While our government’s effort to encourage entrepreneurship deserves an applause, it is when we look at the detail things start to falter.
Having experienced raising funds (grants, equity, mix of equity and debt) from government agencies and related entities (government-linked venture capitals), I came to the impression that raising capital from government-backed agencies (in Malaysia) is not conducive in getting more people to embrace entrepreneurship.
Entrepreneurs are resilient, we are quick to pivot, a master at finding opportunities and monetize it.
But this is not all.
Successful business ventures are often built upon numerous failures.
Failures serve as a great teaching, humbling moment for entrepreneurs to grow.
We grow from failures. We embrace the opportunity to learn, and do better.
In Malaysia, raising funds from government-backed agencies means you are not allowed in any manner to fail.
To make matters worse, getting funds from these agencies would require director’s guarantee and a plethora of other forms of obligations to the fund. In simple terms, if you fail = you are personally responsible to repay.
There is no room to allow a budding company to fail gracefully. In current funding environment, if you fail = you are on the hook for likely 5-10 years to pay back the fund.
There is no opportunity to take a step back and say “Hey, we have done our best. The market/timing/etc is simply against us. Let us close shop, and try out new ideas.”
In Malaysia, especially dealing with government-backed funds, one will have the impression that out of 100 companies receiving the fund, all 100 are expected to be successful.
This should not be the case. Nor expected to be the case.
High risk ideas are prone to failure. But if one takes off, the benefit to the economy significantly outweighs all the other unsuccessful ventures.
To spur the digital economy, our government need to realize that the funds allocated for startups need to have some leeway – an expectation that maybe only 1-2% of the companies will make it big. 10% will do ok, and the rest might falter.
Allow those that falter to stand up, recover and try out new enterprise.
Allow entrepreneurs to attempt wicked, high risk ideas.
Let them learn.
Let them attempt to do things differently.
Let them to also FAIL gracefully.
Do not make them pay (in literal and figurative manner of speaking) for the failure (except if there is a clear negligence or abuse of the funds).
A society that embraces failures is bound to discover greatness.