Business angels on the ascent

KUALA LUMPUR: About 58% of companies and 70% of investment funds in Malaysia met or exceeded their goals, according to a study presented by the Malaysian Business Angel Network (MBAN).
“This shows that business angels are successful in their investments and angel investments can be a good alternative as an investment instrument,” MBAN president Dr Sivapalan Vivekarajah told a press conference to announce the study here yesterday.
The study, called the Emerging Business Angel Market in Malaysia – A State of the Nation Report 2016, found that business angel investing is new in Malaysia. In Malaysia, the average years in investing is five years, compared with six years in Vietnam, 16 years in Thailand and 18 years in the Philippines.
Business angels in the Malaysian sample are highly-educated hands-on investors who effectively co-invest primarily in seed and early stage companies that operate in Malaysia and Asean.
About 17 of the 20 business angels in the study have made investments in 85 companies, with an average of five per business angel. The median-size of the business angel investment fund is US$440,000 (RM1.76 million). The business angels have a median investment range of US$25,000-US$82,000 for first round and US$80,000-US$125,000 for later round. The aggregate business angel investment funds in the study is US$15 million.
“We see more and more people want to do angel investing and they want to come to our pitching sessions. Every week, someone is being registered as angel,” said Sivapalan, adding that MBAN is targeting to have 180-200 members by year-end, from 120 members currently.
He said 93 entrepreneurs have participated in the pitching sessions to angels organised by MBAN from June last year to May this year. About five to six quality deals will be shortlisted every month. On average, a company will be looking to raise RM300,000-RM500,000.
Going forward, he said MBAN would like to have an equal ratio of technology and non-technology deals by next year, as the non-technology sector is fairly underserved in angel investing. However, this is partly due to tax incentives that are only limited to the technology sector as the government wants to move the ecosystem up the value chain.
One of the recommendations in the study is the expansion of business angel investing tax incentives beyond high-technology and individuals.