Combined effort needed to create local unicorns

Start-ups need to have a strong value proposition and innovative solutions to solve community challenges

by HARIZAH KAMEL / pic source: Carsome.my

A CONCERTED effort between all related parties is needed to ensure a favourable environment so that start-ups can successfully become unicorn companies.

RM Applications Sdn Bhd co-founder and chief technology officer Lokesh Gupta said an organisation requires a flexible external environment to develop the right product, easy access to funds, test feasibility, viable pricing, guidance and facilitation on compliance from the regulatory bodies.

“To produce a unicorn in a country, it needs a combined effort between the start-ups, government support and a conducive investment environment. “Malaysia is yet to see any homegrown popular start-up and most of them are mimicking the products and services which are already available in the market,” he told The Malaysian Reserve (TMR) recently.

Gupta said start-ups need to have a strong value proposition and innovative solutions to solve community challenges.

Policymakers need to play a proactive role in shaping the country’s tech ecosystem, he added. “The country should be appealing enough to attract the best tech talents and policies to influence the development of technical prerequisites necessary to produce a unicorn.

“Developing and promoting the right tech skills, providing industry or government grants can also help to minimise the shortfall of tech talents. Malaysia can learn from the Swedish model,” he said.

Earlier this month, the Malaysia Digital Economy Corp announced its Digital Investments Future5 (DIF5) Strategy, a five-year plan focusing on five key thrusts to attract high-quality digital investments and advancing Malaysia’s digital economy in line with the Malaysia Digital Economy Blueprint.

Gupta opined that the government and its related agencies need to push start-ups forward by offering seed programmes as well as creating and funding technology incubators that encourage innovation and entrepreneurship.

He suggested a healthy tax regime such as a tax rebate to attract venture capitalists (VCs) and investment firms to invest in local start-ups, adding that the availability of talent is crucial. Hence, an open immigration policy and advanced skills development programmes should be prerequisites.

He also noted that easy access to angel investors, VCs and institutional investors for funding with a flexible regulation for local and international investors would improve prospects to develop unicorns.

However, bullish stock exchange and expansion are also important aspects.

“The end goal of any unicorn is to go for listing and it requires a bullish stock exchange where it can launch its IPO and be accessible to global investors to subscribe. Companies need to facilitate regional expansion and go global as Malaysia’s market size is limited,” he said.

Certain market observers viewed that the local exchange needs to be more competitive in attracting tech-based start-ups for listing.

“Organisations and start-ups require timely and speedy attention from local and foreign investors and the government to develop their business models and to launch it locally before expanding to regional markets.

“With digital banking licences up for grab, some money service businesses such as MoneyMatch and Green Packet can also eye the unicorn spot. It will be worth visiting this space in a year’s time,” Gupta commented.

PitchIN CEO Sam Shafie said Malaysia needs to be more inclusive to attract the best talents to ply their trade and expertise.

“The country has tonnes to offer to make it an attractive proposition for companies and talents to call it home. If we’re thinking long term, local talents can only get better if they work and compete with the best.

“The question is why are they giving us a miss but yet the ones that we have are making an effort to move elsewhere to be a unicorn. I think that’s the question that our policymakers should ask themselves,” he told TMR.

Malaysia lost its opportunity to have its first homegrown unicorn when Grab changed its headquarters to Singapore, reflecting the vast challenges present in the country’s ecosystem.

Sam opined Aerodyne Group, a drone-based services provider, has what it takes to be a Malaysian unicorn. “I’d put Aerodyne in that potential unicorn hat. They’re already a global company with operations in 35 countries globally and a leader in drone tech,” he added.

TMR reported that Sedania Innovator Bhd would take a “step by step” approach to build Esports Players League, the group’s eSports arm, towards the US$1 billion (RM4.22 billion) valuation.

Recently, the used car marketplace Carsome Group has become Malaysia’s first technology unicorn as part of a share-swap deal that will see the startup take a stake in iCar Asia Ltd.

Carsome agreed to acquire 19.9% of Australia-listed automotive portal iCar from Catcha Group, the largest shareholder of iCar with a 30% stake. In return, Catcha will become a shareholder of six-year-old Carsome.