Cover Story: 6 Malaysian Financiers Predict The New Industries That Will Impact The Future
As governments and nations shut their borders and impose lockdowns in the wake of Covid-19, the global market is entering into a period of uncertainty. In Malaysia, as with the rest of the world, there's no denying that it will be an uphill task to stabilise economic growth.
But with every challenge comes an opportunity. Post Covid-19, there will be a chance for new and existing entrepreneurs to attempt to solve issues caused by the pandemic's impact.
We wonder what's next after the dust settles. What industries or businesses will be able to ride out the storm?
To get a better idea of what's to come, we speak to 6 leaders from different investment platforms to learn what they think will be the businesses of the future.
As financial bankers whose job is to back our nation's most promising startups and small-medium enterprises (SMEs), their knowledge and foresight are invaluable when it comes to discovering what the future holds.
Cradle Fund: Juliana Jan
Having been with Cradle Fund since its early days, chief investment officer Juliana Jan has witnessed Cradle's expansion from a grant provider to an investor through the establishment of its venture arm Cradle Seed Ventures in 2015, and the expansion of its portfolio into equity investment.
To startup founders, Cradle Fund is akin to a prep school they go to in order to find their footing in a fast and furiously competitive environment.
“Aside from vetting entrepreneurs for funding, we also prepare them to strategically assess and project their financials. Only when they pass through the pre-seed stage do we let them go into the ‘real world'," she says.
Jan believes that the current economic instability is a platform for growth.
“For example, solving issues in the gig economy through tech is a great business opportunity, especially now that people are uncertain about their jobs. Other issues for entrepreneurs to solve include education and healthcare,” she says.
“Manufacturing and agritech have always been our strength. The question is, how do you make it faster, stronger or cheaper? Nanotech, robotics, artificial intelligence, biotech, automation—these tech solutions for improving efficiency have a lot of value,” says Jan.
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RHL Ventures: Raja Hamzah Abidin, Rachel Lau and Jo Jo Kong
RHL Ventures plays an important role in connecting Malaysia’s generational wealth with the next generation of entrepreneurial talents through strategic funding and investments.
Its managing partners, Rachel Lau and Raja Hamzah Abidin, bring together with them close to a decade of banking and finance experience abroad.
"What frustrated me upon my return to Malaysia was a lack of understanding about venture capital investments. Our market isn’t as sophisticated yet, so we did a lot of work educating investors who didn’t understand risk metrics. We made it clear we are more focused on delivering results rather than selling a dream,” says Lau.
After launching the firm in 2016, the duo recruited their friend Jo Jo Kong, who is the director of Nirvana Asia and MD of KHK Group, as a general partner.
The world is flawed but you don’t need to solve every problem with technology or a mobile application. The knowledge in identifying what needs to be solved is also important.
— Jo Jo Kong
Hamzah describes their work as catalysts that bridge corporations and startups together.
"Malaysia has a great stock of homegrown entrepreneurs behind multi-billion companies such as Nirvana and Top Glove. Our connections with them will help new startups achieve a win-win situation, aside from financial backing."
"For example, one of our portfolio companies Healthmetrics was able to incorporate its tech systems into a few corporations through our connections,” he explains.
Recently, RHL Ventures made news when it entered into a strategic alliance with South Korean conglomerate Hanwha Group, to develop startups in Southeast Asia.
The trio also launched an accelerator programme for emerging tech businesses and an SME Corp-backed fund worth RM100mil last year.
As for the industries of the future, Hamzah is putting his bets on consumer-based businesses like RAGE Coffee and Signature Market.
Meanwhile, Kong champions artificial intelligence and fintech, while Lau is bullish about Asia for Asia businesses with a slant towards content and media.
Regardless of the industry, the trio always make their investment decision after evaluating a startup founder’s vision and whether their idea solves a necessary problem.
“The world is flawed but you don’t need to solve every problem with technology or a mobile application. The knowledge in identifying what needs to be solved is also important,” notes Kong.
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Fundnel: Wan Mohd Firdaus
“When I joined the workforce in 2007, my peers dreamt of becoming bankers or consultants in top multinational corporations. Today, every young chap I meet wants to work in tech or be an entrepreneur,” says Wan Mohd Firdaus, the country director of Fundnel Malaysia.
He observes that this shift towards tech-enabled careers and businesses come with a set of inherent problems.
“A key issue is the inaccessibility to capital. Most existing financial institutions like banks continue to use archaic methods to assess modern companies, although there are now completely different risk-reward profiles and success metrics compared to traditional businesses,” he elaborates.
Companies like CapitalBay and MoneyMatch will thrive because they offer access to a variety of financial products such as money transfers and SME loans. The data analytics behind these digital products by itself will be revolutionary, and it will take time for traditional financial institutions to catch up.
— Wan Mohd Firdaus
What drew Firdaus to join Fundnel is its unique approach to screening investments.
Founded in Singapore by a group of investors including Gen.T Singapore honouree Kelvin Lee, Fundnel uses an AI-driven deal screening process to curate opportunities in growth and pre-IPO companies for a global network of more than 10,000 investors.
Firdaus truly believes that fintech is the ultimate key to unlocking further growth for the nation’s potential in the future.
“Companies like CapitalBay and MoneyMatch will thrive because they offer access to a variety of financial products such as money transfers and SME loans. The data analytics behind these digital products by itself will be revolutionary, and it will take time for traditional financial institutions like banks to catch up,” he says.
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TH Capital: Naysan Munusamy
While his background is in corporate banking, Naysan Munusamy forayed into venture building when he took up a role as part of the founding team at Malaysian equity crowdfunding platform PitchIN, which is licensed by Malaysia's Securities Commission.
Then, Munusamy also stepped into the other side of the coin as an entrepreneur by co-founding fintech company MoneyMatch, a leading player in the cross border payment field.
“During the first few years of venture building in fintech, I was presented with an opportunity to work together with two founding partners to set up TH Capital," he reveals.
Since 2018, TH Capital has invested in over 10 technology deals primarily in Malaysia and the surrounding region, such as parenting e-commerce marketplace Babydash and health-tech company Naluri.
To Munusamy, digital economy is the way to go for economic growth in Malaysia.
“It sounds like Black Mirror, but a fully digital future is what we are headed into and we have to embrace it. There’s still so many opportunities for the infusion of technology and automation across various industries. This era provides the perfect opportunity for Malaysia to leapfrog our peers by building up our digital capabilities,” he says.
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It sounds like Black Mirror, but a fully digital future is what we are headed towards and we have to embrace it.
— Naysan Munusamy
He believes that future businesses cannot be dependent on just the government and banks for growth.
"If you look at the most successful tech companies globally, it’s always driven by passionate entrepreneurs with a strong angel investor network backing in their early days. It is only later on that they scaled through venture capital," he says, citing examples of companies such as Apple and Facebook.
This is where TH Capital comes in. "We aren’t looking to control the business direction nor pivot operations; rather we are focused on identifying the most promising entrepreneurs and founding teams, and supporting them to realise their vision,” says this passionate investor.
For the full story, click here to get your complimentary digital copy of the April 2020 issue using the coupon code TMApril2020. Code is available to use from March 30th to April 30th, 2020.
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