“The Malaysian Government is committed to building a vibrant startup ecosystem. That commitment is evident through the allocation of up to $900 million to grow the local startup ecosystem. MOSTI will drive this initiative through the Malaysia Startup Ecosystem Roadmap 2021–2030 and will strive to ensure mutual benefit for all stakeholders."
Kuala Lumpur is home to over 8 million people and a growing number of tech startups. Cradle, a federal agency with a mandate to support startups from seed stage to beyond the nation’s borders, is at the heart of the startup ecosystem. The Ministry of Science, Technology and Innovation (MOSTI) launched the Malaysia Startup Ecosystem Roadmap (SUPER) 2021–2030 along with a capacity-building initiative called MYStartup to further elevate Malaysia’s startup scene. Since its establishment, the initiative has supported over 5,000 founders through various programs, investments, and acquisitions.
Success stories include local startup Luwjistik being acquired by Shippit, an Australian logistics company, for $11.3 million in Q4 2022, and BetterPlace, an India-based SaaS and workforce management platform acquiring Malaysia-based recruitment firm Troopers in Q2 2023. Also in 2023, Fintech SoftSpace raised $31.5 million in a Series B funding round, making it the largest Series B raised by a Malaysian startup.
Collaboration and public-private partnerships are key factors in the ecosystem’s success. Khazanah Nasional Sdn Bhd announced a $1.3 billion commitment to support the ecosystem over five years through its Dana Impak mandate. Malaysia Venture Capital Management Bhd (MAVCAP), Cradle, and Penjana Kapital provide grants and investment. Corporate players also support both seed-stage and rising stars. Petronas created its FutureTech program and telecom giant Maxis includes venture building as part of its overall strategy to invest in and grow tech-driven startups and companies. Funding and mentorship also comes from VCs and accelerators including ScaleUp Malaysia, Sunway iLabs, and 25 Startups, which work alongside international organizations such as Indelible Ventures, Gobi Partners, Endeavor, and 500 Global.
Ecosystem by the Numbers
In 2022, Malaysia’s Central Bank announced five successful applicants for the digital bank licenses as approved by the Minister of Finance to further penetrate and develop the unbanked and underserved market. FintechMoneyMatch was one of the five to obtain a license as part of a consortium led by KAF Investment Bank, which also includes Carsome and Fintech startup Jirnexu.
Malaysia aims to grow the Ecommerce market to $367.7 billion and boost the number of businesses exporting via Ecommerce to 84,000 by 2025. The average number of online platforms used per person saw a 1.9 times growth from 2021 to 2022. In January 2022, SaaS-enabled marketplace Dropee raised $7 million in Series A funding led by returning investor Vynn Capital.
In 2022, digital health provider Naluri raised $7 million in a pre-Series B funding and is eyeing strategic expansion into Thailand. Local Healthtech startups such as DOC2US, BookDoc, and DoctorOnCall have been recognised by the government and played a crucial role in managing the COVID-19 pandemic in Malaysia. In March 2023, eldercare-focused startup Care Concierge became the first portfolio to be backed by Gobi Partners under the newly established Gobi Dana Impak Ventures Fund.
Reasons to Move Your Startup to Kuala Lumpur
Young, Educated Workforce
The median age in Malaysia is 30.3 years old, providing companies in Kuala Lumpur with a strong pipeline of young talent. The EF English Proficiency Index 2022 ranked Malaysia #3 in ASEAN and #24 overall, putting it in the “high proficiency” category. The MyDigitalWorkForce Work In Tech initiative provides incentives for training including providing startups with a contribution towards employees’ salaries.
Ease of Doing Business
Malaysia’s government continues to streamline the ease of doing business. The country ranked #42 overall and #8 in the Asia-Pacific region in the Index of Economic Freedom published by the Heritage Foundation, with a score above the world and regional averages. In September 2022, Malaysia launched DE Rantau, a program promoting the country to digital nomads that will provide 2,000 short-term rental accommodations known as Digital Nomad Hubs in 2023.
In the Budget 2023, the Malaysia government allocated RM40 billion ($9 billion) towards loan facilities and financing guarantees for SMEs. The Central Bank has also committed RM2 billion ($450 million) in funding for sustainable technology startups and to help SMEs implement low-carbon practices. Bintang Capital, Kejora Capital, 1337 Ventures, Artem Ventures, and Ficus Capital continue to fund and scale new startups every year.
Selected Startup Organizations
Startup Genome Members
Having empowered over 1,000 startups throughout the years, Cradle continues to drive the growth of the Malaysian startup ecosystem through various initiatives. In addition to grants and mentorship assistance, public-private partnerships with the likes of Microsoft, Petronas, and Maxis continue to scale startups from Kuala Lumpur and nationwide. MYStartup, an initiative with the Ministry of Science and Technology (MOSTI) has been at the forefront of driving collaboration between industries and corporate partners to further elevate and empower the startup ecosystem.
Key Ecosystem Players
Malaysia Digital Economy Corporation (MDEC) Fox Program
The FOX programme is an intervention initiative designed to provide support for 20 selected companies that have shown high-speed growth and the potential to become the next unicorn.
Khazanah (Future Malaysia via Dana Impak)
The programme is an initiative under its Dana Impak mandate — a RM6 billion ($1.3 billion) commitment over five years, which aims to support the local start-up ecosystem of entrepreneurs, start-ups, venture capital and corporate venture programmes.
News from the Ecosystem
Are you interested in diving deeper into this ecosystem? Drop us a message. Our Ambassadors and Partners can plug you in.