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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

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Kuala Lumpur. 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. Photo: Shutterstock
Su-Lin Tanin Singapore

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.

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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.

Stubbornly low wages have forced many in Malaysia to start their own business or look for lubang (a slang term for side hustles), said Lee, who now has offices in Australia and Cambodia.

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.

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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.

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