Khazanah Nasional Bhd and its subsidiary, Jelawang Capital, have selected five venture capital (VC) firms for the Emerging Fund Managers’ Programme (EMP) and the Regional Fund Managers’ Initiative (RMI).

The announcement was made by Senator Amir Hamzah Azizan, Malaysia’s Minister of Finance II.

This comes as Bryan Lim, Jelawang Capital’s CEO and board member, said he was stepping down before the announcement was made.

Launched in October 2024, the EMP and RMI aim to enhance Malaysia’s venture capital ecosystem by supporting local and regional fund managers.

The EMP assists Malaysian fund managers in raising initial funds. Meanwhile, the RMI focuses on regional and global managers to improve Malaysia’s startup ecosystem.

Three Malaysian firms were chosen under the EMP, such as Vynn Capital, Kairous Capital, and First Move. Meanwhile, AppWorks and Granite Asia were chosen under the RMI to bring regional expertise.

For the EMP, applicants are required to raise a minimum of RM60 million (US$12.7 million), with at least 20% of that amount secured as a base condition for eligibility.

However, it remains unclear whether the selected EMP firms have met this funding condition, as neither the event speeches nor Khazanah’s media release addressed this detail.

This selection aligns with the Malaysian Venture Capital Roadmap 2024–2030. It aims to position Malaysia as a regional venture capital hub by 2030.

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🔗 Source: Digital News Asia

🧠 Food for thought

1️⃣ Addressing systemic risk aversion in Malaysia’s venture capital landscape

This initiative directly responds to long-standing structural issues that have hampered Malaysia’s VC ecosystem for years.

In 2018, Malaysia’s venture capital industry faced criticism for excessive risk aversion, with only RM418 million invested from RM3.3 billion available for investment, creating a funding gap particularly at the Series A level (RM1-5 million)1.

The problem stemmed largely from government-funded VC structures that functioned more like loans than investments, lacking standard VC incentives like carried interest that motivate high-risk, high-reward investments1.

This historical risk aversion forced promising Malaysian startups like Grab to seek foreign funding, highlighting the disconnect between available capital and actual investment1.

By selecting firms with diverse investment theses (sector-focused Vynn Capital, cross-border specialist Kairous, and pre-seed investor First Move), Khazanah’s program directly addresses the systemic diversification needs identified by industry critics.

The initiative represents a significant shift from simply providing capital to nurturing fund managers who can better evaluate risk and support Malaysian startups through different growth stages.

2️⃣ Targeting regional integration in a challenging Southeast Asian funding climate

Malaysia’s timing is strategic, as Southeast Asia’s VC landscape has experienced significant contractions, with 2024 seeing the lowest deal volume in six years across the region2.

The selection of Kairous Capital as a cross-border specialist positioned to help Malaysian startups scale into Vietnam, Thailand, and Indonesia reflects awareness of regional market dynamics when domestic opportunities may be limited2.

Similarly, bringing in regional player AppWorks from Taiwan to run Malaysia-focused cohorts acknowledges the value of regional expertise and networks at a time when funding has become more selective2.

This regional approach aligns with broader Southeast Asian trends where M&A has become a preferred growth strategy, particularly in fintech sectors, as companies seek to consolidate amid challenging funding conditions2.

The initiative comes when deep tech funding in Southeast Asia dropped 34% to $801 million in 2024, with Singapore capturing 85.6% of deal volume and 91.1% of total funding—highlighting the competitive challenge Malaysia faces in the regional VC landscape3.

Malaysia’s focus on building ecosystem connections rather than just providing capital reflects lessons learned from more mature markets like Singapore, where coordinated national strategies have proven effective at concentrating regional investment3.

3️⃣ Evolution of Malaysia’s government-backed venture ecosystem approach

Khazanah’s initiative represents the latest evolution in Malaysia’s 15+ year journey to develop its venture capital ecosystem through government-led programs.

The Malaysian Venture Capital Development Council (MVCDC) began organizing institutional investor roundtables as early as 2007 to address barriers to growth in the VC sector, demonstrating the long-term nature of this ecosystem-building effort4.

The structure of the current program addresses specific historical criticisms of government-backed VCs, which were previously hindered by geographic and racial investment limitations that restricted their ability to back the best opportunities1.

By selecting both homegrown Malaysian firms and established regional players like AppWorks and Granite Asia, the initiative balances the need to develop local expertise while importing best practices from more mature venture markets.

The RM1 billion commitment under the Ekonomi MADANI framework signals a strategic shift from smaller, fragmented government initiatives to a more coordinated and substantial approach to ecosystem development.

This evolution acknowledges that building a sustainable venture ecosystem requires not just capital but developing multiple components simultaneously—fund managers, founders, supportive regulations, and connections to regional markets.

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