MSC Malaysia Industry Dialogue Financing ICT SMEs & Micro SMEs 8 April 2010 Berjaya Hotel & Convention Center, KL

1. CRADLE INVESTMENT PROGRAMME
© Copyright 2010 Cradle Fund Sdn Bhd

2. “… entrepreneurship is the practice of
consistently converting good ideas into
profitable commercial ventures”
- Peter F. Drucker -
This is what CRADLE does!
© Copyright 2010 Cradle Fund Sdn Bhd

3. Who is Cradle?
• Cradle Fund Sdn Bhd (Cradle) is an agency under the Ministry
of Finance, Malaysia (MOF) which manages the Cradle
Investment Programme (CIP) since its inception in 2003.
• “Entrepreneurs for Entrepreneurs”
What is our mission?
New technology (and its Commercialisation The leading
Growth
Innovation
Catalyst
related) ideas Catalyst in sustainable developmental &
The innovation funnel technology funding supporting platform
for individuals, ecosystem. for all funding
research, corporations, Employment creation agencies and forms,
institutes and esp. Angel
universities Investments.
Addressing market
funding gaps and
industry expectations
© Copyright 2010 Cradle Fund Sdn Bhd

4. Who are our recipients?
Individuals/start-ups with
 innovative ideas but have
insufficient funds to realize
Pre-Seed & Seed
Conditional Grants
their ventures
Industrial Guidance
Aspiring entrepreneurs
 needing funds and mentoring
to grow
Industrial Collaboration
Market Access
 Inventors /researchers needing
funds and guidance to
Competency Building
commercialize their ventures
© Copyright 2010 Cradle Fund Sdn Bhd

5. What is our developmental focus?
• Pre-seed (CIP Catalyst & U-CIP Catalyst)
Proof of Concept /
Idea Stage Lab or Industrial
Prototype Development
• Seed/Commercialisation (CIP 500)
Proof of Concept /
Commercialisation of
Lab or Industrial
Product / Service
Prototype Development
Cradle funds Technology Innovation with Commercial Value
© Copyright 2010 Cradle Fund Sdn Bhd

6. What is our investment focus?
• Technology-based ideas or innovations with commercial value
in the following industries:
ICT Non-ICT Others
• Mobile/Wireless Tech • Biotechnology • Semi conductors
• Creative Multimedia & • Advanced Materials • Life sciences
Content Development • Advanced Manufacturing- • Clean technology
• Shared Services Outsourcing related Tech
• Hardware Design • Renewable Energy/ Waste
• Software Development Management / Recycling
• Internet-based Businesses Tech
• High-Technology Consumer
& Business Products
Cradle funds Technology Innovation with Commercial Value
© Copyright 2010 Cradle Fund Sdn Bhd

7. SEED/COMMERCIALISATION GRANT
© Copyright 2010 Cradle Fund Sdn Bhd

8. What the programme offers
85% of
Pathway
1
Total Project Cost
Outright (Up to RM500K)
(12- 18 mths) Non-Matching
Disbursement to
Entrepreneur
Methodology
Pathway Entrepreneur
2 (1:1)
Matching*
(12-18 mths) 85% of
* Applicable where RM500,000 is
Total Project Cost
insufficient to kick start commercialisation (Up to RM500K)
* CIP 500 is a hybrid between CFSB’s speedy and automated pre-seed evaluation process (50%)
and the investment evaluation process by a venture capitalist (50%).
© Copyright 2010 Cradle Fund Sdn Bhd

9. Eligibility criteria
Seed/Commercialisation (CIP 500)
• Any budding company which meets the below criteria:
 At least 51% of the company’s equity is held by Malaysians, and
 Company in operations for less than 3 years, and
 Company’s total revenue is not more than RM5mil in its total
financial history, and
 Company owns the Intellectual Property (IP) rights of the
products and/or services, which is intended for
commercialisation
 Company already has a prototype which only requires another
8% to 10% product refinement work to meet market & industry
expectations/demands
© Copyright 2010 Cradle Fund Sdn Bhd

10. CIP500 Application Process
Application Offer Letter Full Due Diligence
* Initial Process to take 60 – 90 * Inc. Advisory Panel; to take
days till this point up to approximately 2 months
Approval Committee Finalization of
Pre-Screening
Meeting Offer &
* Requires Evaluation
Weightage & Short listing * Pitch is led by Entrepreneur; Agreement
(1 VP & 1 IM) Process Supported by IM
Evaluation Final Outcomes:
(Feasibility Study) Disbursement &  Succeed
Recommendation
Monitoring  Survive
* Requires RFC & Investment
Summary Process to Reject or
Meeting  Fail
Accept
© Copyright 2010 Cradle Fund Sdn Bhd

11. Structure and process flow
90 days* 12 - 18 months 12 months
Application Milestone 1 Milestone 2 Milestone 3 Ideas Bank
Performance
Performance
* Subject to
* Subject to
*10% misc provision per *10% misc provision per *10% misc provision per
drawdown drawdown drawdown
* Upon
receiving
Deliverables  Exit &
applicants’
 Business Plan Refinement  Business Plan – if  Business Plan – if Fundraising
Completion
Graduation
first reply to
Approval
the ‘Request  Product Refinement applicable applicable Strategies via
For  Ready Product  Sales Build-Up  Sales Build-Up local, regional
Clarification’.
 Infrastructure  Achieve 1st Sales  Support of Final and
 Strategy Development (via LOI, etc) requirements and/or international
 Developing Market Traction  Customisation of Working Capital Venture
& Expansion Product according to Capitalists
Development  Sales & Marketing Strategy Sales Contract and/or
Phase market
Example
Control Measures for Funding Allocations:
a) Direct Disbursement to Suppliers
b) Disbursement of Expenditures Claims mapped against Milestone Achievements; according to business needs
c) Milestones act as Tracking Stage-gates
Pre-Investment Due Diligence Costs:
a) Upon Investment Decision, Cost of External Financial, Technical & Legal Validation would be absorbed by the CIP 500 Grant
upon Success Basis © Copyright 2010 Cradle Fund Sdn Bhd

12. Additional requirements
• Resumes of key managers
• Pictures and/or graphic architecture, blueprints of products and/or services
• Professional references
• Market studies (if any)
• Pertinent published information (if any)
• Patents (if any)
• Beta customers list (if any)
• Potential pipeline deals (if any)
• Etc
NOTE: More details available at CIP 500 application form (www.cradle.com.my)
© Copyright 2010 Cradle Fund Sdn Bhd

13. Allowable expenditure
• Product refinement, market testing, and customised packaging
• Marketing expenses (inc. collaterals, travel where necessary, etc)
• IP search & registration as well as Market research & feasibility studies
• Pay package of employees (up to 30% of total funding amount only)
• Rental and utilities
• Purchase of hardware and software (min. 3 quotations)
 Disbursement to Supplier needs Delivery Order, Purchase Order & Invoice
 Disbursement to be gradual – a) Deposit, b) Remaining Payment
 Where there is no invoice avail, on case-to-case basis, allow mobilisation/forward funding
with ceiling
• Training (if necessary)
• Business Plan Refinement
• Technology licensing/acquisition (if necessary)
• Mentoring/coaching expenses & Professional Fees (Outsourcing Fees, etc)
• Production related expenses (if necessary)
• Contingency Expenses – Insurance, Tax, Duties, Licensing, etc © Copyright 2010 Cradle Fund Sdn Bhd

14. How do I apply?
Online
Application http://www.cradle.com.my
Applications only accepted online!
• No Mail-in or Email
• No Attachments
Helpline:
• Email: enquiries@cradle.com.my
• Cust. Relations: +603.21664730
© Copyright 2010 Cradle Fund Sdn Bhd

15. THANK YOU
enquiries@cradle.com.my
+603-2166.4730
© Copyright 2010 Cradle Fund Sdn Bhd