Going the distance for startups

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For Malaysia to succeed as a startup hub, more needs to be done to create a thriving entrepreneurial ecosystem based on diversity.

For Malaysia to succeed as a startup hub, more needs to be done to create a thriving entrepreneurial ecosystem based on diversity.

By Sharmila Ganapathy

The idea of Malaysia as a regional hub for startups is not a new one. However, achieving this goal continues to be an uphill climb and, despite many efforts by the domestic public and private sectors, it has so far proven elusive.

A panel of entrepreneurs at the recent 4th Global Entrepreneurship Summit held in Kuala Lumpur attempted to address the issues surrounding this subject, offering their insights and even advice to create a thriving entrepreneurial ecosystem in Malaysia.

Starting off on a positive note, German-born entrepreneur Bjoern Hermann cited the US example, where he pointed out that almost the entire economic contribution in the US comes from high growth companies. He added that many jobs in the service industry are being replaced by software.

“Jobs doing complex but repeatable work will see half of today’s service industry being replaced by software in the next 10 years. This is an opportunity for Malaysia to go through transformation and become a major economic innovation,” he told an audience of media and entrepreneurs present at the recent summit in Kuala Lumpur.

Nazrin HassanNazrin Hassan, a Malaysian entrepreneur-turned-chief executive officer of Cradle Fund Sdn Bhd (pic), didn’t mince his words on what is lacking in the Malaysian ecosystem: “I’ve seen other ecosystems i.e. Singapore. You don’t build an ecosystem just full of local people – successful ecosystems work because of their diversity. Entrepreneurs need to go to international ecosystems, get international exposure.”

He also called for reform of universities in Malaysia. “Here we separate the academic side from the private sector. The best universities have close links with the private sector.”

Then there is the issue of the talent gap plaguing our universities. “40% of Singapore’s research faculty is from the international market. There are pros and cons to this, but the desire of these universities to take the best, exposing students to the best, is encouraging. It brings the global element of competition to these universities,” Nazrin said.

A key issue was then raised, namely the issue of benchmarking Malaysia as a startup hub. According to Hermann, the reason to benchmark is to learn something: “Silicon Valley is great because there are a lot of lessons to be learned. Malaysia can learn for example, for an ecosystem to work you need certain infrastructure in place and financing. Another thing that can be learned is how important it is to have talent.

“More than half of founders from Silicon Valley are immigrants who went to Washington to push for immigration reforms. It is vital to hire people from abroad; the number one issue for Silicon Valley companies comes back to their ability to attract people from all over the world.”

American entrepreneur and founder of World Startup Report, Bowei Gai, meanwhile believes that it is  not realistic to benchmark Malaysia against Silicon Valley. “It is better for Malaysia to look at countries in the region or benchmarking against countries with similar size or GDP. At the end of the day, each country needs competition, it drives a country forward. Take for instance Singapore, Malaysia has a fighting chance to beat Singapore,” he enthused.

Nazrin however, disagreed to some extent. “Benchmarking is about getting to the next level. I would look to Singapore as an ally; use them as a platform to connect to the rest of the globe.” Hermann seconded his views, by adding that it’s not about competition but strong collaboration in the ecosystem, not just locally but globally.

Hermann’s message to entrepreneurs? “No matter what we discuss about the ecosystem, just make it happen—give your best, be persistent and get the resources you need.”

Salient advice indeed, and to some extent, the three panelists did answer some of the questions on Malaysian entrepreneurs’ minds on why Malaysia is still not a regional start up hub. What stands out is that there is no black and white where the matter is concerned and that there is no one solution.

However, if the parties involved take heed of the advice of these successful entrepreneurs, there is no reason the goal cannot be achieved.

Bowei Gai (left) and Bjoern Hermann at GES Malaysia 2013 (photo credit: Sharmila Ganapathy).

Bowei Gai (left) and Bjoern Hermann at GES Malaysia 2013 (photo credit: Sharmila Ganapathy).

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