Malaysia is awash with profitable start-ups, so why aren’t investors interested?
- Despite having a wealth of innovative start-ups, Malaysia can’t seem to attract the same amounts of venture capital funding as Singapore or Indonesia
- But industry insiders say investors’ appetites are starting to change, potentially pivoting towards profitable start-ups over riskier ventures
Like many entrepreneurial Southeast Asians, 35-year-old Malaysian businessman Lee Zhern Je left a stable job to bet on himself. In 2015, he resigned from a major consulting firm in Kuala Lumpur to start Epic Unicorn, his own digital marketing company.
Inspired by his self-made father, Lee and his business partner turned their IT skills into a business – but survival dictated that it became profitable quickly.
“I needed to be able to sustain my lifestyle. So I couldn’t go into start-ups that require investment and time. I needed something that I could sell tomorrow and make money tomorrow,” he said.
Malaysians often feel short-changed when they compare themselves to their Singaporean peers, who are better paid despite being equally competent, well-educated and having skills on par with talent in Singapore and other developed nations, he said.
But starved of venture-capital (VC) funding and similar investments, experts say many Malaysian start-ups don’t have the luxury of scaling or building their businesses with a long-term growth model and are instead compelled to quickly turn a profit.
This confluence of factors has created a breeding ground in Malaysia for innovative start-ups that become rapidly profitable, yet do not attract VC funds. But observers say a turning point may be approaching as investors’ playbooks change.