Heavy-handed love hurts MY startups

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Government intervention often doesn’t produce the effect envisioned by policymakers. My favorite example is the Great Hanoi Rat Massacre of 1902.

The French colonists who ruled at the time wanted to control the rat population in Vietnam’s capital, so they offered citizens a bounty per rat killed. To collect cash, one simply had to present a severed rat tail.

The enterprising residents of the city realized they could game the system by cutting off rats’ tails and then releasing the rodents to continue breeding. While this practice allowed them to pocket more cash, it also increased the rat population.

The best-laid plans of rats and men, eh?

For a more modern example of government intervention having unintended consequences, we can look at Malaysia’s startup scene. Today’s featured story, in particular, dives into how government support designed to aid the ecosystem may have made it reliant on handouts.

Today we look at:

• Malaysia startup scene faltering under government’s heavy hand
• Fintech funding slipping in India
• Other newsy highlights such as Singaporean data center firm Digital Edge scoring US$1.6 billion in funding and Chinese EV giant Geely setting an ambitious sales goal

Premium summary

Nice idea, shame about the execution

Image credit: Timmy Loen

VCs have started paying more attention to the Malaysian startup scene in recent months amid increasingly positive media coverage.

However, Malaysia-based investor Kevin Brockland argues that the country’s ecosystem has, in fact, regressed in recent years, primarily because of government intervention.

• Talent wasted: While the country has a large pool of natural entrepreneurial talent, these founders don’t have the ideal environment where they can succeed. The space is flooded with government programs designed to aid startups, but instead, it has created a system where companies become dependent on state support.
• Knowledge gap: Many of the government agencies meant to support the startup ecosystem also lack direct entrepreneurial or relevant startup investing experience. Despite good intentions, the limited understanding of startup dynamics has led to inefficiencies.
• Solutions: A more market-driven approach could help turn things around by reducing overreliance on government support. If private capital can flow freely and a culture of risk-taking is fostered, founders could have an environment that would allow them to solve actual problems.

Fintech funding falls

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