Opinion: Malaysia does not need more venture capital; it needs capital willing to take different risks

An opinion piece published by The Edge Malaysia argues that Malaysia's financing challenge for growing businesses is less about the volume of venture capital and more about the type of capital available. The authors, Jeep Kline, founder and managing partner of Raisewell Ventures and a faculty member at UC Berkeley's Haas School of Business, and Shawn Balakrishnan, a partner at The Penta Group who leads its Asia operations from Singapore, use the example of a profitable Malaysian entrepreneur seeking to expand from Penang into Johor or into Indonesia and Vietnam. Such a business may lack the collateral a bank requires and may not offer the exponential growth or rapid exit that conventional venture capital targets.

The authors cite the Securities Commission Malaysia's estimate of a RM290 billion MSME financing gap in 2022, attributed to information gaps, market infrastructure and stringent lending criteria. They note this coexists with Bank Negara Malaysia's report that banks and development financial institutions approved RM186.7 billion in new SME financing in 2025. In their view, the gap reflects mismatched capital rather than unwillingness to lend, since banks, venture investors and founders each act rationally on different criteria.

The piece argues that companies such as regional manufacturers and advanced-manufacturing suppliers may need patient capital, private credit, revenue-based financing, growth equity or blended finance rather than venture funding. It cites the Securities Commission's statement that crowdfunding and peer-to-peer platforms had facilitated more than RM9 billion in cumulative funding by December 2024. The authors link this to the New Industrial Master Plan 2030, noting that domestic suppliers in semiconductors, data centres and renewable energy supply chains may require longer financing horizons than venture investors prefer.

On policy, the authors point to the Securities Commission's five-year roadmap, which targets RM40 billion in annual capital-market funds raised by 2028 and focuses on mid-tier companies. They also cite Bank Negara Malaysia's 2025 Annual Report, which describes a move toward guarantee-based SME financing from 2026 to reduce collateral requirements. The authors argue that institutional capital, including pension funds and government-linked investors, could support productive businesses through specialist managers, credit guarantees and development finance partnerships without abandoning fiduciary responsibilities. They conclude that Malaysia should measure success by productive business growth rather than start-up counts or fund inflows.