Many of us may already be familiar with the term unicorns, but unfortunately Malaysia is still not too familiar with having a homemade one (you may have a strong opinion about it, but take your horses).
The US has most unicorns to this day, which is not surprising, but Asia as a whole also carries many unicorns. In fact, only in Southeast Asia, we have Indonesia, Singapore and the Philippines representing the region with 5, 3 and 1 unicorns respectively.
Today, many Malaysians are still disappointed by the missed opportunity Grab Housing, which is not only Malaysia’s first unicorn, but the first decacorn (a company valued at more than $ 10 billion) in Southeast Asia.
So what were we missing and what is still missing today? Why has Malaysia not yet grown a unicorn? As we write about the home ecosystem, we must admit that these are questions that often cross our minds. Before we delve into this, it would be good to re-establish the basics of what we know about unicorns.
What is a unicorn?
To put it simply, unicorns are start-up companies valued at US $ 1 billion, a term first coined in 2013 by Aileen Lee who founded Cowboy Ventures, a venture capital firm in its infancy.
Fun fact: It is called the Canadian version of unicorns narwhals.
There are more terms for startups with a higher value, such as the term decacorn I mentioned earlier, which is given to start-up companies valued at US $ 10 billion.
Other terms include hectocorns or super unicorns (US $ 100 billion), minicorns (US $ 1 million), Soonicorns (startups with the potential to become unicorns) and more.
In April 2021, there are more 600 unicorns worldwide, including decacorns and hectocorns. They come from a wide variety of industries such as fintech technology, e-commerce, artificial intelligence, Internet software and services, automotive and transportation, and more.
How can you become a unicorn?
Now, in addition to being valued at US $ 1 billion, so is Aileen Lee described unicorns as rare technology startups. This is because, for the most part, unicorns are generally startups that introduce disruptive innovations through their technology.
Take Uber or Airbnb, for example, which changed the way they share commodities through technology and became the pioneers of their industries. Companies that have the first-rate advantage are more likely to become unicorn, but that’s not a guarantee.
87% of unicorn products are software, 7% are hardware and the remaining 6% are other products and services, according to RazorPay. Some other common features of unicorns are that they are usually B2C and are privately owned companies.
To add, the valuation of a unicorn has nothing to do with its financial performance. Take Grab, for example, which is generally not yet a profitable company, although CEO Anthony Tan claims it is profitable in certain verticals. However, the start will be valued 39.6 billion US dollars.
For many emerging companies, the valuation will be $ 1 billion investors and major rounds of financing, but an acquisition can also increase a company’s status overnight.
What are the advantages of being a unicorn?
If you did a simple search for “why startups should aim for unicorn status,” you’ll actually find sources that tell you otherwise, as some believe that unicorns often chase and burn investors’ money. , and that a “proper” start-up is one that must be cultivated through blood, sweat, and tears.
In fact, from this search, you will find that there are more people advising startups that pretend to be camels instead of unicorns, especially during COVID-19.
Dictionary time: Camels are startups that balance cash flow and growth, such as managing costs sustainably and not burning them through financing or cash flow through a growth mentality at all costs.
Despite this, investors are he still wants to invest in Soonicorns to turn them into unicorns because of the potential for them to provide massive returns later. A small investment in a breicorn at first can mean impressive performance if you find success later as a unicorn.
Now, fame is certainly one of the benefits that unicorns get from being recognized as a rare, high-value, privately owned company, but benefits they include being a role model for the local home ecosystem and attracting the attention of more investors (local and foreign) and government.
When a startup becomes a unicorn, it points to the potential of the industry that will make the government look for them more and generate more ambition within the set of investors.
But why is Malaysia struggling to grow unicorns?
To incoming, we are not a rich country. Our GDP per capita (which is used to measure the standard of living) is US $ 11.4 billion, which makes a big difference if you compare countries with unicorns like Singapore and the United States, whose GDP per capita is 65.2 thousand US dollars.
However, not being rich is not the only thing that makes it difficult for us, as having a smaller population further reduces the market for people who are willing to see the value of their services and pay for them.
Even larger countries like Thailand, with a population of 70 million, Vietnam (100 million) and the Philippines (110 million) are struggling to create unicorns, so it does more unlikely that we will be able to house one in Malaysia, with a much smaller population of 32.7 million.
Due to our population and market size, Malaysian entrepreneurs would have to go to the region in order to achieve unicorn status and unfortunately most of the time this means moving their headquarters to other places, shared Kashminder Singh, co-founder of pitchIN with The Edge.
International CVs tend to be more present in Singapore, which is why Grab moved when they were unable to raise enough funds in Malaysia due to lack of funding and the avenues we have locally.
In addition, prestigious investors such as Alibaba and Softbank are unlikely to have the funds to increase the status of a startup closer to the unicorn that will fund startups without a regional presence, said Chok Kwee Bee, CEO of VC Teak Capital, in the same interview with The Edge. .
Another hurdle we have is our talent, not our lack, but our lack of money to hire top-notch talent. Mediocre talent results in mediocre startups, making it harder for them to target the unicorn club.
In accordance with Doc Siva de Proficeo, one of its ScaleUp Malaysia companies wanted to hire great talent, but the demanding salary of this talent was high as it earned about RM 30,000 a month ($ 10,000 SG) in Singapore. Unable to pay it, he slipped through the company’s fingers.
At Jobstreet Singapore, it shows that it costs $ 8,000 to $ 20,000 to hire a CTO, $ 10,000 for a sales director, and $ 8,000 for a channel sales manager. This could be considered the benchmark for hiring the best talent, but it’s rare for your average Malaysian start-up company to have enough funds to pay for them.
Malaysia wants to attract or grow five unicorns by 2030
Although we have not yet grown a unicorn in the last decade, Malaysia aims to attract or grow 2 unicorns in 2025 and 5 in total in 2030, whether domestic or foreign companies, according to the MyDigital map.
Some of the initiatives outlined include the establishment of digital industry clusters as a regional hub, the introduction of a single window platform for investment opportunities, and the improvement of incentive packages to attract specific investors. .
Dictionary time: A single window is a platform it is required by the government and allows information to be sent to meet regulatory requirements between economic operators and government authorities. A single window is a single point of entry for data and data only needs to be sent once.
While it seems quite ambitious given our progress so far, it is safe to say that the government is paying more attention to the importance of having a unicorn in the country.
A starting point for us would definitely be for our government and relevant agencies to first identify possible short horns in our country, talk to them and understand what their needs are, and address them before they also go on our search. in search of better opportunities. regionally.
From here, we can identify which parts of the framework achieved the desired results and find better ways to replicate and improve our performance.
Years and years have passed seeing countless players in the home ecosystem say Malaysia will see a unicorn soon, well, we’d like to see more than just ambitious plans, but the actual actions and their execution come to fruition.
- You can read more unicorn-related articles we’ve written here.
Featured Image Credit: Catch