Matt Van Leeuwen, a Netherlands-born entrepreneur, came to Malaysia more than eight years ago when he got an opportunity to grow his biotech startup SimuGen (then based in Cambridge in the UK) in the Asian market. This was back in 2008 just after the global financial crisis which, according to him, were really challenging time to raise capital in Europe. It was especially difficult for biotech companies that were perceived as riskier investments.
“One thing that struck me was that Malaysia was very aggressive in developing a biotech sector and provided really good incentives for foreign entrepreneurs to land here and build a business. When the offer from a local VC firm came to invest in us, it didn’t take me long to pack my bags from the Netherlands and come out here,” Leeuwen told e27.
But that is only one part of the story. “The other part is that I happened to have a lovely Malaysian girlfriend at the time (who also studied in Cambridge), who’s now my wife, so you can say that the stars were aligned and things sort of worked out on different fronts,” he quipped.
Leeuwen, who is now a familiar name in the startup ecosystem in Malaysia, is currently well-settled. He recently started Sunway Innovation Labs (i-labs) — a partnership between Sunway University, Sunway Ventures, and Sunway Group — which plays a dual-function of being an incubator for students and a corporate accelerator for the Sunway Group.
e27 had a long chat with Leeuwen about iLabs’s business model and the overall startup scene in Malaysia.
Here are the edited excerpts:
There are a few leading incubators/accelerators in Malaysia. How is Sunway iLabs different from them?
Sunway iLabs is a unique partnership between Sunway University, Sunway Ventures, and Sunway Group. One problem that Sunway iLabs seek to solve is to mitigate a new startup’s risks, to provide a safety net of sorts if you will. It is commonly accepted that nine out of 10 startups fail. So much so that it has become a joke among the startup circle that you have to write your post-mortem alongside your business plan.
It’s to be said that failure of startups is part of the game though. The now famous Silicon Valley slogan goes “fail fast, fail often” or some people say “fail forward”, and we should learn to embrace that. But here at Sunway iLabs we provide startups the key ingredients to succeed, which include access to talent, capital and knowledge.
One of the key mistakes that startups tend to make is creating products that has no application or doesn’t really solve a problem. Studies have shown that almost half of these startups that fail to identify a market need for their product as the single biggest reason for their failure. So, Sunway iLabs is a solution to this problem as it is imagined as a place where also businesses come to have their problems solved or innovation needs addressed. And the testing and validation platform is provided by the Sunway Group’s 12 businesses and its networks.
The second reason why startups fail is because they run out of cash to fund their fast growth. Fast growth is what entrepreneurs need, investors want and markets desire. The synergy with Sunway Ventures comes into play here. Potential funding and mentorship from Sunway Ventures can help budding entrepreneurs effectively bypass some of the biggest startup killers — losing customers, losing to the competition, and losing people – by providing access to capital.
However, Sunway Ventures is only one of the potential sources of funding. Sunway iLabs also works closely with other VCs and angel investors for equity funding as well as with government agencies that provide grants to entrepreneurs.
The third reason for failure is that entrepreneurs are not able to change the direction of their startup fast enough once they realise that their business model is not sustainable and scalable. In fancy startup terms it’s called a pivot. Startup teams must possess the ability to change products, take up a new marketing approach, shift industries, rebrand the business, or if necessary even tear down a business and start all over again. It is not easy to make the decision to pivot at the right time, especially for first time entrepreneurs. And that’s why we provide the necessary handholding through seasoned mentors who have experience in building companies and have gone through the different stages of development.
What is the key objective of iLabs?
Our first objective is to nurture and deliver a new generation of young entrepreneurs to support Malaysia’s goals to become one of the top 20 countries in the world by 2050.
Sunway iLabs is very much in the position to do so, as we have about a pool of 30,000 digitally-savvy students to start nurturing within Sunway City alone. To meet this objective, Sunway iLabs functions as a micro-ecosystem which links well with the larger Malaysian ecosystem.
Secondly, we aim to showcase Sunway iLabs’ startups as a success story to game change how people view innovation. A lot of companies in Malaysia, particularly the ones in the brick-and-mortar businesses, innovate internally and are a little slow in adopting new technologies and that, as we know, limits their growth. We would like to shake things up a little, cause a little ripple effect, and shift Goliath mindsets to David mindsets, and embed a culture of perpetual evolution, so ultimately young entrepreneurs will have more support for growth from big corporations.
How do you pick startups for your incubation programme? Can you explain the process?
We currently have two groups of startups that we evaluate for incubation:
Students and researchers in the Sunway Education Group. These people can use the space and tap into the advice provided by iLabs to further develop their ideas and create potential startups. We are running an annual Start-it Challenge to pick the best ideas and provide entrepreneurs with access to programmes to further nurture the ideas and take them to the next level. The finalists of the Start-it Challenge will be invited to pitch their project to a panel of judges consisting of investors and industry leaders. Then the top 3 winners will get an opportunity to participate in the iLabs accelerator and launch their startup.
We also open iLabs to external startups that could provide innovations or solutions to the Sunway Group of Companies. We have formed collaborations with government agencies, such as Cradle, AIM, MDEC and MaGIC to identify startups that may be incubated by iLabs.
Is it a cohort-based programme? What is the incubation period?
We are keen to advocate that innovation happens as a result of diversity, so we encourage cross-cohort collaborations throughout the year. However, we plan to run up to two 12-week accelerator programmes per year for projects that have strong commercial potential.
Do you incubate concept stage startups as well?
When are you starting the programme? How many startups are you planning to incubate this year?
Our Start-it Challenge will commence at the end of August and we are looking to identify three projects that are ready to be accelerated by the end of the year. In addition, we are running a beta accelerator programme for five companies this year.
Is iLabs sector-agnostic? Do you also incubate cross-border ventures?
Sunway University produces students with a diverse range of backgrounds, so we expect their ideas also to be covering different applications and industries.
We are building strategic partnerships with international organisations that can provide a soft landing in certain markets, we also call them launchpads. These launchpads allow our entrepreneurs to build cross-border ventures in a more cost-effective way than if they would have to do it themselves.
What facilities do you provide to the incubatee startups? Do you also provide equity funding/grants?
We have a 6,600 sq ft co-working space where great minds can come together to think alike. We believe in ontological design — the things we design can design us as well – so we have gone all out to equip the space with absolutely everything that young entrepreneurs would need.
We have access to great mentors, particularly mentors from Sunway’s leadership team, who have great networks, as well as deep industry experience.
We have tied up with ecosystem players and government agencies that provide grants and built collaborations with VCs and angel investors that are looking for investment opportunities in early stage startups. In addition, we have an in-house VC firm that invests in promising companies at different stages of development.
Have you set up a separate fund to back your startups?
We will be leveraging on Sunway Ventures, which is the corporate venture capital (CVC) arm for the Sunway Group that was recently set up to drive the group’s participation in the new digital economy and to explore scalable technology-related startups through external VC investments or internal venture building.
To give you a little background, Sunway Group is a leading property-construction conglomerate with interests in 12 business lines. With Sunway Ventures, we will be looking to position the Sunway Group at the intersection of the online to offline convergence. Other focus areas for Sunway Ventures includes logistics, digital media, fintech, healthcare and education startups, which are sustainable and synergistic to Sunway’s existing business lines.
iLabs is basically a non-profit organisation. Who is funding the incubation project then?
The funds for the initial setup of Sunway iLabs is from the Jeffrey Cheah Foundation. The Jeffrey Cheah Foundation is the brainchild of Sunway Group’s Founder and Chairman, Tan Sri Dr Jeffrey Cheah, one of the best-known entrepreneurs and visionaries in the country for turning two disused mining craters into a thriving township and Malaysia’s first Green Building Index certified sustainable city.
His passion is education and because of that he has created the country’s largest education-focused social enterprise, the Jeffrey Cheah Foundation (JCF), which owns and governs the 16 educational institutions of Sunway Education Group worth RM1 billion (US$233.5 million) today. The Jeffrey Cheah Foundation’s social enterprise model ensures that surplus funds post operating expenditures are channeled into facilities and capacity building. In the past decade, we have built links with top institutions in the world including Harvard, Oxford and Cambridge as well as partnered with one of the world’s top economists, Professor Jeffrey Sachs to set up Asia’s first Jeffrey Sachs Center for Sustainable Development.
Do you work with both government as well as corporates in Malaysia? What kind of partnerships do you have with them?
Yes we work with both the government and corporations in Malaysia. The government agencies we are currently working are the Malaysian government agency responsible for overseeing MSC Malaysia implementation, MDeC; Agensi Inovasi Malaysia (AIM)-owned national technology commercialisation platform in collaboration with SME Corporation Malaysia, Platcom Ventures; Malaysian Global Innovation and Creativity Centre (MaGIC), Cradle Fund Sdn Bhd and its official trade association and governing body for angel investors and angel clubs in Malaysia, Malaysian Angel Business Network.
We are also collaborating with companies such as ride-hailing giant Grab, and Silicon Valley-based entrepreneur camp designers Young Outliers.
How is the Malaysian startup scene faring? What kind of companies are cropping up in the country?
I think the startup scene is very much ramping up, with more capital available. In the past 10 years, we have also seen some cross-border M&As although this is still very nascent in Malaysia, compared to the famous startup hotbeds, such as Silicon Valley. In terms of building a conducive environment for startups, Malaysia’s government has set up a number of agencies that provide support and funding to entrepreneurs. It is a very interesting time to be an entrepreneur in Malaysia right now, and I expect to see more success stories come out in the coming years.
An interesting space that has been given increasingly attention recently is the smart city market, which is estimated to be worth about US$1.5 trillion globally by Frost & Sullivan. This market will be driven by advancements in technology platforms such as Internet of Things, Artificial Intelligence, autonomous vehicles and robotics.
In Sunway City, we are working towards being the first private-driven smart sustainable city, soon to be equipped with free WiFi; this means we will own the data generated within the city and can work to develop meaningful solutions for community safety, mobility, smart buildings, governance and education, to name just a few.
While over 90 per cent of Malaysians are using internet, startups have not been able to leverage this opportunity — why?
I think a lot of companies, not just in Malaysia but globally, are thinking that digital transformation as a bolt-on thing. Many go the way of bolting on some digital channel or technology searching for a problem, instead of applying design thinking to solve real customer problems. A lack of in-depth insights in customer pains or needs and inability to develop more market-driven innovations hampers digital transformation.
And perhaps there’s a lot of fear associated with digital transformation that we are dealing with – people think that AI, or IoT would mean that people would lose jobs. Fundamentally, I’m a technological optimist so I think it would be the contrary. Take the industrial revolution for example, we no longer have a bunch of people who have horse carriages, or people who make horse carriages, but now we have millions of people benefitting from the automative industry, and whole economies dependent on it for growth. The Fourth Industrial Revolution has already started that builds on the Third or Digital Revolution, representing new ways in which technology becomes embedded within our daily lives and even the human body.
How do you compare the startup ecosystem in Malaysia with the rest of the markets in Southeast Asia?
Generally, Singapore is leading the startup scene in ASEAN. They have the most well-funded startups in Southeast Asia. Malaysia is not too far behind. There are two Malaysian companies topping the list in SEA by value – iProperty and Jobstreet.
Our government is both business-friendly (ranked second in ASEAN after Singapore) and tech-friendly. The country has also announced the intention to build the first Digital Free Trade Zone in the world which will merge physical and virtual zones with additional online and digital services to facilitate international e-commerce and invigorate Internet-based innovation.
I see Malaysia as a key gateway to the ASEAN market, which has a population of more than 600 million people with a young demographic and some of the fastest-growing economies in the world. There is definitely no lack of opportunities for local entrepreneurs and there is plenty of government support, but the question is whether they have the entrepreneurial mindset and will to grab the bull by its horns and go on to build global companies.
Image Credit: Sunway iLabs