COMMERCIALISATION FUNDING

An invention remains as invention unless commercialized with economic returns.

MVF Young Graduates Symbiosis Grant (CRDF) Grant (CRDF) BSF BGF Others VCs / Loans / Debt Ventures VCs / Loans / Debt Ventures Cubicle Garage Incubators Entrepreneurship Training Nurturing & Mentoring Value-added Services Business Advisory Enterprise SEED GOV. GRANT/ ANGEL/EARLY STAGE FUNDING “SEMI-VC”VC Training & Consultancy

Appointed by the Government since 1997 to manage Government (MOSTI) grants under the Technology Development Programme (TDP). The type of grants are : i.Commercialisation of R&D Fund (CRDF) ii.Technology Acquisition Fund (TAF) Since the 10th Malaysian Plan, MOF has entrusted MTDC to manage two new funds for further commercialisation support and business expansion:- i.Business Start-up Fund (BSF)- Convertible loans ii.Business Growth Fund (BGF)- hybrid fund

CRDF CRDF as the name implies, is for the funding of commercialisation activities of locally developed technologies undertaken by Malaysian-owned companies. The technologies can be those developed by the public sector or they can also be the output of in-house research and development (R&D) activities by the companies. Under CRDF, commercialisation refers to a process by which the results of research projects are converted to marketable products and are commercially produced.

CRDF: FUNDING QUANTUM Types of CRDF Target Group Source of R&D / Technology Quantum of Funding (RM) Percentage of Funding 1 Spin-off company Public Sectors R&D500,00090% 2 Start-up company Public sector R&D500,00070% 3 (a)SME Internally generated/Public Sectors R&D 4 mil70% 3 (b)Non-SME Internally generated/Public Sectors R&D 4 mil50%

TAF TAF is established to facilitate eligible Malaysian companies in the acquisition of foreign technologies for immediate incorporation into the company’s manufacturing activity. TAF’s partial grant enables companies to avoid expensive and often risky technology development stages. The acquisition of technology could be in the form of acquiring know-how / IP exploitation / rights / blueprints via one of the following methods: i.Licensing of technology; and ii.Outright purchase of technology iii.Technology support from foreign experts; and iv.Training of local personnel abroad (whichever related) Provides funding of between 50% - 70% of total eligible costs or RM4m, whichever is lower.

BSF BSF is for seed funding of technology-based start ups. Under BSF definition, a start-up is an early growth company, involves in technology commercialisation activities and ready to bring their products to markets:- New university spin off companies; Companies started and self funded by entrepreneurs, but without significant revenue; Companies with high novelty/innovative products and have potential market; and/or New companies set up with collaborative research and established market overseas.

BSF Name:Business Start-up Fund (BSF) Fund size:RM100 million RP3 (RMK-10):Year 2013: RM25.0 million Focus:Technology Based Companies Funding Per Company :Maximum of 90% of total project cost or RM5.0 million whichever is lower Fund Structure:Promissory Notes Convertible to Redeemable Convertible Cumulative Preference Shares (RCCPS) Coupon Rate:3.5% Repayment: Maximum of 8 years inclusive of 3 years grace period Repayment shall commence on the first month of the 4 th year on monthly basis over 5 years

BGF BGF is a Hybrid Fund :- Acts as a transition and bridge to VC financing Financial assistance in two forms:- o Grant; and o Equity (same structure but more flexible than conventional VC) Grant is disbursed to finance the tail-end of technology development phase Equity portion disbursement is only upon fulfilment of the grant milestone and upon the start of the initial phase of business development.

BGF Name:Business Growth Fund (BGF) Fund size:RM150 million Fund Drawdown (RMK-10) :Year 2011: RM50 million Year 2012: RM50 million Year 2013: RM50 million Focus:High Technology Grant Recipients Investment Size Per Company :Max. RM4.0 million Fund Structure:Hybrid of Grant & Equity Funding - Redeemable Convertible Preference Shares (RCPS) Company profile:Early stage (successful grant recipients) Exits:3 – 5 years via buyback, trade sale, IPO, etc.

APPLICATION RECEIVED PRE- ASSESMENT EVALUATION TC The application is assessed on eligibility of the company /project. Thorough evaluation to ensure that the proposed project's objectives and other requirements are in line with the Grant's objectives. This includes presentation, discussion on the proposal and visit by Evaluation Officer. Technical Committee (TC) will evaluate the proposal & if deemed fit, will recommend the proposal to the Approval Committee for final approval. AC Final approval by Approval Committee (AC) Signing of Agreement To issue Letter of Rejection To issue Letter of Offer Application Returned Client Charter : 45 working days The application will be re- evaluated. Approved?

OPEN A MONITORING FILE The company is to submit a Quarterly progress report. TC Present the status/issue(s)of the project PROGRESS REPORT SUBMISSION MONITORING WORKSHOP The company is to present the progress of the project twice a year Progress Report Submission Issue Acknowledgment of Receipt Issue a reminder letter Review the report submitted and highlight the issue(s) to TC /AC if any Company fails to attend 2 consecutive workshop Issues Identified in project implementatio n Presentation of the project status Acknowledgment of attendance by MO AC MO to present TC’s recommend ation to AC Final Presentation for project Closure Notification of AC’s Decision to Company NOTE: The project duration for TAF and CRDF approval is for 2 years.

NameBSFCRDFBGFTAF Fund sizeRM 125 million.RM 180 million.RM 150 million.RM12 million Source of fundMinistry of Finance (MoF) Ministry of Science, Technology and Innovation (MOSTI) Ministry of Finance (MoF) Ministry of Science, Technology and Innovation (MOSTI) Fund tenure periodBudget th MP Fund objectivesTo support and encourage entrepreneurship and creation of new strategic businesses that are important, and potentially scalable; and the funding of supporting companies within a technology eco- system. To promote the commercialisation of locally developed technologies (from public and private universities, Government’s Research Institutions and companies) undertaken by Malaysian owned company. To support successful grant recipient companies until they can generate sufficient commercial value to attract VC financing and other forms of financing. To facilitate eligible Malaysian companies in the acquisition of foreign technologies for immediate incorporation into the company's manufacturing activity. TAF's partial grant enables companies to avoid expensive and often risky technology development stages. Focus sectorsTechnology companies. Locally-developed high technology, except ICT. High technology companies. Technology companies. Subscription instrument Loan with convertible option to equity. Partial, matching grant. Hybrid – a combination of grant and equity. Partial, matching grant.

Commercialisation Of Surgical Trauma Implant (orthopaedic), secured contract through Skim Anak Angkat Kementerian Kesihatan worth RM100 million ( ) Challenges: - Long government procurement procedure in finalising contract, approximately 2 years. -Delay in getting CE certification due limited cash flow of the company in year Competition from China and India products which are being sold at a very low price.

Commercialisation of Carbonator TM for Sales and Contract Services of Industrial Schedule and Medical Hazardous Waste. It is a 2nd generation of Carbonator which is used to treat, reduce and convert industrial schedule waste and medical hazardous waste into stable, odorless and harmless compound. Accumulated sales: RM11,210,781 (2011 – 2012). Challenges: - Requires high capital investment for test bed to showcase and promote their technology before securing confirmed purchase from their customers, Pantai Medivest -Continuous upgrading is required by the company in order to reduce operation cost and to enhance operation of the system.

Acquisition of technology for the manufacturing of CD92 Homogeniser System (Mechanical Fuel Treatment System) -complete system to reduce sludge, improve combustion, blend different grade of oil and produce water-diesel emulsion to be used in large ship engine system. Accumulated sales: RM5,394,000 (2008 to 2012). Challenges: - No support from technology provider. The company is supposed to ride on ‘Buyback’ clause in the Licensing Agreement. However, the technology provider failed to transfer the Purchase Order from their clients to the company with no reason. -Emergence of ‘copycat’ homogeniser makers and suppliers worldwide that price their products as low as possible in order to penetrate Asia Pacific market.

Commercialisation Of Organic Feed Phosphate. Technology to manufacture and marketing of inorganic feed phosphates (DiCalcium Phosphate and Mono DiCalcium Phosphate). Their 30,000 MT per annum plant is the first of its kind in Malaysia and South East Asia. Local & export sales amounting to RM43.95 mil ( ) Challenges: -Requires test bed to showcase and promote their technology before confirmed purchased from their customers, Pantai Medivest - involved high capital investment. -Continuous upgrading is required by the company in order to reduce operation cost and to enhance operation of the system.

Commercialisation of electric scooter – Model ES11 Technology lies in the combination of in-house development (battery of the ES11) and acquisition of stator block from KLD Energy Technologies, Texas. Leveraging the advantages of two technologies which complement each other to enhance competitive advantage of the product.

Challenges: -Difficulties in securing funds from commercial financial institution : no track records and considered as high risk businesses. -Rate of research commercialization is targeted at 10% but….Reported: 5.1 % in RMK-6 and RMK-7, 3.4% in RMK-8 and 4.5% in RMK-9 -Lack of interest and business skills amongst academic staff to become entrepreneurs - Limited technical support from technology provider (Uni/RIs) – limited knowledge of industrial up-scaling and commercialisation. -Small pool of technology entrepreneurs - One key problem in achieving significant rates of commercialisation of research is the relatively small pool of experienced entrepreneurs in Malaysia who are comfortable with technology and willing to take up and commercialise research outcomes from universities.

927.46RM mil Sales RM203.56mil Export sales RM418 mil Private Investment 249 2,706 Job created Approved RM million Disbursed RM million

RM mil Sales Generated RM43.2 mil Export Sales RM131 mil private investment 55 IP Generated 642 Job Created Approved RM45.81 million Disbursed RM19.6 million

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