Malaysian government seeks to spur local tech startup scene. Bolehkah?

The Malaysian government seems to be stepping up efforts to grow the local tech startup scene with their strong backing of StartupMalaysia.org. The program aims to create “10 globally thinking Malaysian entrepreneurs with scalable startups” by 2013.

So here’s the masterplan. First, inspire. Through Silicon Valley Comes to Malaysia (SVC2M), StartupMalaysia.org hopes to inspire over 1000 local entrepreneurs. Through the two-day conference, which flew in an A-list of Silicon Valley entrepreneurs and investors such as Naval Ravikant (AngelList), Jawed Karim (YouTube) and Shawn Fanning (Napster), the Malaysian community was inspired and hopefully seeded with ideas on how tech startups can be built in the country.

Second, identify. Through the StartupExperience Innovation Camp, StartupMalaysia.org hopes to identify 100 entrepreneurs to go through the two-day camp very much similar to StartupWeekend. The camp follows the structure of the Startup Experience Game, implementing four stages – Stage 1: USER, Stage 2: TECH, Stage 3: IDEATE, Stage 4: PITCH.

Finally, the program hopes to incubate 10 startups that will go though a Silicon Valley immersion trip, funding roadshows and mentorship to help them achieve the goal of being a scalable company by the end of the program.

As a Malaysian, I welcome this initiative to breed a richer startup environment. This is, of course, one of the first major event held locally to inspire and set young minds spinning. Presenting the option of entrepreneurship as not a last option before graduating a university student but a career path at the beginning of their tertiary academic life as mentioned in the event’s opening speech is really something I strongly support. But, would this program work?

One part of creating a strong startup community is to encourage the execution of ideas. A friend once mentioned to me that he read somewhere that a startup community follows the r-selection pattern (this is where my biology classes take effect). Organisms following this selection pattern are opportunist at heart, producing as many offsprings as they can with the hopes that some may survive in the volatile environment conditions. Sounds like the startup community that you are in? Move fast, build prototypes quickly, get feedback, kill the product if it is not working and move on. That’s why the community is so dynamic, fast-paced and to most of us addictive. And that is what a startup community should have. Millions of ideas being executed on, millions of these executed ideas being killed because they don’t work or can’t scale and the surviving few will turn into the next billion-dollar companies that produces a new generation of angels to fund the next cycle.

Which brings us to the other half of creating a strong startup community, there must be the available capital to sustain these activities. And this is where the involvement of private equity is important. Yes, the government can help kickstart the equity part of a startup community, much like how the Singaporean government is doing. However, a strong startup community rides more on private equity than on government funding. A behavior that has been proven through the success of Silicon Valley. And, from my interviews with US-based investors, I have learnt that a startup community will not attract foreign investors unless there is already strong and active local private equity involvement in the community itself. This gives an indication to foreign venture capitals that there is potential in the region. To gain the confidence of the local private equity community, the startup community must be able to show a strong exit model. Basically, a good track record to show that this industry is a rewarding one.

Now, that is my opinion of how a strong startup community will function. If you read the two paragraphs above on repeat, that should be the recurring, working model. So will StartupMalaysia.org achieve this? We’ll have to wait and see. In my opinion, creating just 10 successful startups from this program alone is not enough to kickstart the chain reaction. What we need is one big motherlode of startups injected into the space with the private equity to bring them to the next level. But that is all wishful thinking. Right now, any step, no matter how small, is a good step in the right direction. Provided they are executed properly by the right people. The “Malaysia Boleh” spirit is strong in this, I just hope for my country’s sake that this can be done well by people with the right motives.