My start-up (now dead) attended the first batch of the MaGIC's Global Accelerator program (GAP) by the Malaysian government in 2017. The talks were bad, the "mentors" were useless and everything was extremely inefficient. Most of the founders who came only stayed for the first few days, realised the situation and dropped their interns for the free co-working space, and left. The whole program smelled like money laundering or nepotism at best. I thought it was satire when I read this headline.<p>Also, at least >70% of the start-ups in my cohort have died by now. Maybe one or two good ones exited (who were already doing really well before joining).
The startup scene is just a side-effect of all the correct economic, political and social conditions being in the same place. A healthy startup scene is good evidence that your country is strong enough to take risks, but imo not something you can likely just launch into having.
Exits are the number one ingredient for a startup ecosystem. If there’s no market for exits, there’s no investment.<p>Silicon Valley has the best environment in the world-outside-of-China for exits. Large tech companies are frequent acquirers. Large companies in Malaysia, or Japan, or almost anywhere else, acquire rarely.
Ah yes, governements like to think they can create a startup eco system by throwing money at it.<p>The EU thinks the same way:
<a href="https://www.neweurope.eu/article/eu-plans-digital-startup-investment-fund/" rel="nofollow">https://www.neweurope.eu/article/eu-plans-digital-startup-in...</a><p>But in the end many other factors are also (maybe even more) important. In the case of the EU having different languages, different cultures, different tax systems, different and strong regulations in many areas really does not help.
Malaysia was scammed out of $4.5B, via a prior "1MDB" state-funded investment initiative targeted at "real estate, Middle East oil and other sectors":<p><a href="https://www.latimes.com/world/la-fg-malaysia-1mdb-hollywood-20190710-story.html" rel="nofollow">https://www.latimes.com/world/la-fg-malaysia-1mdb-hollywood-...</a><p>Venture investing is probably even harder to properly police against self-dealing that happens under cover of "a big contrarian vision".
Chile tried something similar, with StartupChile which I participated in circa 2011. My impression was that there were some very productive and interesting startups formed, while a <i>lot</i> of money was wasted.
"If Malaysia-based capital becomes more involved in the scene, there could be dividends at home, giving the country more leverage to persuade these companies to set up operations within its shores and employ and train locals – a multiplier effect for both capital and jobs, say industry players."<p>If Malaysian ops is a poor decision if your VC isn't Malaysia, it wouldn't magically become a good decision if your VC is Malaysia. Which suggests that this strings-attached money might not be in the fiduciary interests of the company.
My impression is these people aren't hypothesis driven. The smart money seems to look at things and say, "I think the world is going to need disintermediation, curation and retribalization, and leapfrog technologies for emerging markets. You either sustain an existing customers business model or you disrupt it, and our business is providing air cover to the latter, and using the former as a hedging instrument." It's a technology macro view. Dumb money says, "we provide growth capital for key technologies that support national sector x, y, z." Straight micro mandate.<p>From my armchair, I'd assert the difference is smart and dumb money can practically be defined by those with a hypothesis vs. those with a mandate.<p>A state fund could be smart money, but they would need a lot of freedom to do it - or find funds/funds-of-funds that had the freedom for them, which is what pensions do today. I wonder whether most governments could handle the political risk of the losses from a real VC fund, because the losses just look like slush funds for connected managers.<p>Not to dump on them, I think some sovereign wealth funds and even treasuries could benefit from being run more like aggressive pension funds, but the trouble with government is there is no way to clear off the project barnacles that attach to anything with momentum. Maybe they will do it differently.
Bursa Malaysia (the local stock exchange) classifies public listed companies into the following sectors:
1. Basic materials;
2. Consumer cyclicals;
3. Consumer non-cyclicals;
4. Energy;
5. Financials;
6. Healthcare;
7. Industrials;
8. Technology;
9. Telecommunications Services; and
10. Utilities<p>So, Bursa is largely composed of commodity businesses. It works but shouldn't there be some progress? Is it okay to stick with the status quo?<p>It's true that there's a potential in these VC schemes for leakage due to self-dealing. But let not the perfect be the enemy of the good. The article mentions several government funds that have been disbursing funding to tech startups for decades, so this is not a totally new thing run by idealists rather than realists.<p>I understand the skepticism when I read the responses attached. But I've always been confident about Malaysia. Maybe it's just that I'm a patriot.
I’m an old, cynical bastard who hasn’t had his morning coffee.<p>My second thought on reading this headline was “regulatory capture”. Who put it in their head to invest in R&D this way?<p>I mean, I’ll take this <i>any</i> day over pandering to real estate developers, and especially in a country with such an amazing natural heritage.
How can I short this?<p>Matt Levine suggested WeWork was a kind of short on the VC bubble. I guess that if there was a way to short it directly, I wouldn't be the only contra-investor.<p>Disclaimer: I've been on the sidelines of a government funded VC failure in Christchurch, NZ. Lots of puff, little output.
Considering the hit and miss (lots of miss) nature of startups this seems like it is ripe for corruption. I'd be really worried about direct government involvement in such things.
This sounds less like a cunning plan for economic growth and more like a cunning plan to funnel money into the pockets of the 20-something children of well connected people.