A co-funding initiative between private investors and the government targeting SMEs known as the SME Investment Partner (SIP) Program has recently raised a total of MYR 90 million (USD 21.88 million) of funds which is ready to be disbursed for investments in SMEs in Malaysia. The co-funding initiative is managed by local fund managers Warisan Quantum Management Sdn Bhd and RHL Ventures Sdn Bhd who raise funds from private investors, while the government through SME Corporation Malaysia (SME Corp) provides a matching amount to the fund.
Both fund managers have raised a total of MYR 50 million (USD 12.16 million) to date, with the remaining MYR 40 million (USD 9.73 million) of seed fund is channeled by the government through SME Corp. The SIP Program will have allocations of funds ranging from MYR 500,000 (USD 121,565) to MYR 3 million (USD 730,000) per deal, with the funding ratio of 1:1.
The program is an effort by the government to provide an alternative pathway to SMEs for accessing financial assistance. Unlike typical venture capital financing which focuses on technology-based companies, SIP targets a much wider range of viable SMEs including main street firms across all sectors, with high growth potential, innovative capabilities and operating in emerging areas.
Both equity and debt financing structures are offered to meet the financing needs of SMEs especially in the early stage of their operations, between one and three years. Over 150 potential deals have been identified by SME Corp from existing government-run SME development programs such as Tunas Usahawan Belia Bumiputera and other programs implemented in collaboration with PlatCOM Ventures, Malaysia Global Innovation & Creativity Centre (MaGIC) and Yayasan Inovasi Malaysia (YIM) for initial evaluation.
(Sources: New Straits Times; DealStreetAsia)
