Source from (The Star Online): http://biz.thestar.com.my/news/story.asp?file=/2013/4/20/business/12996630&sec=business
Published: April 21, 2013
It is budding entrepreneurs like Chelliah that The Star's new Accelerator Fund hopes to support.
The fund, launched on Wednesday with RM20mil in its coffers, aims to help digital and technology-based entrepreneurs get started and ultimately take their ideas to the market.
The new fund intends to provide seed capital to companies and individuals in the pre-seed and seed phase, with maximum funding of RM300,000 and RM1mil, respectively.
A unique feature of the fund is the host of value-added services that come with the monetary support. Besides ringgit and sen, successful applicants gain access to The Star Media Group's plethora of resources, from branding and marketing to legal advice and media.
The Star Accelerator Fund is the
brainchild of Dr Chua.
The Star corporate services senior manager George Chan, who is overseeing the operations of the fund, points out that financing can be hard to come by for entrepreneurs, especially those who are new to the scene.
“Many ideas never see the light of day because they don't have the funds. It is in this area that we hope to help young Malaysians,” he tells StarBizWeek.
“When we set up the fund, our intention was not only to help build the business, but also to assist and nurture the entrepreneur. There are some great technopreneurs out there who are off the grid.
“We would like these people to come forward and take advantage of this opportunity. We are not concerned with whether they speak perfect English or have good presentation skills. We simply want to give them a chance, and listen to their ideas.”
Star Publications (M) Bhd executive deputy chairman Datuk Vincent Lee reveals that the project was born out of a challenge thrown to him by MCA president Datuk Seri Dr Chua Soi Lek.
“Dr Chua suggested that such a programme would not only lend a helping hand to deserving young entrepreneurs, but also bring back talent to Malaysia,” Lee says. “Moreover, we aspire to create enterprises that become global game-changers, not just jaguh kampung'”.
The fund also heeds the Government's transformation initiatives as spearheaded under the Economic Transformation Programme, which calls on the private sector to boost private investment in the country.
The fund comprises two mechanisms: pre-seed and seed. The difference between the two funding options is the stage of development of the applicant's business.
Pre-seed applicants would require funds to develop their ideas into prototypes. The seed fund applicants, meanwhile, are businesses that already have a prototype and who are ready to commercialise their products.
The fund seeks to assist young Malaysians from the development of an idea into a prototype, through the proof-of-concept stage and finally to market launch. The money for this fund can be channelled to product research and development, intellectual property, legal and compliance, proof-of-concept and pre-commercialisation.
Those who obtain seed-level funding may ask for up to RM1mil. They are required to complete the process of readying their products or services for market entry within a 12-month period. The fund covers the processes necessary for commercial success, namely production, distribution, marketing, sales and customer support.
The Star Accelerator Fund intends to go beyond the traditional role of a financier. In exchange for financial support, The Star is looking to acquire an equity stake in the investee company.
This is not an issue of management control, but rather a mentoring and support process, Chan explains, as many start-ups fail due to a lack of business and financial acumen.
“It is here that we believe our most valuable help will be given. We want to be a partner in the business that we fund to enable growth and ensure sustainability and success.”
In terms of eligibility, the founder of the company must be Malaysian and aged 21 years and above.
Lee: ‘We aspire to create enterprises
that become global game-changers,
not just jaguh kampung.’
For the pre-seed fund, a company must be formed with a minimum issued and paid-up capital of RM2,000. On the other hand, an applicant for the seed fund must own a registered company with an issued and paid-up capital of RM10,000.
The industries that qualify for assistance from the fund can be divided into two broad categories: information and communication technology (ICT) and non-ICT (see chart).
Unlike most funds in the market currently, The Star Accelerator Fund is an equity fund and not based on a rebate process.
“Most funds in the market operate on a grant basis, which means you spend the money first and then submit your claim for re-imbursement,” Chan says.
“For most start-ups, this can often be an insurmountable barrier since they may not have the initial capital outlay. Start-ups usually need two to three years to break even, and this is provided the product is good.
“We work with our recipients to establish a financial plan and disburse the finances according to an agreed set of key deliverables and timeframes.”
Furthermore, those who succeed in obtaining the pre-seed fund can graduate to seed-level funding, Chan adds.
Chan, a chartered accountant, will manage the day-to-day running of the fund together with his colleague Debbie Pozzobon, a former corporate banker who has experience as a managing director and chief financial officer.
After a deal is evaluated by Chan and Pozzobon, it will be recommended to the investment committee for final approval.
“We received over 50 enquiries within 24 hours of the launch. Indeed, we are already assessing our first set of applications. The response from the market has been very encouraging and we are looking forward to a future where we are part of the successful journey of young Malaysians,” Chan quips.
Those who attended the launch event came away impressed.
Andrew Tan, director of innovation at digital agency VLT Kuala Lumpur Sdn Bhd, says: “I think it's great that The Star is taking this step to support current and would-be tech entrepreneurs. What's really exciting is that it's not just about funding but also supporting start-ups through The Star's own experiences and platforms, which is arguably more important to fledgling start-ups.
“This is something that we at VLT Labs also do, helping start-ups accelerate their potential by leveraging our experience in UX, marketing and brand strategy, while connecting them with brands and partners who might elevate them further.”
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