Spearheading world's first Islamic venture capital fundMay 5, 2016 @ 11:01AM
By RUPA DAMODARAN
KUALA LUMPUR: Malaysia will take the lead in setting up the world’s first Islamic venture capital fund that will spawn the growth of start-ups, said Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah.
Treasury officials and the Malaysia Venture Capital Bhd are now finalising the US$100 million (RM398 million) deal with Islamic Development Bank (IDB) in Jeddah and a memorandum of understanding is expected to be signed during the upcoming IDB’s annual meeting in Jakarta later this month.
“We are looking at a small amount first, and if it is successful, we
will invite other parties to join the venture fund,” Irwan said after launching a 12-month nurturing programme fund called “Elevate” by Malaysia Debt Ventures Bhd (MDV) yesterday.
Although there is a slow growth in start-up in Islamic countries outside Malaysia and Indonesia, he was confident of a shift in the mindset as seen in growing interest in Egypt and the United Arab Emirates.
“We are also looking at partnering with Indonesia and Dubai. Partnering with the Middle East countries is a good move as we are developing our own syariah-compliant fund so we will invest in syariah-compliant companies.”
Start-up investments can be a game-changer in the investing circles and attract more foreign direct investments (FDIs) to the country, he said. For instance, Malaysia attracted 96 start-up deals last year worth US$800,000 in investments, while Singapore had 55 start-ups with US$7.5 million investments.
“If we focus and create 200 start-ups and multiply investment, the FDI numbers can run into billions.”
Grab Taxi was one start-up established in Malaysia, but turned into a billion ringgit company subsequently.
“Start-ups provide the potential to raise the per capita income of countries as this ‘new economy’, which provides growth in new areas such as education, health, logistics, fintech and digital technology, can help countries to survive the FDI competition,” Irwan said.
The 12-month Elevate initiative will see MDV selecting 20 companies to be mentored and coached from a pool of at least 8,000 existing technology-based young companies in the current entrepreneurship community in Malaysia.
MDV chairman Tan Sri Zarinah Anwar said Elevate will also provide a pre-approved financing facility of up to RM2 million to the top graduates of the programme.