Traditional Capital Raising - Malaysia

The Total Capital Raised in Malaysia's Traditional Capital Raising market market is projected to reach US$530.30m in 2024.
Venture Capital dominates the market with a projected market volume of US$429.20m in 2024.
In global comparison, most Capital Raised will be generated the United States (US$159.0bn in 2024).
In Malaysia, the Traditional Capital Raising market is seeing a resurgence in interest among local investors seeking stable long-term investment opportunities.

Definition:

The Traditional Capital Raising market relates to venture investment in startups and emerging companies that are not yet generating positive or significant revenue but have high growth potential. The capital is mostly raised from venture financial institutions, and minorly from banks.

Structure:

The market consists of two segments:
- The Venture Capital market refers to private equity funding that is offered to startups and emerging companies.
- The Venture Debt market refers to the combination between equity and debt financing, which is used to finance the early stage and growth stage capital-backed companies.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Additional information:

Although the Traditional Capital Raising market is highly competitive in investment opportunities due to the rapidly high growth rate of startups and emerging companies, it has become more popular for these businesses who cannot get traditional loans from banks, to develop and grow their businesses or projects.
Key players in this market are companies such as Sequoia Capital and Hercules Capital.

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Venture Capital
Venture Debt

Traditional bank loans
Digital capital raising

The Traditional Capital Raising market in Malaysia has been experiencing significant growth in recent years, driven by a combination of customer preferences, market trends, local special circumstances, and underlying macroeconomic factors.

Customer preferences: In Malaysia, there is a strong preference for traditional capital raising methods such as bank loans and equity financing. This preference can be attributed to the familiarity and trust that individuals and businesses have in these traditional methods. Additionally, the conservative nature of the Malaysian market has led to a preference for more established and conventional forms of capital raising.

Trends in the market: One of the key trends in the Traditional Capital Raising market in Malaysia is the increasing demand for Islamic financing. Malaysia has a large Muslim population, and Islamic financing adheres to Shariah principles, which prohibit the charging or payment of interest. This has led to the development of Islamic banks and financial institutions that offer Shariah-compliant products and services, including capital raising options such as Islamic bonds (sukuk) and Islamic equity financing. Another trend in the market is the growing popularity of crowdfunding platforms. These platforms provide individuals and businesses with an alternative way to raise capital by tapping into a large pool of potential investors. Crowdfunding has gained traction in Malaysia due to its ability to connect entrepreneurs with investors who are interested in supporting innovative projects and startups. This trend has been further supported by the rise of digital technology and increased internet penetration in the country.

Local special circumstances: The Malaysian government has been actively promoting and supporting the development of the capital market in the country. This has included initiatives to strengthen the regulatory framework, improve market infrastructure, and enhance investor protection. These efforts have created a conducive environment for traditional capital raising activities and have instilled confidence in both local and foreign investors.

Underlying macroeconomic factors: The strong economic growth and stability in Malaysia have also contributed to the development of the Traditional Capital Raising market. The country has a robust financial sector, with a well-regulated banking system and a deep pool of liquidity. This has made it easier for businesses and individuals to access capital through traditional channels such as bank loans and equity financing. Furthermore, Malaysia's strategic location and well-developed infrastructure have attracted foreign direct investment (FDI) into the country. This influx of FDI has not only boosted economic growth but has also created opportunities for capital raising through joint ventures and foreign partnerships. In conclusion, the Traditional Capital Raising market in Malaysia is developing due to customer preferences for traditional financing methods, trends such as the demand for Islamic financing and the popularity of crowdfunding platforms, local special circumstances including government support, and underlying macroeconomic factors such as strong economic growth and FDI inflows. These factors have created a favorable environment for capital raising activities in the country and are expected to continue driving the growth of the market in the future.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.