KUALA LUMPUR: Malaysia has huge potential in the fintech space, mainly because of its attractive entrepreneural space, according to Rakuten Capital managing partner Oskar Miel.
He said the regulators were also now open to innovation and technology.
Miel, who is in charge of Rakuten’s Fintech Fund and Rakuten’s Mobility Investments, told StarBiz that the country’s strong underlying market, large population and business to consumer (B2C) model as well as Internet access to huge markets also offered unique proposition for fintechs to grow further.
“There is so much potential in Malaysia due to its attractive entrepreneural space and also since the regulators are open to innovation and technology,” Miel said during a panel discussion at the ScxSC Digital Finance Conference 2017 that was organised by Securities Commission Malaysia yesterday.
However, while there is a need to regulate Fintech, Miel opined that the regulations imposed have to be flexible enough to not disrupt the entrepreneural space.
“It’s a test of reasonableness in terms of how much regulation is imposed on entrepreneura or Fintech start-ups,” he noted.
Referring to questions on trends and investments in fintech, Life SREDA VC, a venture capital firm headquartered in Singapore partner and investment director Igor Pesic said the trend now in fintech was cryptocurrency investments and initial coin offerings (ICOs).
He explained that this was one of the fundraising methods used by about 500 to 600 companies this year and they have raised about US$3bil.
“About 30% of the margins from the funds raised were invested into fintech and this is a trend now. Many seed stage fintechs are able to raise huge funds this year,” he noted, adding that many start-ups were opting for the ICO approach.
Miel, however, opined that although the return on investment for ICOs were higher, about 87% of companies issuing ICOs still lacked knowledge.
“Most of these firms have also established themselves as foundations in order to avoid paying taxes. Still, ICO is a preferred route due to its high return on investment,” Miel explained.
That said, where valuation is concerned, Miel said it was pertinent to look at the companies’ growth in terms of revenue, operating income, earnings before interest, tax, depreciation and amortisation or price-to-earnings ratio for more developed companies.
Investors also need to look at its management and workforce, as investing in creative people or talents will deliver results.
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