[This is a sponsored article with MDEC.]
It’s been known that Malaysia has set a goal to identify five unicorns by 2025, which was announced in 2021, in line with the Malaysia Digital Economy Blueprint or MyDIGITAL.
In a promising turn of events, the nation witnessed the rise of Carsome announced as the first unicorn within the same year.
Establishing unicorns requires meticulous planning and sustained efforts. With less than two years to achieve this ambitious goal, Malaysia Digital Economy Corporation (MDEC), under the Ministry of Digital, is actively laying the groundwork to ensure this becomes a reality.
The drive to achieve this comes from the top with MDEC CEO, Ts. Mahadhir Aziz.
He emphasised, “Through the Malaysia Digital (MD) national strategic initiative, our aim is to revolutionise Malaysia’s digital capabilities, harness technology and innovation to fuel sustainable economic growth, catalyse digital adoption across industries, and firmly establish Malaysia as the digital hub of ASEAN.”
MDEC assumes an active role in spearheading initiatives that can champion the support of high-growth startups, forging strategic partnerships, and implementing pioneering programmes.
This concerted effort creates an environment conducive for businesses to expand their digital exports, aimed at propelling Malaysia’s economic growth to new heights. Guided by the MD vision, MDEC has rolled out several strategies to do so.
Among them is the Founders Centre of Excellence (FOX), which is dedicated to cultivating high-potential startups. It will focus on equipping these companies with the tools and knowledge they need to scale globally and achieve technological innovation.
Getting the home base right
The FOX programme aims to identify and nurture high-growth technology companies, amplifying their potential to become global tech companies. By fostering a robust support network and providing targeted resources, FOX helps these organisations solidify their business fundamentals and strategic capabilities.
Currently, there are at least 35 Malaysian-based companies under the initiative, with a few showing strong unicorn potential. MDEC is keeping their names under wraps, but it is suggested that among them consist of leading companies in fintech, proptech, and recommerce verticals.
According to MDEC, these companies under FOX were chosen based on their business model’s scalability, revenue curve, and having a minimum 20% three-year compound annual growth rate (CAGR).
Within the FOX programme, one key focus area is the refinement of companies’ customer acquisition strategies. The programme will emphasise interest in models that provide stickiness, aiming for reduced churn rates and minimised acquisition expenses.
MDEC stated that the combined valuation of the top 10 startups under the FOX portfolio of 35 companies is estimated to be US$4 billion.
While each of these startups is still on its journey to reach a valuation of US$1 billion, it is crucial to recognise that the true value of a business extends beyond mere numbers.
What determines the long-term success and market resilience of a company is its underlying fundamentals, and its ability to innovate and adapt.
While the FOX programme is designed to accelerate the growth and valuation of the participating startups, MDEC will ensure that these companies hold strong business fundamentals and are strategically positioned for scaling up.
Ultimately, this is in light of the startups’ attainment of IPO and unicorn status.
For instance, participants in the FOX programme can gain mentorship access from industry leaders, who are specialised in training companies in key business areas.
FOX’s participants will also be exposed to networking opportunities with potential investors and partners, which are invaluable resources as they prepare for future milestones.
This is important, because while rapid company growth may seem impressive, one observation stands out: tech companies often struggle to establish essential internal structures amidst their swift expansion. It is a trend that MDEC has observed over its 28 operational years.
MDEC believes that by avoiding pitfalls like hasty reorganisation or restructuring, which can derail a company’s progress, MDEC FOX can help ensure that these startups not only grow in valuation but also strengthen their operational health. This positioning sets them up for enduring success.
Companies participating in the FOX initiative have the opportunity to access a broad range of consulting and advisory services from MDEC’s partnered firms such as Ernst & Young (EY), Klynveld Peat Marwick Goerdeler (KPMG), Korn Ferry, and Brand Soul.
This way, MDEC can ensure that startups receive tailored support, enhancing their strategic capabilities and growth potential.
The consulting companies will advise startups on areas such as talent management, organisational structure, branding, and sustainable business growth strategies.
Exposing them to the world
Additionally, the high-growth tech startups will also be put through networking and business matching opportunities via DEX CONNEX.
DEX CONNEX is a platform initiated by the Digital Exports Division (DEX) of MDEC to expand the revenue footprint of Malaysian tech companies into regional and global markets.
MDEC collaborates extensively with the Malaysia External Trade Development Corporation (MATRADE) and the Ministry of Foreign Affairs via the various Malaysian Embassies to enhance trade opportunities for local tech companies on a global scale.
This effort is bolstered by close partnerships with Malaysian embassies around the region. It includes the engagement of ambassadors, high commissioners, and trade commissioners.
Key international collaborations include associations from Thailand, Australia, Japan, Philippines, Vietnam, Indonesia, and Taiwan.
Additionally, MDEC actively collaborates with Malaysian business chambers in various countries to further strengthen and expand the network for Malaysian tech enterprises. It aims to foster robust global connections that facilitate their international growth and visibility.
This initiative is crucial for the nation, as global companies drive innovation, provide jobs, nurture talent, attract investment, contribute taxes, and strengthen the overall ecosystem.
But are unicorns still worth chasing?
There has been plenty of discourse in the startup ecosystem criticising the unicorn agenda, as it promotes heightened valuations from venture capitals, and the companies themselves take a back seat in attaining profitability.
Hence, why is MDEC so fixated on growing unicorns?
MDEC acknowledged that the ecosystem’s concerns are valid, as we have all seen the fallout from unicorns in other countries when valuations are pushed beyond realistic limits, without supporting fundamentals.
Investors have become savvier about investing in startups with greater sustainability in the long run. Ultimately, business fundamentals are crucial, especially in a challenging economic climate.
This potential underscores the critical role of investors who are equipped and ready to support these ventures. Programmes like FOX are instrumental in preparing these startups, making them viable candidates for substantial investments.
The value of pursuing unicorns extends beyond their financial worth, according to MDEC.
As beacons of success, unicorns serve as lighthouses within the tech ecosystem, inspiring other entrepreneurs to elevate their ambitions. The success stories of these unicorns play a crucial role in galvanising the entire startup ecosystem, making it more robust and resilient.
MDEC’s FOX programme not only accelerates the journey towards such milestones but also cultivates well-rounded companies with strong fundamentals, enriching the ecosystem’s resilience.
MDEC prioritises the sustainability of businesses over rapid expansion, and that is exactly what the FOX and DEX agendas aim to achieve.
- MDEC offers various programmes for MD status companies. Apply for Malaysia Digital status here.
- Read other articles we’ve written about unicorns here.
Featured Image Credit: MDEC
