One phone to rule all; Fintech, the healthy disruptors of forex

Software rules: Less than 20 of the iPhone comprises hardware and labour costs. The real profit is in software, which is all about knowledge and mindsets. – Bloomberg

WHO dominates the phone dominates the Internet. The whole world of information is now available in your hand, replacing your own mind as a memory base for instant decision-making.

The reason why traditional bank shares are dropping like a stone is that mobile phone companies and financial technology (FinTech) platforms “get it”. Banks and conventional financial institutions are stuck with so much legacy hardware (branches and outdated mainframes) and complex regulation that their CEOs feel beseiged by bad news – cyberattacks, privacy leakages (like the recent Panama leak), capital requirements and huge fines.

No wonder top bank talent is leaving the industry. In Silicon Valley they get fat bonuses to become “cool” without regulations. Regulated bank CEOs are held personally responsible for everything that goes on in their bank, having to deal with soul-destroying staff and expenditure cuts, on top of their own pay cuts.

I was at the Singapore Forum this month moderating a panel on FinTech when the Alibaba strategist mentioned that the current battle for market share is all about “mindset and handset”. The mindset of the Internet age is that you do not need to own any assets – you simply share or rent them from those who have excess capacity. The mobile handset is where most of the world’s population is moving towards doing business, from dating to buying a house, phone, using your fingerprint and retina as digital signature.

Finance today is an information business and FinTech (see below) can deliver payment services at 1-2 cents per transaction compared with US$10-US$12 per paper-based payment. Increasingly, we spend more on apps and software than on the actual hardware.

Did you know that the fastest adopters of technology in the world are porn, gambling and politics, in that order?

The financial consultants Oliver Wyman have come up with a major report on “Modular Finance”, which argues that technology has transformed finance into modular parts – modular supply (provision of financial services by specialists); modular demand (buying new services from such specialists).

Oliver Wyman’s report begins with a cartoon about a customer buying a house, arranging a mortgage and insurance, selling stocks and wealth products for the downpayment and paying for all fees through a single mobile phone. Equipped with the latest encryption, digital signatures and right apps, the mobile phone has empowered the customer to everything what used to take several visits and weeks to the bank, the lawyer, real estate agent and even land registry to complete the transaction.

In short, the game of finance is being fought by one super-bank to rule them all (Goldmans?) or one phone to rule them all.

The global supermarket model (one brand to rule them all) is having a serious re-think about being labelled G-SIFIs (global systemically important financial regulations), requiring special regulatory attention and additional capital and liquidity requirements. Increasingly, these universal banks do not need to own and supply all services in-house – they simply outsource the back-office or even key services to trusted specialists.

On the other hand, FinTech aims to change our lifestyles through different types of technology.

First, frictionless and seamless inter-operability integrates businesses like logistics with payments, such as Alibaba, making it easier to buy, pay and deliver in one pass.

Second, Big Data analytics, which Amazon uses suggest to you what to buy next and understand how customers are changing.

Third, Blockchain and Distributed Ledger technology, which makes systems more secure.

Fourth, artificial intelligence, such as robo-advisers on investments.

Fifth, data secrecy and unique identity codes that ensures privacy and confidentiality.

FinTech platforms have less staff, less legacy assets, less regulation and more flexible mindsets. These barbarians at the gate are only stopped by regulations that currently protect the banking franchise. This is not to say that they don’t have defects, such as lack of attention to anti-money laundering, terrorist funding and cyberattacks. When they reach super-scale, they are also Too Big to Fail.

The rapid evolution of FinTech means that Asia now has the money and the technology to transform our antiquated financial systems into the 21st century.

The Asian population is young, tech-savvy, mobile and willing to experiment with new services and equipment, which we are creating in Asia. The good news is that if our young startups get it right, the world is their market. The bad news is that if our regulatory and government support services don’t allow our startups to compete, our markets and jobs will be someone else’s lunch.

What is holding back this transformation to FinTech Asia is still mindsets. Look at how Jakarta taxi drivers are protesting against Uber. Regional banks are expanding their footprints by buying the franchises of retreating European and American banks in investment and private banking. But they and their regulators have not thought through how to use FinTech to cut back their legacy systems, many of which are obsolete and operating under-scale, because many regulators still insist on each bank owning and running their own hardware and branches. To be fair, not all regulators think that way.

Barriers to FinTech are sometimes regulatory mindsets. Asian regulators are more willing to accept the entry of financial institutions from outside the region than from their neighbours. Without regulatory concurrence, many banks and financial institutions do not dare to experiment with new technology.

We now have Asian customers moving to global service providers like Apple, Google and Amazon, if Asian financial service providers do not get their act together. Compe-tition is good – look at how Sri Lanka is negotiating with Google to provide balloon-suspended cheap high-speed wifi coverage.

Asian bankers and regulators need to think hard about what Asian customers really want to achieve global scale in terms of efficiency, stability and trust.

FinTech and mobile handsets are not the solution to all our problems, but they will change how the problems are resolved. The real problem is our mindset. Less than 20% of the iPhone comprises hardware and labour costs. The real profit is in software, which is all about knowledge and mindsets.

That belongs to the realm of politics and education, which is another story.

Andrew Sheng writes on global issues from an Asian perspective.

Fintech, the healthy disruptors of forex

SINCE the global financial crisis of 2008-2009, investment banks have spent much of their time and energy on regulatory compliance, leaving them “on the back foot” innovation wise.

Faced with growing regulatory demands in recent years, investment in new technology has had to take a back seat. This does not come as a surprise given the lack of deals and flows as well as the broad-based decline in commodity prices. That little space innovation wise has been quickly filled by fintech firms.

There are traditional fintech firms that act as ‘facilitators’ (larger incumbent technology firms supporting the financial services sector) and there is emergent fintech firms who are “disruptors” (small, innovative firms disintermediating incumbent financial services firms with new technology).

The fintech space can be further broken down to four major sectors – payments, software, data and analytics and platforms.

In the foreign exchange market environment, a typical trading would include sourcing for the best price either via electronically or via the voice broker.

In Malaysia’s financial market landscape of foreign exchange trading, the wholesale price or in other words interbank market is dominated by investment banks facilitated by money brokers who source the best available price to match foreign exchange trades.

With the wholesale market dominated by firms with deep pockets and ample liquidity, customers are subject to a spread cost, whereby prices they receive naturally takes into account a spread from the screens and a spread from the interbank price as well as a spread that is subject to the credit profile of the customer.

Global fintech firms however are altering this process or at least are gradually making inroads.

These firms provide a platform that offers a comprehensive foreign exchange solutions, including live mid-market exchange rates updated in real-time, customised foreign exchange rate alerts, a fully automated transaction information dashboard, multi-user and multi-subsidiary control panel as well as on-demand forex reports.

The best part is, these firms charge a flat fee of which is detailed before each currency trade with absolutely no additional or hidden fees.

Until recently, SMEs have had little choice in terms of where to go, other than to the banks, but now it seems a different foreign exchange model is emerging in the fintech sector, giving banks a run for their money.

The crux of these business models by fintech firms in the foreign exchange business is service via the use of technology.

The automation of the process, eliminates the middlemen and therefore reducing cost, fintech has enabled companies to be more transparent with their pricing.

In the case of Malaysia, SME’s play a vital role in Malaysia’s economy, with foreign exchange risks increasingly being a volatile variable in their cost structure.

These form of fintech solutions are likely to witness exponential growth, but the cost would be, a gradual erosion of SMEs foreign exchange business that are currently held by our local investment banks.

Fintech firms’ foreign exchange model broadly encompasses four major steps, namely, the SME firm carries out their foreign exchange transaction by selecting the currency, the amount, delivery date and beneficiary account and confirm the exchange rate.

Once this is done, the next step is, the SME firm sends the fund to the fintech firm whereby the fund is segregated and held in a local bank.

Bear in mind these funds don’t form the part of the assets of the fintech firm and are held separately to ensure full client fund security at all times.

The third step is, the fintech firm’s matching engine will proceed to the exchange, matching the SME firm’s fund with another company or through the wholesale foreign exchange market.

Throughout the process, the SME firm is provided full transparency on prices, giving the SME firm the liberty to be fully in control.

Once the trade is matched, the funds are sent to the chosen beneficiary account of the SME firm, either its own, a subsidiary or directly to its supplier.

A four-step approach that uses the middle rate of the foreign exchange, removes the so called spread cost that is usually charged by banks to these SME firms and finally gives full transparency on the whole process itself.

With the clout and importance of these fintech firms, the Monetary Authority of Singapore recently announced the formation of a new FinTech & Innovation Group (FTIG) within its organisation structure.

FTIG will be responsible for regulatory policies and development strategies to facilitate the use of technology and innovation to better manage risks, enhance efficiency, and strengthen competitiveness in the financial sector. The upcoming Singapore FinTech Festival, to be held in Singapore from Nov 14 to Nov 18 will be an event to watch.

Organised in partnership with the Association of Banks in Singapore, the week-long event, which is the first of its kind in Asia will bring together a series of distinct, back-to-back fintech events.

Bottom-line, Malaysia’s financial sector, in particular its foreign exchange market needs vibrancy and fintech firms are likely to add spice to the local foreign exchange market, aside from creating value added business processes and technology intensive jobs, it would provide a healthy competition to the local investment banking scene.

Suresh Ramanathan believes gone are the days when foreign exchange trading was noisy, loud and unruly. It’s more about savvy technology driven trading. He can be contacted at skrasta70@hotmail.com

By Suresh Ramanathan Currency Insights.

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Facebook Brings 'Chat bots' to Messenger

SAN FRANCISCO: Facebook on Tuesday extended its reach beyond online socializing by building artificial-intelligence powered “bots” into its Messenger application to allow businesses to have software engage in lifelike text exchanges.

The move announced at the leading online social network’s annual developers conference in San Francisco came as the number of monthly users of Messenger topped 900 million and the Silicon Valley company works to stay in tune with mobile Internet lifestyles.

“We think you should be able to text message a business like you would a friend, and get a quick response,” Facebook co-founder and chief Mark Zuckerberg said as he announced that developers can build bots that could even be better than real people at natural language text conversations.

Bots are software infused with the ability to “learn” from conversations, getting better at figuring out what people are telling them and how best to respond.

The bots could help Facebook over time monetize its messaging applications and get a start on what some see as a new way of interacting with the digital world, potentially shortcutting mobile applications and sidestepping search.

“Our goal with artificial intelligence is to build systems that are better than people at perception -- seeing, hearing, language and so on,” Zuckerberg said while laying out a long-term vision for Facebook. A look at the number and types of services that titans such as Facebook, Google and Apple have rolled out in the last couple of years, it appears the companies are “trying to dominate the customers’ mobile moments,” Forrester analyst Julie Ask told AFP.

Getting smarter

Artificial intelligence is already used in Messenger to recognize faces in pictures, suggesting recipients for messages and for filtering out spam texts. “Soon, we are going to be able to do even more,” Zuckerberg said.

He promised a future in which Facebook AI would be able to understand what is in pictures, video or news articles and use insights to recommend content members of the social network might like.

Bot-building capabilities will be in a test mode with Facebook approving creations before they are released, according to vice president of messaging products David Marcus.

Some of the latest tools include one for the creation of “high-end, self-learning bots,” along with ways for them to be brought to people’s attention at Messenger, Marcus said.

“If you want to build more complex bots, you can now use our bot engine,“ Marcus told a packed audience of developers.

“You feed it samples of conversation, and it’s better over time. You can build your bot today.”

The list of partners launching Messenger bots included Business Insider, which said it will use the technology to deliver news stories to people in real-time.

“We are excited about this new offering because we know that messaging apps are exploding in popularity,” Business Insider said in a story at its website announcing the move.

Cloud computing star Salesforce planned to use the platform to help businesses have “deeper, more personalized and one-to-one customer journeys within the chat experience,” said Salesforce president and chief product officer Alex Dayon.

Bridges, not walls

Zuckerberg laid out a future for Facebook that, aside from Messenger, included ramping up live video streaming and diving into virtual reality.

“We think we are at the edge of the golden age of video,” Zuckerberg said.

Facebook opened its Live platform to allow developers to stream video content from their applications to audiences at the social network.

Zuckerberg demonstrated with a drone that flew over those seated, streaming live video to Facebook while he spoke.

Messenger and Live will be built out further in coming years, along with virtual reality technology at Facebook-owned Oculus, according to Zuckerberg.

When his daughter takes her first steps, Zuckerberg said he planned to record it in 360-degree video so family and friends can experience it in virtual reality as if they were there for the moment.

At one point, Zuckerberg’s comments took on a political tone, with the Facebook chief maintaining that the mission to connect the world is more important than ever given rhetoric about building walls and fearing those who are different.

“If the world starts to turn inward, then our community will have to work even harder to bring people together,” Zuckerberg said.

“Instead of building walls, we can build bridges,” he added, in an apparent reference to the fiery rhetoric of Donald Trump. - AFP

Internet set to cut cord with US government, ICANN urges Internet control

The US government, announcing its intention to end its role in March 2014, said it would seek to maintain a "multi-stakeholder" model for Internet governance

A plan to end a key US government oversight role on the Internet is on track for completion this year, the head of the online address gatekeeper said, in a symbolic move towards asserting the independence of the web.

While the transition will not change how the Internet works, it would help reassure users, businesses and governments about its integrity, according to Fadi Chehade, chief executive of the Internet Corporation for Assigned Names and Numbers (ICANN).

Chehade told AFP the transition plan being prepared since early 2014 will be delivered to the US government in February, and that it could take place on September 30—a year later than originally planned.

If the US government approves the plan, "then the contract between ICANN and the US government which is set to naturally expire on September 30 will just expire," Chehade said in an interview Wednesday in Washington.

Chehade said the private non-profit ICANN is effectively a "traffic cop" that ensures the Internet address system functions, and that the US government's role has been merely to ensure that it follows correct procedures.

"In all the years we've done that (the US government) has never said we did not follow the process," he said.

"People have aggrandized the role of the US government in what we do. But the change is actually minimal. It's important symbolically because the US was really a steward for the Internet, but for day-to-day accountability, it is minimal."

Who runs the Internet?

The US government, announcing its intention to end its role in March 2014, said it would seek to maintain a "multi-stakeholder" model for Internet governance—which allows virtually all users from business to academia to government to participate—instead of a "multilateral" system controlled by governments.

Chehade said that without US oversight, ICANN would be managing the technical functions of the Internet under the supervision of a 16-member board which is designed to maintain diverse representation.

"We have a very solid process that ensures this is not a capturable board," which can be hijacked by governments or other institutions, he said.

He added that the transition plan seeks "to strengthen the assurances that ICANN will remain multi-stakeholder," by giving Internet users more authority to appeal to overturn decisions or even to remove board members.

Chehade noted that even though the ICANN process can be "unwieldy," most decisions are made by consensus, with very few disputed votes in the organization.

He added that he expects a fresh round of hearings in Congress, following complaints by some US lawmakers that Washington is "giving away" the Internet and suggestions that it could be controlled by other governments.

"I think the concerns Congress has raised are very justified and genuine and therefore being prepared to address them is crucial," he said.

But Chehade noted that ICANN has effectively been handling its functions for a long time.

"The independence of ICANN has been proven to be working for many years," he said.

"It's been working and we are now simply admitting that. We are ending the symbolic role of the US government which should have been let go in 2000."

ICANN chief urges wide Internet control

 

Internet Corporation for Assigned Names and Numbers (ICANN) President and CEO Fadi Chehadé called for the "preservation of a decentralised, transnational and not too fragmented governance" of the Internet on Tuesday

The head of the private agency that acts as gatekeeper for the Internet called Tuesday for international discussions to ensure control of the web remains decentralised.

Fadi Chehade, president and CEO of the Internet Corporation for Assigned Names and Numbers (ICANN), called for the "preservation of a decentralised, transnational and not too fragmented governance" of the Internet.

He told a Geneva conference that the Internet should remain "polycentric" but that the private and public sectors should work together.

"Only initiatives involving the private sector and governments can successfully and effectively address crucial issues like cybercrime, taxation of e-commerce, and child protection," Chehade said.

ICANN, which is in charge of assigning domain names, is likely to break free of US oversight late next year.

Washington said in March it might not renew its contract with the Los Angeles-based agency, provided a new oversight system is in place that ensures the Internet addressing structure is reliable.

"ICANN is not and shall not be an island disconnected from other stakeholders," Chehade said.

The agency plans to submit a proposal on oversight to the US Department of Commerce next year.

In an interview published Tuesday in Swiss daily Le Temps, Chehade said the role of the United States—one of ICANN's 147 member countries—would remain important.

"If our DNA remains American, our openness to the world is a reality."

US Commerce Secretary Penny Pritzker pledged at a meeting of Internet leaders in October that the United States would "protect and preserve a free, vibrant and open Internet".

Pritzker said that while the United States might not renew its contract with ICANN, it still had a responsibility to encourage a decentralised Internet.

"The United States will not allow the global Internet to be co-opted by any person, entity, or nation seeking to substitute their parochial world view for the collective wisdom of this community," she said. - AFP

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Sick gamers on the rise !

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 You hooked online video games, Internet and sinking ?

IT is 10pm and you know exactly where your children are. They are at home with you, and the last time you looked, they were on their 

You hooked online video games, Internet and sinking ?

IT is 10pm and you know exactly where your children are. They are at home with you, and the last time you looked, they were on their computers engrossed in some game or another.

But does that mean they are fine?

As highlighted by The Star’s front-page story yesterday, that may not be so.

Governments, mental health practitioners, schools, NGOs and parents in many parts of the world – particularly in Asia – are worried about how many young people are hooked on video games and the Internet.

And when the two technologies merge to yield online gaming, we have a greater risk of passion turning into obsession.

Therefore, we should not be surprised by cases of gamers behaving badly when prevented from playing.

On Saturday, for example, two men fought at a cybercafe in Taman Bukit Serdang, Selangor, after one of them had refused to let the other use a computer.

The violence continued at a nearby restaurant, with others joining in, leading to both men being slashed with a parang. The police have since remanded two of the brawlers until tomorrow.

It is possible that this incident was more about uncontrollable egos and temper than it was about an uncontrollable urge to play computer games, but it does tell us that we ought to take a closer look at how our kids are affected by online gaming.

We need to acknowledge that there is a problem here that needs to be addressed systematically and holistically.

South Korea, which has extensive Internet connectivity, has long recognized that.
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Its National Information Society Agency has been conducting an annual survey on Internet addiction since 2004 and runs programmes that provide preventive education, counselling and expert training.

Singapore’s National Addictions Management Service provides outpatient treatment for gaming/internet addiction, describing it as “the extreme use of computer and video games that interferes with daily life”. Gaming addiction in China had attracted so much attention that the authorities have set up military-style rehabilitation centres for young people.

And if some of us believe that our kids are merely going through a “phase” when they spend hours playing online games, it is useful to note that the American Psychiatric Association has identified Internet Gaming Disorder as a condition that requires further research.

“This reflects the scientific literature showing that persistent and recurrent use of Internet games, and a preoccupation with them, can result in clinically significant impairment or distress,” says the association.

Essentially, the association is saying there should be more clinical research and experience before it is ready to classify Internet Gaming Disorder as a formal mental disorder.

As it is, many Malaysian parents can share stories about how their children are so into playing online games that they miss meals, lack sleep, skip schoolwork, lie and steal, and ignore friends and family.

Such a troubling pattern does not have to be officially recognised as an illness to be treated as a problem.

It is time that the Government, schools, parents and the community work together to figure out how we can ensure that a hobby does not become a dangerous addiction.

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 Sick gamers on the rise !

Parents seek help for addicted kids Experts: Too much gaming has more serious effects than most people realise For many Malaysians, i...

Sick gamers on the rise !

Parents seek help for addicted kids

Experts: Too much gaming has more serious effects than most people realise

For many Malaysians, it is no longer just a game.

Desperate parents trying to get their children to kick their addiction to computer games have started to seek professional help for them.

At least two psychiatrists interviewed by The Star confirmed that the issue is becoming a growing problem among children and young adults in Malaysia.

University Malaya Centre for Addiction Science deputy director Assoc Prof Dr Muhammad Muhsin Ahmad Zahari said he had seen five patients, aged 14 to 26, for possible games addiction last year.

He revealed that the small number did not indicate the seriousness of the issue as many gamers were unaware of the problem they were having and thus did not seek treatment.

“It is potentially a growing problem and there is a need to create more awareness on this.

“Otherwise, it can become an illness when these gamers come in late for treatment,” he said yesterday.

Dr Muhammad Muhsin said a comprehensive database should be compiled so that medical experts could set up a plan to manage the problem.

He said the problem was indicative of a disorder if gamers start to behave compulsively when playing or tend to get into a fight over it.

“It can be an addiction if it affects their relationships with other people and disrupts their normal routine,” he added.

In one case, a 14-year-old boy went into a rage when his parents cut off the Internet subscription. He smashed the television set and the PC, Dr Muhammad Muhsin said.

“If gamers feel that they have used a lot of time or money to play the games, have difficulty resisting it and get upset easily, they should start seeking professional help.

“The reasons may be due to the person’s poor attachment to their parents, lack of parental supervision and peer pressure,” he said.

“They could be using the Internet to overcome their mood disturbances too.”

Hospital Penang consultant child and adolescent psychiatrist Dr Lai Fong Hwa said with improved Internet access and faster communication, more younger people were playing video games.

“There may be a concern that their social life may be affected and they will have problems developing social skills,” said Dr Lai.

Scuffles a common sight at cyber cafes, say gamers
 

  Blurred reality: experts say games addiction could affect the development of children’s social skills.

PETALING JAYA: With titles like World of Warcraft, Heroes of the Storm and Left 4 Dead, it is no surprise that video gamers are hooked for good.

However, these fans are adamant that they do not become aggressive despite the brutal nature of the game.

They said that last Saturday’s attack at a cyber cafe in Selangor, where a man slashed someone for hogging the computer, was an isolated case.

At that time, the victim was playing Dota (Defence of The Ancients), which involves two teams pitted against each other with the goal of destroying their opponent’s base.

“It’s irrational to fight or even stab someone over something like that,” said marketing executive Ivan Yong, 25, who is an avid computer gamer.

But he admitted that there were many short-tempered players and that scuffles were not uncommon among players at cyber cafes.

“Personally, I think gamers get violent when they invest too much time in their games. And they lose it when a teammate or opponent spoils it for them,” said Yong, who admitted to being less level-headed during his younger days.

A fellow gamer, who wished to be known only as Hammi, agreed with Yong.

“Yes, gamers tend to get violent sometimes. Sometimes they may not realise what they have done at that time,” said Hammi, 26.

“As a fellow gamer, I think it’s important to differentiate between reality and playing games,” she added.

Student Kae Jun, 17, conceded that many of them were addicted to the games.

“Some people play games so often that it is part of their routine. If they don’t get to play, they will get frustrated,” he said.

Businessman Joe Chee, 27, and student Min Jie, 18, who are both regular cyber cafe goers, said outbursts were common there.

“Some gamers tend to be violent and toxic. They let their emotions get the better of them,” said Chee.

“They would even curse their opponent’s family. Then a fight would break out,” Min said.

Both noted that cyber cafes that enforce a “no noise” policy tend to be less hostile.

“Those loud players have no consideration for others with their endless screaming. You see different types of people at a cyber cafe,” said Min.

All the gamers interviewed agreed that players should not let their love of the game get the better of them.

“It’s important to realise that every time you get upset, it drains your emotional energy.

“Losing your cool makes you tired,” said Chee.

Duo in cyber cafe brawl remanded for four days

PETALING JAYA: The two men who slashed a youth after fighting over a computer console at a cyber cafe have been remanded until Thursday.

According to Serdang OCPD Asst Comm Razimi Ahmad, the duo allegedly slashed a man in the neck with a parang for not letting one of them use the computer console.

During the incident at a cyber cafe in Taman Bukit Serdang at about 10pm on Saturday, the suspect got into an argument with an employee at the cyber cafe who was reportedly hogging a computer he wanted to play on.

They had a war of words and the suspect, who is in his 40s, left the place.

The suspect returned to the cyber cafe at about 11.30pm with a friend carrying a badminton racquet bag which contained a parang and a plank.

In a fit of rage, the two men attacked the employee with the parang and plank.

The cafe management managed to break up the scuffle and told the men to take their dispute outside before shuttering the place.

The trio reportedly continued their fight at a nearby restaurant, where police said the victim was slashed in the neck.

Witnesses claimed that about four friends of the victim came to his aid and slashed the suspect with his own parang before subduing his accomplice with the plank.

 Sources: The Star/Asia News Network

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Venture scheme accelerates growth of start-ups

KUALA LUMPUR: The New Entrepreneurs Foundation's (myNEF) unit Rave Ventures Sdn Bhd is looking to raise RM50 million to RM100 million in the next five to 10 years for its business coaching and mentoring programme, called Rave Accelerator.

The 12-week accelerator programme, which consists of a network of experienced entrepreneurs and industry members, hopes to provide promising start-ups with venture building and funding.

Speaking to SunBiz after organising a Rave Mentor Pitch Night a few months ago, Rave Ventures' CEO Rizal Alwani said that the accelerator had previously signed on RM800,000 and RM1 million sized funds for its first and second batch programmes respectively.

Rizal said the accelerator would connect the founders of start-ups with its wide connection of investors and venture capitals, to ensure the start-ups get the right funding for their business.

Apart from that, he said it also makes sure that the founders get proper information and knowledge on how to conduct vesting agreements by providing advice and consultation.

"Working on a 90-day venture building methodology, we engage the selected start-ups to further refine their product, presentation and execution of their business. Our goal is not only to get start-ups to the next phase of funding, but also to ensure sustainability and growth," Rizal noted.

Meanwhile, on the objective of the Mentor Pitch Night, Rizal said it is to introduce the new third batch start-ups to the experienced entrepreneurs and industry members.

"Our goal is to find the right mentors for all the eight participating start-ups, where their mentors will help to guide and accelerate their businesses further."

The start-ups consist of social matchmaking service, known as "Halal Speed Dating", sports clothing e-commerce Summersault.my, home decorations e-commerce Jiham.my, Above and Beyond Concierge Services, JomJamban Bathroom Services, Laundry on the Go Services, MyMakBidan Services and Toy Library Club (TLC) Services.

The eight start-ups were short-listed from 400 young companies, and started their acceleration programme on Sept 28, 2015.

As part of their business coaching and mentoring programme, Rave Ventures also organises what is called as Demo Days for start-ups to be showcased to local and regional investors.

Demo Days are attended by key start-up ecosystem players including big IT companies, early stage funders, influencer and government agencies.

"We are basically backed by myNEF. For the last two batches, myNEF foundation has invested about RM400,000 into the programmes. Starting this July, myNEF allocated another RM500,000 for the operation costs," Rizal said, noting that the accelerator programme is wholly funded by myNEF since it began its first batch programme in July, 2014.

MyNEF, which was formed in 1997, is a non-profit organisation established by ICT and creative industry players in partnership with the government.

By Wan Ilaika Mohd Zakaria sunbiz@thesundaily.com

Startups put through paces 
 

The programme gives startups the right pressure and motivation to succeed, says Rizal.

SPEED and focus are vital in starting a business, particularly at the start-up phase, budding entrepreneurs heard at the “RAVe Mentor Pitch Night” at the New Entrepreneurs Foundation (myNEF) headquarters in Empire Damansara, Damansara Perdana on Oct 9.

“In focused programmes such as our accelerator plan, we make them do things in three months for things which companies use a year to achieve,” said RAVe Ventures Sdn Bhd chief executive officer Rizal Alwani. RAVe is a subsidiary of myNEF.

During the event, the third batch of eight start-ups were given an opportunity to pitch their ideas to mentors and investors.

“Our entrepreneurs are not exposed to the serious level of competitiveness in the tech eco-system and are also less hungry, so in our programme we give them the right pressure and motivation to succeed,” Rizal said.

The eight start-ups, shortlisted from over 400, had to work up to 4am in the morning to achieve their respective deliverables.

“They were all given deliverables, including their three-month revenue target, and they had to find ways to achieve it, including applying guerilla marketing campaigns,” he added.

The accelerator had been running the programme since 2014.

“By the end of the three-month period, we hope they will become investible companies, be it by grants or by venture capitalists,” Rizal said.

Some of the ideas that the start-ups pitched on that night included being a tech platform for helper services including things like cleaning residential and office spaces, laundry service, post-natal care, purchase of wall furnishings. There was even an idea for a halal speed dating service.

The start-ups were given an opportunity to do a short presentation on their business model, their motivation for doing it and what had been achieved so far.

Subsequently, they were asked by mentors and investors on how they would acquire customers and the acquisition cost. Some mentors also recommended contacts to help the start-ups.

Rizal concluded that the event was to prepare the start-ups of what was to follow.

That would be Demo Day for local investors in December and subsequently in Singapore for investors from the South-East Asian region.

By Lim Wing Hooi The Star/Asia News Network

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Building the startup ecosystem

To build a successful ecosystem, you need to first identify the end goal. Then, piece together all the components and players that will play a fundamental role in making that goal happen.

AS my tenure at MaGIC draws to a close, I wanted to reflect on my thought process for building the startup ecosystem in Malaysia and the region.

When I was asked to be the founding CEO of MaGIC, I came up with a comprehensive gameplan to build the startup ecosystem within the country and Southeast Asia and presented it to an interview panel in February 2014. One interviewer asked: “Sounds like you want to do a lot. It’s a very ambitious plan. But if there’s only one thing you want to accomplish at MaGIC, what would that be?”

I answered without hesitation: “I will put Malaysia on the global map. Because Malaysia has so much untapped potential and my job is to show what’s possible.”

When I was appointed and shortly after President Obama and our Prime Minister launched MaGIC on April 27, 2014, I sketched the ecosystem map above.

You can’t build an ecosystem without first understanding what the end goal is – to help startups succeed at a regional and global level. Only then can you piece together all the components and players that will play a fundamental role in making that happen. As a healthy ecosystem requires various parties to play different roles towards a common objective, this charted a clear path for me to fill in the gaps in the current ecosystem.

One of the reasons why MaGIC has been able to make such an impact so quickly is because I’m a returning Malaysian with an international perspective; no historical baggage, no hidden agenda and nothing to lose.

MaGIC’s initial focus on education, exposure and acceleration charted an agnostic platform and foundation for all parties to genuinely come together and create a critical mass much needed to take this ecosystem to the next level.

To create this, we strived to equip entrepreneurs with the right startup skills via our education portal, MaGIC Academy, expose entrepreneurs to other ecosystems like Silicon Valley and big markets within Asean, and accelerate startups via a global platform such as our MaGIC Accelerator Program (MAP) and 500 Startups’ Distro Dojo.

This critical mass, complemented with our media strategy of exposing and highlighting successful entrepreneurs, generated visibility that did two things: inspired the masses, private corporations and GLCs towards understanding and adopting startups, and generated massive regional and global mentor/investor interest in Malaysian startups.

For example, before MaGIC existed, there was only one accelerator called 1337. Now, there are seven more on top of MAP: Tune Labs, Game Founders, Maybank Fintech, Infinity Ventures, WatchTowerFriends, DistroDojo, 1337. Before MaGIC existed, investors would usually skip Malaysia and fly to other countries such as Singapore, Thailand, Vietnam and Indonesia to seek investment deals. At the MAP Investor Demo Day in November 2015, over 150 investors from all over the region and world came to hear 50 MAP startups pitch. Before MaGIC existed, there was a dearth of interest in startups. Now corporations like Axiata, Khazanah, Maxis, Accenture, Sime Darby, Sunway Group, YTL Group, all the way down to family businesses are trying to set up programmes and funds for entrepreneurs.

On the social enterpreneurship (SE) side, we’ve published a National Social Enterprise Blueprint, a Social Enterprise 101 guide, and the team has been traveling all around Malaysia, doing workshops via SEHATI in Kedah, Kelantan, Terengganu, Johor, Sabah and Sarawak to create more awareness on SE. There’s a big opportunity for MaGIC to be a thought leader in SE because it’s a relatively new concept to the country.

These forces come together to make up the so-called magic recipe (pun intended) for a successful ecosystem. This ecosystem will only be self-sustainable if all parties can work together in a neutral, agenda-free environment.

Looking into the future beyond our initial core focus, MaGIC’s leadership should continue to focus on the exits and acquisitions of startups, which most other fledgling ecosystems in the world don’t pay enough attention to. There is also a need remove roadblocks via government and regulatory policies to make it easier for startups in Malaysia to flourish, regardless of race, gender, age or nationality.

In my opinion, MaGIC’s mandate and goals should be flexible to change every two to three years to adapt to rapidly evolving market and ecosystem needs, to ensure the agency remains relevant in continuing to fill in the gaps. At the same time, because MaGIC utilises public funds, we should continue to spend very wisely to ensure that it commensurates with the impact and effectiveness of our programmes. This should be the mantra of any government-funded ecosystem builder in any country.

I believe in the past two years, my team and I have laid the groundwork for MaGIC and the larger community while showing real impact for what’s achievable within a short amount of time. As with startups, if you put the right team of people together with a vision for common good, anything is possible.

Ultimately, it’s the software (people) that matter more than hardware (infrastructure, capital or assets). A good ecosystem’s foundation is built on good people coming together, and even the most expensive buildings or funding can’t replace that.

Our playbook and strategy has been shared across other countries. We’ve had multiple interest and hosted delegations from Czech Republic, Hungary, South Korea, Thailand, Kazakhstan, India, Japan, Philippines, Australia, New Zealand and many more. Most of these countries are keen to have their startups join MAP next year or collaborate with MaGIC in some ways.

As I approach the end of my contract and time at MaGIC, I can say with confidence and pride that the MaGIC team will continue to deliver as MaGIC moves on to its next phase under new leadership. Despite the initial challenges we faced as a new agency, we have gained the trust and respect of the community and entrepreneurs, and achieved regional and global recognition through our initiatives.

I hope you will visit impact.mymagic.my to view all the programmes we’ve set up and the accomplishments we’ve achieved in the past two years. This is a testament to my team’s absolute focus and commitment to deliver on our mandate.

I am truly proud of the MaGIC team and the empowering and transparent culture we’ve established. While I’m sad to leave my MaGIC family behind, I am privileged to have worked with each individual who will continue to give their all so passionately because they believe in elevating their beloved country and pushing boundaries for positive change in Malaysia.

And for true change to happen, we should have the courage to be comfortable with the uncomfortable, and be familiar with the unfamiliar.

I would like to take this opportunity to thank my chairman Tan Sri Dr Mohd Irwan for convincing me to return to Malaysia to be the founding CEO of MaGIC, to all our ecosystem partners who’ve collaborated with us, to the mentors, instructors and investors who’ve generously stepped forth to give back to the community, to the entrepreneurs who believed in MaGIC, and last but not least, the MaGIC family who’ve worked so hard to make sure we create a sustainable and impactful ecosystem for entrepreneurs to thrive in, especially my first 10 hires who believed in me and my vision back when I had nothing.

I am ever so grateful to the Ministry of Finance for entrusting me to set up MaGIC and steer it in the right direction where it will benefit entrepreneurs not only within Malaysia but the larger Southeast Asia, and to truly put Malaysia on the map.

By Cheryl Yeoh

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