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Two veterans of Malaysia’s start-up and investment ecosystem — entrepreneur and investor Sivapalan Vivekarajah and former Pitch Platforms Sdn Bhd (pitchIN) chief operating officer Xelia Tong — are launching a RM50 million debut venture fund.
Main Market-listed automotive replacement-parts manufacturer New Hoong Fatt Holdings Bhd (NHF) (KL:NHFATT) has committed up to RM20 million as its anchor limited partner.
The investment will be made through its wholly owned subsidiary Jhi Soon Manufacturing Industries Sdn Bhd, which will subscribe for up to 20 million Class A redeemable preference shares in Cypress Drive Ventures at RM1 each, NHF said in a filing with Bursa Malaysia.
Cypress Drive Ventures is the first fund managed by Cypress Asia Sdn Bhd, which was founded by Sivapalan and Tong. It will target technology-driven local businesses at the pre-Series A and Series A stages that are profitable or have a clear path to profitability.
Cypress Asia is seeking the remaining RM30 million from family offices and other investors.
Investments will range from RM1 million to RM3 million per company. Cypress Asia expects to make five to seven investments initially and build a concentrated portfolio of 10 to 12 companies if the fund reaches its RM50 million target. Depending on the deal, it may lead the round, co-invest with another fund or join an existing group of investors.
The fund has a seven-year term, with the option of two successive one-year extensions.
Cypress Asia expects to make its first investment in the first quarter of 2027. It plans to hold its first investment committee meeting in November and already has a pipeline of potential deals that will undergo due diligence.
The pipeline will draw on the co-founders’ existing networks, including companies from accelerator ScaleUp Malaysia’s portfolio and Sivapalan’s Soonicorn Collective for later-stage technology businesses as well as businesses within the network Tong built at pitchIN, a digital fundraising and investment platform.
Sivapalan and Tong worked together at ScaleUp Malaysia, as a senior partner and a managing partner respectively. They invested in 38 companies under the initiative.
Sivapalan also launched the Soonicorn Collective’s Titan, a 12-month coaching and execution programme for founders seeking to scale their business towards RM100 million in revenue, in which 18 businesses took part.
“We have a network of companies that we can invest in. Because we’ve been in the ecosystem for so long, people trust us,” says Sivapalan, co-managing partner of Cypress Asia.
The firm will alsoventure capital firms
The fund is sector-agnostic but will invest only in technology-driven businesses, says Tong, CEO and managing partner of Cypress Asia. Potential areas include electrical and electronics, automotive, digital health and agriculture.
“There are certain areas that we don’t touch — highly regulated businesses, those very dependent on state government contracts, businesses that are purely software, such as human resources software, or very e-commerce-driven. Other than that, we’re quite open,” she says.
Cypress Asia will look for companies that can grow profitably and reach a listing or acquisition without having to raise money repeatedly. Tong says an investee should ideally need no more than one or two additional funding rounds after Cypress Asia’s investment.
“Our investment thesis is to look for companies that already have a profitable business. It doesn’t have to be a lot; it can be a small profit, or at least they should be profitable this year. But they must be able to prove to us that they can be profitable,” says Sivapalan.
“We want to take them to RM8 million to RM10 million in profit over a five-year period and then list them on Bursa Malaysia or another exchange. The good thing about getting them to profitability is that they also become interesting for a merger and acquisition, so it serves a dual purpose.”
“NHF genuinely wants to look at the innovation side of things and potentially diversify into other businesses.” – Tong
Endorsement from a public listed company
NHF became Cypress Drive Ventures’ anchor investor after about 2½ years of discussions with Tong, as the automotive-parts group explored ways to gain exposure to innovation and diversify its sources of income.
Tong first came to know the family behind the company through business and start-up networks when she was at Cradle Fund Sdn Bhd. She had previously encouraged a family member involved in running the group to set up a corporate venture capital arm but the proposal was too early for it at the time.
The proposal was subsequently presented to NHF’s board of directors two or three times, with the board raising extensive questions as the company was new to venture investing. Tong says the process gave both sides time to understand what they were entering into and helped build trust.
Initially, NHF committed RM10 million. When Cypress Asia decided to apply for Jelawang Capital’s Emerging Fund Managers’ Programme at the end of 2024, NHF raised it to RM12 million, which was the amount of private capital Cypress Asia needed to meet the programme’s 20% threshold for a fund of at least RM60 million.
In the end, Cypress Asia was not selected for the programme but Tong says NHF proceeded with the investment as its decision was based on the managers’ experience rather than the prospect of matching capital. It later increased its commitment to RM20 million.
“We are blessed to have them as our first and anchor investor. They genuinely want to look at the innovation side of things and potentially diversify into other businesses,” says Tong.
For NHF, the fund offers potential financial returns and exposure to businesses and technologies beyond its existing network.
Tong also sees the commitment as an example of how cash held by profitable listed companies can be put to work in Malaysia’s venture ecosystem.
“I think Securities Commission Malaysia has also always been trying to get more private pockets to actually invest in this space, to make investments in venture funds … A lot of companies, especially listed ones, are sitting on a lot of cash, but it is a lazy balance sheet that is not doing anything for the business,” she says.
Sivapalan adds: “[NHF] is a main board company, and they are willing to take a chance with us. It gives other people the confidence that they can also take a chance with us.”
“We have a network of companies that we can invest in. Because we’ve been in the ecosystem for so long, people trust us.” – Sivapalan
Experienced investors
Sivapalan and Tong say their previous investments and years spent working with founders will shape how they manage the fund.
“We have been through the mill. We did not just come out of corporate finance and decide to do this. We have worked with many founders,” he says.
Sivapalan has spent close to four decades as an entrepreneur, coach and angel investor. He has personally invested in 16 businesses as an angel investor and also co-founded ScaleUp Malaysia, as well as founded the Soonicorn Collective.
Tong had investment roles at Malaysia Debt Ventures Bhd and Cradle Fund, where she was vice-president of investment and headed the Angel Tax Incentive programme. She later became a managing partner at ScaleUp Malaysia and, most recently, chief operating officer of equity crowdfunding platform pitchIN.
Both see the venture fund as a continuation of their earlier work. During ScaleUp Malaysia’s first three years, investments were made at a fixed valuation of RM2.5 million. Sivapalan says some stronger companies wanted ScaleUp as an investor but eventually declined its offer as the valuation was deemed too low.
A venture fund gives Cypress Asia more flexibility to invest in such companies at a later stage and at valuations that reflect their growth.
“After running an accelerator, the natural progression is to move into a venture capital fund. An accelerator cannot offer different valuations to different companies, so we lost those opportunities … Then Xelia said there might be a corporate investor, and Jelawang came along. So, we thought, ‘Let’s give it a try. Let’s try to raise the fund.’”
Sivapalan adds that the broader aim is to rebuild confidence in Malaysia’s venture capital industry. “There is very low trust in the VC industry today … If the VC industry cannot prove itself, then you can’t raise money to support start-ups and help them grow.
“The VC model can work, and I think we would like to show that we have the right insights, the right model and the right thinking to make this work.”
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