The Star launches $6.59M fund to invest in Malaysian startups

Star Publications, a media company in Malaysia which also runs Star Publications, has just launched a MYD 20 million (US$6.59 million) fund to invest in Malaysian startups.

The fund, called The Star Accelerator Fund is offered in two forms: pre-seed fund and the seed fund. The pre-seed fund provides each applicant with up to MYR 300,000 (US$98,800) while the seed fund offers support of up to MYR 1 million (US$329,000) per applicant. The decision on which fund to apply for is determined by the stage of development of the applicant’s business.

Who can apply?

How does a startup qualify for The Star Accelerator Fund? First of all, the founder must be a Malaysian and have a controlling stake in a local company. The startup must also fulfill a certain paid up capital in order to apply for the funding. Should an application be considered for funding, startups will be required to pitch the idea to an investment panel. For successful startups, funding will be disbursed and paid out in terms of the milestones agreed upon. In return for the funding too, Star Publications will acquire an equity stake of up to 20 percent in the startup.

“The equity shows our commitment to a start-up company to ensure its ideas can be nurtured into a viable and sustainable business. In this context, we are actually supporting what the ETP (Economic Transformation Programme) is all about,” said Datuk Seri Dr Chua Soi Lek, MCA president and initiator for the fund, at the launch in Menara Star.

If the response is good, Star Publications has the resources to double the funding amount to MYR 40 million (US$13.18 million).

Star Publications also runs The Star, Malaysia’s largest English tabloid

Besides the monetary funding, the media group will also offer a platform via its various media properties to highlight its portfolio companies. The company definitely value adds to its portfolio company as it publishes the nation’s English daily, The Star. According to the Audit Bureau of Circulations, The Star has a daily circulation of between 290,000 to 300,000. The Star is majority-owned by the Malaysian Chinese Association, the second-largest party in the ruling Barisan Nasional alliance.

Good news for Malaysia startups?

One of the few things we heard on the ground from startups in Malaysia is the lack of funding sources available. While there are numerous funds (Rakuten, CyberAgent Ventures, GREE Ventures) being set up around in Southeast Asia, we seldom hear news about foreign fund investments in Malaysia. In Malaysia, The Cradle Fund is the main organisation where startups in Malaysia can turn to and apply for funding. The Star Accelerator Fund now provides an alternative to Malaysia startups.

With more and more funds being set up by local organisations, this is a sign of commitment from the government and various local organisations to push for more digital startups and entrepreneurship. Of course, while this is great news for the local community in Malaysia, whether or not the media group can successfully execute the accelerator program and bring startups to new heights is another question. Without prior experience in running an accelerator program, perhaps the fund can be better utilised by partnering with international accelerators who are capable to bring in international mentors, especially those from Silicon Valley. Star Publications can then focus on what it does best: the media industry.

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This article by Jacky Yap originally appeared on e27.co, a Burn Media publishing partner.