Has Malaysia’s largest VC lost its luster?

Malaysia Venture Capital Management (Mavcap) is the largest government-owned venture capital firm in Malaysia, with a total portfolio value of about 5 billion ringgit (US$1.29 billion).

Founded in 2001, Mavcap’s mission was to invest in ICT-related companies across the entire funding spectrum, from pre-seed to late stage.

But after around two decades, Malaysia-based investors and founders have begun questioning Mavcap’s role in stimulating the tech space, especially after it stopped direct investments in 2011 to solely focus on being a fund of funds (FoF).

Frustrations, uncertainty, and doubt

Four investment professionals who spoke to Tech in Asia on condition of anonymity flagged a host of issues.

Firstly, they say it’s difficult to directly engage Mavcap with proposals, claiming that they have to go through intermediaries to get the attention of the agency.

Secondly, they highlight that Mavcap’s funding has become too small, making it difficult for the agency to make meaningful investments.

The sources add that not much is known about Mavcap’s investment returns, aside from press statements announcing new funds and investments and information available on its website.

A government official familiar with Mavcap told Tech in Asia that they only knew details about the agency’s investment through Teak Capital, a boutique VC firm headquartered in Kuala Lumpur, which was appointed as Mavcap’s outsource partner in July 2008.

Teak would fetch a premium for its investee company, GroupsMore, which was acquired by ecommerce platform Groupon in January 2011.

The government official said that the deal helped Mavcap get a 2x return on its investment. However, they couldn’t divulge more details as the information has not been made public.

Thirdly, the investors that Tech in Asia spoke to question Mavcap’s relevance in light of Penjana Kapital, a newer government agency that has not only been making headlines but also has the same mandate as Mavcap in being an FoF.

The sources argue that success stories of foreign funds being domiciled in Malaysia like Thomas Tsao of Shanghai-based Gobi Partners and of raising a Malaysian VC class such as Victor Chua of Vynn Capital are rare cases.

Tsao opened Gobi’s Southeast Asian headquarters in Malaysia in 2012, and he also relocated to the country. Chua, on the other hand, worked in Mavcap and then moved to Gobi before setting off on his own with Vynn Capital.

Yes, but…

Grappling with systemic difficulties

Outshone by a younger rival

At least a billion ringgit