All startups aspire to expand and obtain success for their products or services in the market. However, it would be difficult to achieve those two aspirations with a low budget; which is why startup funding is essential. The money from the startup funding helps in operating a new business. The funding comes from various sources such as friends, family, personal savings and many more.
For today’s article, we will be compiling a list of startup funding options available in Malaysia. Before we start, it is vital to keep in mind that startup funding has different rounds. It starts with a Seed Funding, then Series A Funding, Series B Funding and finally Series C Funding. We will be explaining each of these rounds together with the examples of investors in Malaysia. Without further ado, let’s get started!
1. Seed Funding
Seed funding is the first stage of funding. Suggesting from its name, you can look at it like how you’re planting a tree. For a new business, the ‘seed’ plays the role of early financial support. Similar to planting a tree, you’ll need a seed first before planting it. This financial support helps to grow the business; or in other words, the business will grow into a ‘tree’. The money is usually used to create prototypes, hire bigger teams, and conduct market research for the company to improve.
For seed funding, the potential investors are so-called angel investors and venture capitalists who are at the early stage. Angel investors are people with a large amount of money and income to spend. These investors usually consist of your friends or family. Whereas for venture capitalists (VCs), are those who invest in companies for possible huge returns. VCs are generally in forms of corporations. The amount that they fund varies depending on what kind of service, product, reputation, or market your startup has.
Examples of investors in Malaysia dealing in seed funding:
- BizAngel – Angel Investor
- Nexea Angel – Angel Investor
- Cradle Fund – Government-owned equity funding
- 500 Startups – Venture Capital Firm
2. Series A Funding
Series A funding is the next stage. You can start to opt for this funding once your business established a track record. For example; your company has a consistent revenue figure. At this stage, you should already start planning to further expand your business in the market. You should also begin developing a business model that can be used for a long run with long-term profits.
Angel Investors reduce in numbers at this round. However, the amount of early-stage VCs and traditional later VCs continue to increase. Traditional later VCs consist of corporations which invest a lot in various other projects.
Examples of investors in Malaysia dealing in Series A funding:
- Cradle Seed Ventures – Venture Capital Firm partnering with Cradle Fund
- Netrove Partners – Venture Capital Firm
3. Series B Funding
When your business has already moved past the development stage; and you’re ready to bring it to the next level, you can start with Series B funding. By this point, the service or product for your business is already perfect – all that’s left is to make it extensively accessible. If your business is under the Series B funding, it merely means that it has been well-established.
The amount of funds received at this stage is much higher compared to the seed funding and Series A funding, of course. The funds gained are used in improving customer service, expanding the brand by marketing, building the team and many more. The investors for this round are still the same from Series A – consisting of mostly VCs. This time, your investors are putting more trust in your business due to its stability. They also believe that you will lead them to a profitable exit in the future.
4. Series C Funding
Businesses under the Series C Funding are considered quite successful. This is the stage where your business is no longer viewed as a “startup”. Instead, you’ll now start creating new products or services to grow your business further. The funding received in Series C can be used in buying another company. In most cases, the figures for this funding will hit six figures. Also, investors can incorporate investment banks, hedge funds and late-stage multinational VCs.
Examples of investors in Malaysia dealing in Series C startup funding:
Well, that’s about it. Most companies would stop at Series C funding; but some will go on for Series D, Series E and so on. Just a side note; if your business is under Series C funding, it can start going global! We hope this article has helped clear any confusion that you have regarding startup funding and has provided you with some good options in Malaysia! For more articles like this, head on to LokaPost.