Strong Bio-based Startup and SMEs

Key to a Successful Bioeconomy

Mohd Nazlee Kamal, PhD. DIMP

World Islamic Economic Forum, Kuala Lumpur

4 November 2015

Global Trend: Changes in the Sources of Economic

Competitiveness

LabourIntensive

Capital Intensive

Knowledge-based

Information-based

From Industrial

Economy…

To

Knowledge Economy

INNOVATIVE

TECHNOLOGIES

CREATIVE

IDEAS/

SOLUTIONS

• Knowledge and innovation are the bedrock of development strategies to achieve higher

productivity and sustained economic growth

• The knowledge-based economy relies greatly on technologies, creative ideas and

solutions, and efficient allocation of resources as sources of competitiveness

Economic Paradigm Shift in a Knowledge Economy

Focused on Quantitative Growth

Quantity and Hardware-based approach

Conglomerates taking the lead

Focused on Inclusive and Sustainable Growth

Quality and Software-based approach

Strategic collaborations with, and increasing role of ventures and SMEs

Aligning Malaysia SMEs Development to the Bioeconomy

Vision

Economic activities based on processes using biological sources to

generate sustainable economic, social and environmental development

The Vision

Malaysia’s bioeconomy to be a

significant contributor to the nation’s

economy by 2020 and beyond

Bioeconomy has the potential to:

• Make the country more competitive

internationally

• Creation of value added jobs

• Enhance food security and affordable

healthcare

• Create greener economy as the country

shifts towards a low-carbon economy

• Increase Nation’s income by exploiting

our bio-resources to high value products

using bio-based technology

Startup and SMEs are the Backbone of the Malaysian

Economy

SMEs account for a

large proportion of

businesses in Malaysia

Majority are micro-enterprises, with 5 workers or less

2013 SME GDP Contribution by Key Economic Activity

(2005 constant prices)

Overall: 33.1%, Services 20.6%, Manufacturing 7.9%, Agriculture 3.2%, Construction 1.0%, Mining & Quarrying 0.1%

99.2% of business establishment

29.40% 29.60% 30.70% 31.20% 31.70% 32.00% 32.50% 32.70% 33.10%

70.60% 70.40% 69.30% 68.80% 68.30% 68.00% 67.50% 67.30% 66.90%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2005 2006 2007 2008 2009 2010 2011 2012 2013

SME (% Share) Large Enterprise (% Share)

Comparison of SMEs and Large Enterprises and their

Percentage Share to GDP (constant 2005 prices)

2013 SME CONTRIBUTION TO

GDP 33.1%

EMPLOYMENT 57.5%

EXPORT 19%

Source: Department of Statistics, Malaysia and SME Corporation Malaysia

Important domestic source of growth

Foundation and support in supply chain through forward and backward linkages

Strengthen resilience of the nation economy

Provide support for growth in novel sectors

Promote private sector-led growth

Performance of SMEs Outpaced the Growth of the Overall

Economy

• Growth trend of SMEs in Malaysia

since 2004 continuously outpacing that

of the overall economic growth of the

country.

• The trend will continue and

enhancement of the SME ecosystem

will improve SMEs growth further.

Source: Department of Statistics, Malaysia and SME Corporation Malaysia

6.4

10

6.5

0.2

8.37.1

6 6.35.6

6.3

4.8

-1.5

7.4

5.2 5.64.7

-4

-2

0

2

4

6

8

10

12

2006 2007 2008 2009 2010 2011 2012 2013

SME Growth

Overall GDPGrowth

SME & GDP Growth Trend (CAGR based on constant 2005 prices)

79%

18%

2% 1%Percentage

Micro

Small

Medium

Large

Source: Department of Statistics, Malaysia and SME Corporation Malaysia

Profile and function/ role of SMEs

FDI & DDI

Increased Number of Employment

Spin-off & Supporting Industries

Revenue

Contribution to GDP

Green Lifestyle

Improved Quality & Wellbeing of Life

Reduced Dependency on Fossil Resources

Inclusivity & Community Development

Knowledge-based Economy

Ensuring Sustainability

Lessen Environmental Impact by using renewable

biomass resources

IMMEDIATE IMPACT ENABLING KEY STAKEHOLDERS

MEDIUM TERM IMPACT

LONG TERM IMPACT

VALUE PROPOSITION

INDICATORS

IMPACT

Technological Innovation

ECONOMIC PERSPECTIVE SOCIAL PERSPECTIVE ENVIRONMENTAL PERSPECTIVE

BIOECONOMY AS AN

IMPLEMENTATION STRATEGY

OF THE ECONOMIC

TRANSFORMATION

PROGRAMME

National Biotechnology Policy Bioeconomy Malaysia

Bioeconomy is the New Economic Icon for Malaysia

2011 - 2015

SCIENCE TO BUSINESS

Phase 2Phase 1 Phase 3

2005 - 2010

CAPACITY BUILDING

2016 - 2020

GLOBAL BUSINESS

A comprehensive roadmap that foster a

conducive ecosystem to accelerate the

growth of biotech industry

2020 - 2035

BIOECONOMY

ROADMAP

Shifting Traditional Economy to an Innovation-based

Economy

Innovations are

driving a growing

demand for

sustainable and

bio-based

products from

renewable bio-

based materials

The application of bio-based technologies is the GAME CHANGER that

transform conventional processes and industries in the bioeconomy into major

contributors to the national economy

Bioeconomy Development by Championing Bio-based

SMEs to Greater Heights

57

30

22

16

1

27

15 1612

1

24

6 74

2

0

10

20

30

40

50

60

Start Up SME-Micro SME-Small SME-Medium Matured

Number of BioNexus Companies; By Development Phase (Revenue Generation), &

By Industry (Q3, 2014)

AgBiotech BioMedical BioIndustrial

It is intended that by 2020, Malaysia will be a global player in Biotechnology and will generate at least 20 global Malaysian companies – National Biotechnology Policy

Provide regulatory

assistance &

consultation to

BioNexus companies

and the bio-based

industry in general

Spearhead programmes

and initiatives to enable

Bionexus status

companies to grow in

terms of market access

and other developmental

aspects to go global

53% of BioNexus status companies are SMEs

45% of BioNexus status companies are Startups

Access to finance

Access to human capital

and talent development

Access to advisory

services and information

Access to market

• Difficulty in obtaining financing

• Perceived higher risk for financiers (risky investment) in

biotechnology/ bio-based financing

• Limited marketing and promotion strategy

• Limited access of bio-based products to domestic and global markets

• Lack of certification of bio-based products/ Costly certification process

• Limited access to advisory and facilitational services

• Difficulty in retaining manpower

• Inadequate training and inadequate resources for training

Challenges Faced by Bio-based Startup and SMEs in Malaysia

Access to technology

and innovation

• Lack of management capacity and technology capability constraint

• Low adoption of technologies

• Limited capability in research and development

Access to legal and

regulatory services

• Management in intellectual property and regulatory issues

Startup and SMEs-Related Initiatives in the National Biotechnology

Policy and Bioeconomy Transformation Programme

• Promotion of new areas/ sector crucial to the bioeconomy

• The private sector (small businesses) to spearhead the development of high growth areas in bioeconomy

Focus on Niche Areas

• Provide timely access to funding, provide funding infrastructure to bioentrepreneurs

• Lowering barriers and cost towards commercialisationNurturing & Market Access

• Upgrading entrepreneurial skills through education and training BioentrepreneurshipDevelopment

• Promoting local bio-based products to international quality standards Global SME Development

• Promotion of equal and fair access to business opportunities Branding & Marketing Platform

• Creating environment conducive for innovation

• Providing greater support for innovative SMEs Clustering Strategy

COMPETITIVE STRATEGIES IMPACT ON VENTURES & SMEs

DISCOVER VALIDATEPRODUCT

DEVELOPMENT EFFICIENCY GROWTH MATURE

Playing the Role of the Ecosystem Architect to Support Bio-based

Startup

Entrepreneurs

Government

Universities

Investors

Service Providers

COMPONENT TO

STRENGTHEN

START-UP

ECOSYSTEM

STARTUP LIFE CYCLE

Mentors

• Discovery and

ideation

• Market

assessment

• Prototype

• Early customers

and iteration

• Product

development

and user

acquisition

• Monetisation

• User acquisition

and growth

• Product and

market

expansion

• Scale to global

markets

• Sustain profit

and growth

• Exit/ IPO

No funding required Self Fund:

MYR 0 – 50k

Angel:

MYR 50-150k

Seed:

MYR: 150 -500k VC:

MYR 500k – 5mil

> 5 mil

Roughly 2 – 5 months 3 – 12 months 3 – 7 months 6 – 9 months 12 – 24 months Steady state

Strengthening the Startup Ecosystem through Incubators

Strengthening the role of university

incubators

INVESTMENT

SERVICES

MENTORS

Incubators geared toward speeding up the growth and

success of start-ups and early stage companies by

• Providing mentorship

• Investor introduction and infrastructure support

• A good path to source capital from angel investors,

governments, and other financiers

Incubators provide entrepreneurs with a supportive

environment.

Provide services on a one-stop basis and enabling overhead

costs to be reduced by sharing facilities and services.

IDEAS APPLY TO

INCUBATOR STARTUP

Majority of start-ups

in Malaysia may

have good

technology but with

lack of proper

support and

facilitation, they

may not be able to

monetise it, and

that is always a

challenge to the

young

entrepreneurs.

Startup Focuses on Bio-based Chemicals and Wellness

Sectors

R&D

(New insights & understanding)

MANUFACTURING

Translation of insights into novel practical

application

PRODUCTS

Commercial and Social Application

UpstreamDownstream Value Add Market

Raw Material ProductProduct

To…From…

• Conventional

methods

• Low productivity

• Improved

productivity

and standards

Bio-based

Technologies

New business will be

generated from bio-based

innovations by means of

FOCUS AREAS

PROMOTION, a strong

domestic market and

potential for export,

spearheaded by startup

and SMEs

Diversification through bio-based products

Increased used of bio-based raw materials in the chemical industry

Enabling innovation and growth in the healthcare sector

Creating new bio-services businesses

BIO-COSMECEUTICALS, WELLNESS & PHARMA

NUTRITION

CELLULAR MEDICINE AND STEM CELLS

BIO-BASED CHEMICALS

Strengthening Entrepreneurship through Public Private

Partnerships

• Empowering Malaysian

bio-based start-ups

and SMEs to move up

the value chain

• Providing research

and infrastructure

support to industry

• Developing talent for

the bio-based industry

Establishment of

CoE for

Industry-Academia

Collaborations

Universities &

Research Institutes

Industry/

Biotechnology

Companies

Labs or offices

located in

universities with

extensive shared

facilities for industry

enhancement

Research &

Development

Commercialisation

Education

Participation of faculty members

and graduate students

Provision of educational

programs

Sharing research information

and technical expertise

Internship Opportunities

Licensing/ Intellectual

Properties

Sharing research information

and industry experience

outcome

Creating long-term partnership with

QB3 to accelerate commercialisation

of life science-based technologies and

innovations

• Capacity Building in Innovation and

Commercialisation

• Start-up Acceleration and Partnering

Programmes

• International Incubator Exchange

Programme

BiotechCorp-QB3 Bio-Entrepreneurship Programme

• To learn and adopt best practices from QB3

• Developing industry linkages for early stage

startups and to co-develop models that

could be translated to a focused program in

Malaysia

• Startup-in-a-box program, to create a

rapid pipeline for screening viable startups,

develop licensing models and funding

pathways

• Life science startup from a local university or

an innovative research group with potential

for growth will be trained in QB3

• An incubator exchange program will enable

local startup companies to have space within

the QB3 incubator network

1

2

3

The QB3 Ecosystem

QB3: a Three-Campus Research and

Commercialization Institute

PROGRAMMES THAT LOWER BARRIERS TO INNOVATION

QB3 Startup in

a Box

Legal

QB3 Garage

Operational

Venture Fund & Joint

Investing

Funding

QB3 Bridging the Gap

Proof-of-Concept

IndustryAlliances

Sponsored Research

QB3

(UCB, UCSC, UCSF)

California Institute for

Quantitative

Biosciences• QB3 link more than 220 laboratories

• Launched its first incubator, the QB3 Garage at the University of California SF in

2006, and a similar effort at Berkeley

• In the US, QB3 has produced over 300 bio-based companies within three years

through mentorship and seed funding

Linking the QB3 Ecosystem to Malaysia

University Industry

Service

providersStart-ups

Government

planners

QB3 Connects University Discovery

to Bioeconomy Growth

Teams

Start-up

in-a-Box

Incubator

Venture

Fund

MANUFACTURING

ECONOMICS

Startup

Company

Bioeconomy

Growth

University

Research

DISCOVERIES

Concept

Legal

Space

Funding

Linking the QB3 Ecosystem to Malaysia

Teams

Incubator

Start-Up in-a-Box

• Connecting research laboratories with complementary

technologies with industry

• Connecting scientists with bio-entrepreneurs

• Providing access to legal & financial services

• Assist in incorporating new companies and businesses

• Providing guide to small business grant applications

• Providing low cost, high quality space

• Providing access to infrastructure and equipment

• Providing a highly supportive work environment

Venture Fund • Invest for equity

• Have Corporate Investment Partners

Applying “Startup in a

Box” concept tp

BioNexus startup and

SMEs, the support

will come by in the

form of additional

benefits that will help

lessen overall

financial burden.

“QB3 Train the

Trainer Programme”

by BiotechCorp-QB3

partnership train

incubator managers

and technology

transfer personnel

from universities

Conduct programmes

between QB3 and

Malaysian

universities to local

develop incubators

Continuation Strategies to Successfully Proceed Startup and

SMEs

Comprehensive strategy to develop the

business potential of startup and SMEs

1. Intellectual properties (IP) that are

developed within CoEs and;

2. Graduates from the QB3 programme

with exceptional abilities and high

potential for global success are selected

to further enhance their business venture

with the Larta Institute

Leveraging on the LARTA Institute

network towards;

• Improving market access strategy into

other countries

• Obtaining guidance through a systematic

mentoring initiative from industry experts,

made available through the LARTA

Institute’s network and collaboration with

industry leaders around the globe

Companies and organisations, amongst

others that is part of the LARTA network

• Introduce prospects/pathways for commercialisation

• Best practices into their commercialisation efforts

• Develop strategies to support commercialisation approach

• Customer/Partner feedback – market interaction

• Build networks of influence and expertise

Creating 20 Global BioNexus Companies by 2020

A JOINT TASK FORCE BETWWEN

BIOTECHCORP AND SMECORP

• The BioNext programme was created to

further spur the growth of BioNexus SMEs,

especially those looking to widen their

market into other countries / regions.

• In pursuit of positioning local

biotechnology industry as global business,

the plan focus on consolidating the

strength and capabilities in technology

development and innovation with the

ultimate goal for commercialisation.

• Aim at BioNexus SMEs and through a

targeted approach in the areas of

financing, market access and human

capital development.

BIONEXT PROGRAMME TO

CATALYZE THE GROWTH OF

BIOBASED SMEs

IN COLLABORATION WITH:

CERTIFICATION & REGULATION

TECHNOLOGY ROADMAP

SUPPLY CHAINMANAGEMENT

BRANDING PARTNER SEARCH

MARKETING STRATEGY

A Conducive Funding Ecosystem for Nurturing BioNexus

Companies

Strategic Collaborations with Financial Partners

Making available

funding opportunities

for BioNexus companies

Funds to help the

SMEs businesses

expand and grow

further

Funds to launch

and to sustain

start-ups

Biotechnology

Commercialisation

Fund, established

to help revenue

generating

companies

Participation in Impactful International Trade

Exhibition and Special Missions

Connect with institutions with available

funds is advantageous to the development

of BioNexus companies

1

2

BioShoppe is an umbrella label for an array of made-in-Malaysia, value added bio-baseditems which include herbal supplements, personal care and household products.

A Branding and Marketing Platform for

Entrepreneurship Development and a Flagship Store

for Malaysian Bio-based Products

• Bioshoppe gives buyers a way of recognising

products manufactured by BioNexus companies.

• 3 retail presence, and showcasing over 100 types of

products (including beauty and aromatherapy) from

15 BioNexus companies.

• Accelerate the growth of BioNexus SMEs under the

Biocosmeceutical and Pharma Nutrition sub-sectors

BioNexus companies, notably SMEs, can leverage on

the key activities of the BioShoppe Concept Store:

• Collaboration with existing BioNexus companies

• Collaboration with Ministries, Agencies and State

Governments

• Online BioShoppe

• Participation in local and international events

• Advertising and promotion of BioShoppe

Addressing the Tail End of the Value Chain – the BioShoppe

Concept

Strategic Partners and Promotion Platforms

Products from BioNexus Companies

National Innovation

Conference and

Exhibition

Life Springs

Solaris

Nova Natural

Supplement and

Skincare

Expo Milano 2015

Super

Pharmacy

Megastore

Malaysia Global

Innovation and

Creativity Centre

ASEAN SME Showcase

Department of

Women

Development

Malaysia

Malaysia International

Halal Showcase

Market penetration strategy to enhance market access and build presence for

local biotech products, elevating the status of

BioNexus status companies

Clustering Strategy in Key Economic Corridors

BIOMEDICAL CLUSTERS

Northern Region Medical Devices Cluster

Central Region BioMedical Clusters

Southern Biopharma Cluster

Sabah: Drug Development & Drug Discovery Cluster

Sarawak Drug Development & Drug Discovery Cluster

BIOINDUSTRIAL CLUSTERS

Northern Region Biomaterials Cluster

East Coast RegionKertih Biopolymer Park

Oil and Lipid Cluster Biogas Cluster

Southern Region Johor BioXCell

Sabah POIC

Sarawak Corridor of Renewable Energy

AGBIOTECH CLUSTERS

1

2

3

4

5

6

7

8

9

10

Sabah High Impact Agriculture Centre - Kundasang

Agro BioXcell – Cameron Highlands

East Coast RegionCentre for Biotechnology & Herbal Products

Northern Region – Penang Science Park (Aquaculture)

Sarawak Agarwood Industry

14

15

13

12

11

1

2

3

4

5

6

7

8

9

10

14

15

13

12

11

Supporting Bioeconomy Key Stakeholders

Economic Corridors &

Industry Clusters

Institutions Of Higher Learning

BioNexus Status

Companies261

High-end Research Facilities

And Infrastructures

20 Public Universities

77+ Private Universities

16,000 annual graduates in applied and pure sciences

53 BioNexus partners facilities nationwide

134 BioNexus companies in AgBiotech

76 BioNexus companies in BioMedical

46 BioNexus companies in BioIndustrial

Northern Corridor Economic Region, East Coast

Economic Region, Iskandar Malaysia, Sarawak

Corridor of Renewable Energy, Sabah Development

Corridor Bio-XCell Malaysia, Kertih Biopolymer Park, Kulim-Hi-Tech Park,

POIC Lahad Datu & Sandakan, Tanjung Manis Halal Hub

Industry clusters in Malaysia currently provide a platform for supporting

Bioeconomy stakeholders in AgBiotech, BioMedical and BioIndustrial

CONCLUSION

In the context of bioeconomy, start-up and SMEs contribute to

economic dynamism, spurring innovation in novel sectors.

Bio-based start-up and SMEs development is a key focus in

the bioeconomy agenda – intended for as an important

domestic source for growth, and to promote a private sector-led

bio-based sector.

Realising the economic contributions as well as its potential for

further growth in the bioeconomy, the government has taken

proactive approaches towards developing an ecosystem to

support homegrown bio-based start-up and SMEs.

Thank You