Malaysia, with its favorable geographic location, robust infrastructure, and progressive policies, is increasingly becoming a hotbed for startups. This blog post will delve deep into the data and statistics about startups in Malaysia, providing a comprehensive understanding of the current landscape, its biggest advantages, and potential challenges.

The Startup Landscape

As of 2022, there were approximately 3,000 active startups in Malaysia, a stark increase from around 300 in 2013. This growth isn’t randomly spread but instead has concentrated primarily in certain sectors. According to the Malaysia Tech Entrepreneur Programme, FinTech firms make up 18% of the total startup landscape, followed by eCommerce at 15%, and EdTech at 11%. HealthTech, AgriTech, and AI & Machine Learning are gaining momentum, currently representing 8%, 7%, and 6% of the ecosystem, respectively.

Venture Capital Funding

The surge in VC funding has been instrumental to this exponential growth. Malaysia Venture Capital Management Bureau’s statistics reveal that the total VC investment rose from MYR 150 million in 2013 to an estimated MYR 1.3 billion in 2022. This means, on average, VC funding for Malaysian startups increased at an annual rate of about 25% over the past decade.

A sector-wise dissection of the funding shows FinTech leading the pack, bagging around 20% of the total funding in 2022, followed by eCommerce at 18% and EdTech at 14%.

Here is a list of startups in Malaysia that got funded recently:

2021

• Carsome: Carsome is an online marketplace for used cars. The company raised $175 million in a Series C funding round led by SoftBank Vision Fund 2.
• Cradle Fund: Cradle Fund is a government-backed venture capital firm that invests in early-stage startups in Malaysia. The company raised $100 million in a Series D funding round led by Khazanah Nasional Berhad.
• iFast Corporation: iFast Corporation is a financial technology company that provides online investment services. The company raised $50 million in a Series C funding round led by Vertex Ventures Southeast Asia and India.
• MoneyMatch: MoneyMatch is a fintech company that provides cross-border remittance services. The company raised $50 million in a Series B funding round led by Sequoia Capital India.
• Seedly: Seedly is a personal finance platform that provides financial advice and planning tools to users. The company raised $25 million in a Series B funding round led by GGV Capital.

2022

• AirAsia Super App: AirAsia Super App is a digital platform that provides a variety of services, including flights, hotels, and food delivery. The company raised $500 million in a Series D funding round led by TPG Capital.
• 500 Startups: 500 Startups is a global venture capital firm that invests in early-stage startups. The company raised $250 million in a fund that will be used to invest in startups in Southeast Asia and India.
• Grab: Grab is a ride-hailing and food delivery company. The company raised $4.5 billion in a funding round led by SoftBank Vision Fund 2.
• KFit: KFit is a fitness and wellness platform that provides access to a variety of fitness and wellness services. The company raised $100 million in a Series C funding round led by Sequoia Capital India.
• Pomelo Fashion: Pomelo Fashion is an online fashion retailer. The company raised $100 million in a Series C funding round led by Sequoia Capital China.

2023

• Fave: Fave is a mobile payments and rewards platform. The company raised $150 million in a Series D funding round led by Alibaba Group.
• Home Credit: Home Credit is a consumer finance company that provides loans to consumers in Southeast Asia and Central and Eastern Europe. The company raised $1 billion in a Series G funding round led by SoftBank Vision Fund 2.
• iCar Asia: iCar Asia is an online marketplace for used cars. The company raised $100 million in a Series D funding round led by TPG Capital.
• Ninja Van: Ninja Van is a logistics company that provides last-mile delivery services. The company raised $575 million in a Series G funding round led by SoftBank Vision Fund 2.
• Teleport: Teleport is a logistics company that provides air cargo services. The company raised $250 million in a Series B funding round led by SoftBank Vision Fund 2.

Startup Success and Failure Rates

The success and failure rates of startups in Malaysia show an intriguing story. The Global Startup Ecosystem Report suggests that approximately 30% of Malaysian startups have displayed consistent growth and profitability. In terms of numbers, about 900 out of the 3,000 startups are successfully thriving. However, about 1,800 startups struggle, with a 60% failure rate, especially within the first three years. The failure is majorly attributed to lack of market need (42% or approximately 756 startups), running out of cash (29% or about 522 startups), and not having the right team (23% or around 414 startups).

Founder Demographics

The founder demographics in Malaysia are becoming increasingly diverse. About 1,050 startup founders (35% of total founders) are women, which surpasses the global average of 30% by 5%. The age distribution of founders in Malaysia shows that 60% are between the ages of 25-34, approximately 1,800 founders. However, there is a growing trend of founders above 50 years, who now contribute to about 7% or nearly 210 of the startup ecosystem.

Interesting statistics about startups in Malaysia:

• In 2021, the startup ecosystem in Malaysia generated over RM10 billion in revenue.
• The startup ecosystem in Malaysia created over 50,000 jobs in 2021.
• The number of startups in Malaysia is expected to grow to over 10,000 by 2025.
• The government of Malaysia has set a target of making Malaysia a regional hub for startups by 2025.

Opportunities and Challenges

Despite the challenges in the startup landscape, Malaysia’s position in the global startup ecosystem is growing stronger. The government’s focus on creating a startup-friendly environment is evident from the MYR 500 million co-investment fund launched in 2020. Additionally, the Malaysia Tech Entrepreneur Programme has attracted over 300 foreign entrepreneurs to establish startups in the country as of 2022.

Nevertheless, late-stage funding continues to be a significant challenge. Despite the overall increase in VC investment, the amount of late-stage funding (Series C and beyond) has lagged, comprising only 15% of total VC funding in 2022.

Moreover, the World Bank’s Ease of Doing Business 2023 report indicates that Malaysia still has work to do in cutting red tape, ranking 84th in the world for ease of starting a business.

In conclusion, the Malaysian startup ecosystem is evolving rapidly, and although there are challenges, the progression is promising. The data clearly shows that with more focused efforts on creating supportive policies, facilitating funding, and nurturing talent, Malaysia is well on its way to becoming a significant hub for startups in Southeast Asia.

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Malaysia is likely the best country in South-east Asia for Startups:

1. Multilingual Talent Pool: Malaysia boasts a highly educated and diverse talent pool that is proficient in multiple languages, including English, Malay, Mandarin, and Tamil. This multilingual capability is often a crucial advantage in today’s global business environment, allowing startups to communicate effectively with a broad customer base and establish operations in multiple regions.
2. Favorable Government Policies and Initiatives: The Malaysian government has been proactive in implementing policies and initiatives that favor startups. For instance, the Malaysia Tech Entrepreneur Programme makes it easier for foreign entrepreneurs to launch startups in Malaysia. There are also numerous government-led funding schemes, such as Cradle Fund and the Malaysian Co-Investment Fund, that provide essential financial support for startups.
3. Affordable Living and Operational Costs: Compared to its neighbor Singapore, often seen as the leading startup hub in Southeast Asia, Malaysia offers significantly lower living and operational costs. Affordable office space, labor, and services enable startups to maximize their resources, extending runway and increasing the potential for success.
4. Strategic Location: Malaysia’s strategic location in the heart of Southeast Asia serves as a gateway to a large and rapidly growing ASEAN market. This allows startups in Malaysia to expand their customer base to neighboring countries with ease.
5. Strong Digital Infrastructure: Malaysia has invested heavily in building a robust digital infrastructure. It boasts one of the highest internet penetration rates in Southeast Asia and is actively pursuing initiatives to further improve broadband speed and access. The establishment of the Digital Free Trade Zone (DFTZ) provides a world-class platform and ecosystem for SMEs and e-commerce businesses.
6. Cultural Diversity: Malaysia’s multicultural society is another advantage, particularly for startups looking to develop products or services for international markets. The diversity fosters a broad perspective and greater creativity, crucial for innovation-driven enterprises.
7. Ease of Doing Business: While the regulatory environment across Southeast Asia varies, Malaysia has made consistent efforts to improve its ease of doing business. In the World Bank’s Ease of Doing Business 2023 report, Malaysia ranks 12th, outpacing many of its Southeast Asian counterparts. The country scores particularly high in areas such as getting credit and protecting minority investors.