[The Star] Govt Agency Creates Platform for Creative Ideas
In the race to become developed, the economy has to be moved up the value chain. Inherent to this is the need to develop more innovation-driven enterprises. KLSMC is mentioned as one of the companies in Malaysia that drives this innovative spirit forward by the advancements within stem cell research on cartilage regeneration.
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PETALING JAYA: In the race to become developed, the economy has to be moved up the value chain. Inherent to this is the need to develop more innovation-driven enterprises.
And for innovation to occur, something more than the generation of a creative idea or insight is required. The insight must be put into action to make a genuine difference. Towards this end, investors and innovators now have set a match-making platform to commercialise new innovative products potentially worth billions via the initiatives of Agensi Inovasi Malaysia (AIM).
AIM, a statutory body set up by the Government to be the driving force behind this push towards an innovation-based economy, has created two major platforms for innovations to be properly presented and commercially evaluated for investors via Innovation Business Opportunities (IBO) and Newco or equity investment.
Under the Newco platform, AIM will also step in and invest in the companies that have pitched it their ideas in cases where the innovations are considered to have high commercial aspects and potential.
AIM chief executive officer Mark Rozario said AIM had invested a total of RM120mil in five companies in the form of equity stakes.
“Our role is to come in as a strategic shareholder. So we take a minority stake at no particular fixed amount, as ultimately, it depends on what the company needs to commercialise its innovation.
“We look for companies that have something different to offer and tremendous growth opportunity,” he told StarBiz recently.
Rozario explained that what AIM was trying to do was fill the gap in the bid of these innovative companies to take off.
“We are concerned that if these companies cannot source for a partner that can help them in the initial period, then their good ideas and innovation might just fizzle out.
“These things are quite high-risk and that’s why private-sector investors do not get into the picture at this crawling stage.
“In the long run, if these companies’ innovative products and technologies take off, private investors such as private equity funds and venture capital could replace us by buying out our stakes” he said.
This is because AIM would need its investment back to be re-invested in other new companies.
Concerning equity investment too, Rozario said, the Government had no fixed amount of funds for this purpose, although AIM does have an investment committee that would go through all the proposals that came in and evaluate the viability of their innovative ideas.
“We have a due diligence process via our investment committee where they look at certain criteria from the legal, financial and technical angles prior to recommending the company to our Governance Council, which is chaired by the Prime Minister.
“Due diligence is about protecting the country’s interest, as we have to make sure that these companies and ideas are genuine and that they own this technology,” he elaborated, adding that the companies that AIM had invested in had real potential in developing their products to create new markets that could be worth billions.
One of the companies that AIM has committed to putting in RM70mil is i-Gene Sdn Bhd, a company that is a pioneer in digital autopsy.
“It has developed the technology and software to analyse the body in thousands of slices and in 3D format to determine the cause of death.
“It is not intended to totally replace the physical autopsy process but the company is targeting about 70% of the autopsy cases.
“i-Gene has already got a contract to set up eight digital autopsy centres in the United Kingdom,” he said.
Another investment that could draw a lot interest, said Rozario, was the technology developed by the Kuala Lumpur Sports Medicine Centre (KLSMC) on using one’s own stem cells to heal injured knees.
“What they have done is develop new cartilage from the stem cells harvested from the patient’s own blood.
“KLSMC has clinical data as of now where they have already treated 50-over patients over the past five years. Many people have damaged their knees in one way or the other and the current procedure of undergoing an operation and replacing it with an artificial knee is not as effective as having a new natural knee,” he said.
Rozario said the potential for this was tremendous and that AIM was looking at facilitating global multi-centre trials.
“From this technology, it is not just the knee cartilage that you can replace but it is also applicable to any joint in the body as well as facial reconstruction,” he said, adding that AIM had committed to investing RM6.2mil in the company.
AIM also recently invested about US$5mil (RM15mil) in Mardil Medical Inc, a US-based cardiac device company, which includes the development of an Asian Centre of Excellence at the National Heart Institute of Malaysia.
“It has developed a device to treat faulty heart valves, where the only option now is to undergo invasive open heart surgery, which is not always effective.
“Mardil has spent a couple of hundreds of millions to develop this technology and is now ready. Now that the centre of excellence is here in Malaysia, we foresee a regional hub in the making for those who require the treatment. That’s the value we see for Malaysia,” he said.
The two other companies that AIM has invested in are involved in light-emitting diode (LED) fibre optics, which is a cheaper and lighter alternative for copper cables in super computers, and a painless solution for haemorrhoids.
On the longer-term outlook, Rozario does not expect it to take too long for these companies to take off and grow into public-listed entities. “At this point, we might exit as strategic investors and let the private sector be in charge,” he conceded.
Besides equity investment, the other exciting platform of AIM’s initiatives in the commercialisation of innovation is IBO, where each volume (there are three volumes thus far) was personally launched by the Prime Minister himself.
“Where the IBO is concerned, we actually go through all the intellectual property (IP) of the 20 public universities and 27 public research centres and include those that have business potential into the volume of our IBO. The IBO also contains some of the proposals from companies,” he said.
Subsequently, said Rozario, investors (companies, private equity funds, venture capital as well as high net-worth individuals) could analyse the IBO and decide which IP they were interested to invest in.
“If there were more than one investor interested in one IP, then there would be an open bidding process where we evaluate each bidder on their track record, financial capability, marketing and manufacturing strength and network distribution,” he explained, adding that usually, the IP owners were compensated according to the sales royalties of their products.
On what was interesting about the IBO, he said its team had included a market analysis and three-year revenue projection, among others.
Rozario said that from the IBO, the Government which has been investing a lot of money in public universities and research centres now had the chance to create wealth for the country.
So far, he said the take-up rate of the IBO had been encouraging. “For the first volume launched in April last year, we had 82 bids for the 32 IBOs, where 12 have already been signed.
“The second one launched in October last year saw 24 bids for the 19 IBOs. And for the recently launched third volume, the bids are ongoing, where a total of 50 more IBOs with a potential revenue of RM950mil have been made available.
“The IBOs range from a tropical clothes dryer and a salt replacement seaweed additive to a five-in-one machine for padi field preparation and a dual-locking system for motorcycles.
“For those IBOs that have not been taken up, we will store them in our repository system for future usage. We are also doing the same to build our own network of investors,” he said.
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