Inward challenges faced by start-ups in Malaysia

Thanx to Dash of Warisan Global and Kauffman Foundations, I was given the opportunity to provide my thoughts on entrepreneurship in Malaysia. I can only cover the state of entrepreneurship for ICT space as I do not have visibility in other sectors.

The article can be found at http://www.entrepreneurship.org/PolicyForum/Blog/post/2010/04/19/The-State-of-Entrepreneurship-in-Malaysia.aspx. Malaysia has progressed a lot on entrepreneurship as to compared to 10 years ago, when there was not even access to seeding grants. *except angels*

I meet many companies over the years, most of them are start-ups. In Malaysia, many of these start-ups are fortunate for being able to tap on seeding grants provided by the government ; Technofund, Pre-seed Fund, and Cradle Investment Fund.

One area I would like to cover in this entry is the main challenge faced by technology based start-ups. Most start-ups are innovative having new products, solutions and ideas but lack business innovation and the drive to sell. This came quite evident especially from start-ups came out of universities or founded by a group of geeks.

Due to the above, many are unable to progress to the next stage which is commercialisation.

Many start-ups are unable to realise their internal challenges to make commercialisation a success. This happens when the companies have some or majority of traits below:

1. Strong passion in technology innovation ONLY.

2. Less than 3 founding members, and none from sales & marketing or financial background.

3. Has no engagement with customers or potential customers.

4. Keep on innovating and adding new products when not much effort done to take products to market. *Stuck in technology innovation loop*

5. Little understanding about the market. Many assumptions need further validation.

6. Not clear about revenue sources.

7. Majority of work outsourced and none of the founding members able to further develop and manage the solutions post-outsourcing period.

8. Products are skewed towards research based rather than making product-ready ones.

9. At the wrong marketplace. This is especially true for internet based company. Targeting low e-commerce marketplace to sell your online solutions can be disastrous.

10. Not focused

Based on my findings, these are the top 10 . I will elaborate on what a start-up can do or prepare for in advance to overcome the above challenges in my next entry.