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Malaysia government allocates RM315 million for tech start-up industry

Image adapted from: http://mdv.com.my/tsfrf3/

The government has allocated RM315 million to strengthen the start-up industry in the country post-COVID-19 pandemic, according to the deputy Science, Technology and Innovation minister Ahmad Amzad Hashim.

He said for that purpose the Ministry of Finance (MoF) had agreed to provide an additional allocation of up to RM100 million to Malaysia Debt Ventures Bhd (MDV) to finance the Technology Start-up Funding Relief Facility (TSFRF).

Based on a survey by Malaysian Global Innovation and Creativity Centre (MAGiC) conducted on April 4, it was discovered that nearly 50 per cent of start-up companies required RM500,000 to RM1 million to ensure the sustainability of their businesses throughout 2020.

To cushion the impact brought forward by the COVID-19 outbreak, MDV with support from Ministry of Science Technology & Innovation and Ministry of Finance had invested RM100 million in Technology Start-ups Funding Relief Facility (TSFRF).

The Technology Start-ups Funding Relief Facility (TSFRF) was created top support technology start-ups that have been impacted by the currently adverse market and economic conditions and funding disruptions.

TSFRF aims to provide immediate and targeted cash flow support for VCs or Government agency-backed technology start-ups to sustain their business operations. TSFRF was made available from May 2020 onwards.

“TSRF which was launched on May 15, 2020 provides financial aid to assist the cash flow of selected companies and was opened to all locally owned technology start-ups or those which were manned by the majority of Malaysians or where a significant portion of the income was generated in the country,” he said.

He was replying to a question by Syed Saddiq Syed Abdul Rahman (Independent-Muar) during the Dewan Rakyat sitting today, who had enquired about plans and initiatives to develop and reinforce the nation’s start-up industry post-COVID-19 pandemic, especially for youths.

Ahmad Amzad said the TSFRF offered a financing tenure of up to five years subject to annual review and exemption of legal fees and the absence of any other additional fees that have to be borne by the borrowers.

“The RM100 million funding for the TSFRF is on top of the allocation which has been provided to ‘tech funding’ agencies under the Ministry of Science, Technology and Innovation (MOSTI)  including Malaysia Debt Ventures Bhd; Cradle Fund Sdn Bhd; MAVCAP and Malaysian Technology Development Corporation (MTDC) before this, making the total sum provided to date to be RM315 million.

“The allocation is channelled to ‘start-ups’ in loans, grants, development capacity initiatives, operational support, market access and others,” he said.

He also that Cradle will also offer a new financing programme in the form of grants amounting to RM26.5 million for 2020 which had begun at the end of June specifically for new applications to help start-ups face the pandemic.

Meanwhile, MAVCAP has launched 2 new equity financing programmes which were known as Lunex totalling RM10 million which focused on ‘fintech start-ups’ and Asia Greentech Fund amounting to US$20 million which aided green technology start-ups.

Ahmad Amzad added that a bridging equity financing programme known as SuperSeed Fund II amounting to US$10 million will be launched in the near future.

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