning subsidiary that will arise amongst the four competing subsidiary companies. The Board that will scrutinize and penalize the subsidiaries based on their weekly performance will include KLBC members. Over time, recruits will be terminated gradually, leaving just one to fill in the position of THE CEO that will run the surviving company at the end of the season.

A new year

A new year and the journey continues , The Catalyst program has gone through six months of inception with University of Kuala Lumpur. We have had six lecture sessions with the participants and an they have attended an event organised by Malaysian Venture Capital Association and Mavcap. The challenge is to enhance the experiential learning of the participants who are mainly students in the journey to change the mindsets into a fundamentally equipped entrepreneurs in its true sense.

For those who are new to Catalyst , Catalyst is a human capital development program managed by Locomo Sdn Bhd focusing in the development of leaders
and entrepreneurs , A journey that breaks cultural barriers and imparts ethical and fundamental values in the next generation of entrepreneurs. As oppose to the environmental make of the entrepreneurial landscape which are fueled by negative influences, the Catalyst aims to create strong individuals with a strong sense of social responsibility, entrepreneurs who thrives on innovation and can steer through challenges .

The current landscape of our focus is in Malaysia , with the hope that this program will change the lives of the few that we touch and would spread in a positive contagious manner we hope to transform individuals and assist them in achieving their dreams. and this year 2007, earmarks the escalation of our program , the journey will continue to expand from our incubator in UNIKL . A Journey thread with passion , we hope to live our dreams in the near future ,

Thank you for those who have contributed to our journey and we welcome all that are inspired by us!

To a good year ahead

Rizal Alwani
Founder, Catalyst Program

Failure A bridge to Success

"Entrepreneurship is a journey, you will not know what will hit you next, therefore relax and enjoy the ride!" It was a quote I picked up at a recent seminar in KUTPM . It was really true , it probably is the essence of any journey that begets success.

I have made a simple observation on the topic , it is those who are visionary are normally blessed with failures early,traditionally innovative individuals are challenging an ecosystem which is no different then waging wars , a journey that can never be achieved without some initial failures.

Embrace failures and differentiate!

A failure can be devastating and the angles of failures come in so many perspective and form. for me entrepreneurship is a journey to be independant. Failures are the reaction of either ignorance, inexperience or utter stubborness that clouds our decision and actions.

However for each individuals a weakness of one can be a strength of another, therefore although most people do come across similar failures however the cause and remedy to each needs a customised approach. This is probably one of the reasons why people do not want to share their failures openly in fear of being ridiculed by other people .

As human beings we differ in our abilities to identify our weaknesses some are aware of it but finds it hard to execute the remedial actions to improve and solve their problems. Some have higher egos and would not admit to a weakness , however this individual would fare better in the remedial plans .

I have seen great individuals not doing so well probably the benchmark is higher for them , the problem lies in so many areas , I am one who believes that the journey that we took to get us where we are today is a reflection of how well we learn from our failures , if we have recognised them and take remedial steps and acquire indepth knowledge on the solutions we would be in a better state then we were before .

I have come to recognise that anger and disattisfactions clouds us as we whine about the imperfection of the environment and blame it for our failures . we have to realise that the environment as challenging as it maybe has no better strength than our determination to succeed , realistically, we would always be in a situation where we're against the odds for it is the tenets of innovation and true entrepreneurship, As I have emphasised in my lecture in the Catalyst Program the road to success in innovating is filled with hardships we should learn to climb the mountain one step at a time. Overcome the nearest hill and more hills to come before having a go at the highest peak.

With every failure, recover and dynamically adapt and change to prepare for bigger challenges to come , whats more important is we keep on moving and steer ourselves in the right direction , make adjustments as we learn new things. Find collaborators that will strengthen us , prepare ourselves for that greed is prominent and are barriers to succesful collaboration , address it well in every partnership and endeavours...

It does not matter if you fail it matters most that you learn from it!