Netrove Asia Sdn Bhd is no newcomer to the New Economy. Claiming to fully understand the financial needs of dot.coms, it is looking to invest in Internet startups in Asia and recently identified Corpmart.com Hong Kong.
This project has been brought to Malaysia. Application service provider Corpmart Sdn Bhd plans to assist small and medium enterprises (SMEs) to gain access to the Internet to engage in business-to-business (B2B) e-commerce.
Corpmart is backed by Netrove, which has investors from Singapore, China, Hong Kong, Taiwan and Malaysia. Malaysian investors include the Inti Group, Audrey Group and Jasatera Sdn Bhd.
Singapore investors include listed companies such as Enersave and brokers from Kay Hian Group.
It is understood that a paltry 10% of local SMEs have opted for net connectivity. Corpmart aims to sign up 200,000 of the 400,000 SMEs within the next six months, according to Corpmart Chairman and Chief Executive Officer (CEO) Wallace Ng.
In an interview with Malaysian Enterprise, Netrove Asia CEO Teh Kim Seng says: “While many companies and people in Malaysia and around Asia want to join the ranks of Internet companies, they don’t know how to approach it.
“This is where we come in to help, we can manage a net entrepreneur’s funds. Right now we are raising funds privately but we will not have problems raising funds via the stock market and expect to list within 12 to 24 months.”
Netrove President Foo Yong Kwang concurs. ” Angel investors are individuals or companies that have significant experience in nurturing startups. They should understand e-business and not just supply funds to dot.coms.”
Teh is an experienced investment banker who has handpicked start-ups in Hong Kong. These companies subsequently went for an initial public offering (IPO) such as Quamnet.
“We are looking at investing in a few Internet companies in Malaysia and are in conceptual stage.
“We will finalise this soon and have a pool of investors from Singapore, Malaysia and Taiwan. Our first tranche of funds was RM15 million, and we expect to secure RM100 million by the end of the year,” says Foo.
In Asia, Netrove is discussing plans with a company in Singapore, two in Malaysia, as well as in Hong Kong and China. These companies are old economy companies that are keen to become dot.com companies.
He notices that in Asia, investors are reluctant to invest in dot.coms. A dot.com requires funds from angel investors and seed capital for start-ups, right up to its first round of financing, pre-IPO and listing the company.
“There is a vacuum of seed and angel capital in Asia, coupled with the fact that many venture capitalists (VCs) dare not take risks. The lack of initial capital providers is causing ideas from dotcoms to remain on the drawing board.
“Dotcoms need angel or seed capital financing to move to an early stage start-up before VC will professionally look at them.
Teh believes that many VCs’ funds are old economy companies such as manufacturing companies and not for start-ups.
“But even for those with angel capital financing, there is a lack of financial knowledge in the Internet field in Malaysia. More market education with the right financial people for Internet players and VCs would help.
“The third factor is the regulatory side. Many people face bureaucratic problems such as trying to get MSC status, getting foreign investors when you don’t have MSC status and it can take up to three months to get FIC approval. “However, Bank Negara has been helpful,” says Teh.
Removing such obstacles will help local and overseas investors. There are abundant funds from US, European, Hong Kong and Japanese VCs. But due to concerns with remittance of funds and foreign exchange controls, these investors are afraid to invest in Malaysian dot.coms.
“When Hong Kong started two years ago, the market was flooded with funds from US, Japan, Korea, and dot.coms flourished. Countries like Japan, Hong Kong, Taiwan, Singapore are doing well. Several hundred million US dollars were invested in these markets,” says Teh.
IDC has earmarked US$1 billion for China, Hong Kong and Taiwan. The fourth factor is educating the public on e-commerce through the media and providing greater exposure to promising dot.coms in Malaysia.
Teh advises SMEs to develop an Internet strategy and implement it. If an SME does not have an Internet strategy within the next three years, it will lose its competitiveness. The Internet has created efficiency in operational costs and marketing.
It also allows small companies to quickly establish a global reach, if a company has strong logistics plus a web site it can ship its goods to Malaysia or the rest of Asia.
A web site enables you to capture more information about your customers, such as location, age preferences, gender and income. This enables sellers to customise their products. ” You can’t capture this information with an old economy shop,” says Teh.
So, a budding Net entrepreneur should re-energise his business, put a dot.com behind his name and use Internet technology to improve communication and management systems through Intranet. Laggards will certainly lose out.
(Source: Focus, Malaysian Enterprise Magazine, June 2000)