Frequently Asked Questions (FAQs) for MDV Technology Start-Ups Funding Relief Facility (TSFRF)


ABOUT TSFRF

1What is the Technology Start-Ups Funding Relief Facility (TSFRF)?
The Technology Start-ups Funding Relief Facility (TSFRF) is a financing facility that has been developed to provide immediate, affordable and targeted cash flow support for eligible Venture Capital (VC) or Government agency-backed Technology Start-ups that are currently impacted by the adverse market and economic conditions due to the Covid-19 outbreak.
2How does the TSFRF work?
The TSFRF is similar to a revolving credit facility. This means that disbursement can be requested on demand or based on a 6 month rolling cash flow requirements per applicant. Outstanding balances of the principal can be rolled-over semi-annually, providing flexibility in managing repayment.
3When is the TSFRF available for application?
The TSFRF will be available for application for the first start-ups cohort beginning 18 May 2020 until 31 May 2020. Subsequent application windows will be opened until the entire fund of RM100.00 million is fully committed. However, should the situation warrants it, MDV will consider to open the TSFRF again for additional application.
4What are the key features of the TSFRF?
  • Cashline facility for VC or Government Agency- backed Tech Start-ups with semi-annual roll-over of up to RM2.50 million per applicant;
  • The TSFRF can be used for working capital and business expansion;
  • Up to 3.5% p.a. financing rate;
  • Financing tenure of up to 5 years subject to annual review;
  • Warrant cover of up to 10% of financing limit at the last funding round equity price;
  • Personal guarantee and debenture as security.

ELIGIBILITY

1What are the eligible criteria for Tech Start-ups to apply for the TSFRF?
  • Tech Start-ups that are incorporated in Malaysia.
  • Must be majority owned by Malaysians; or majority of the staff are Malaysians; or majority of revenue is generated in Malaysia.
  • Tech Start-ups that are VC and/or Government Agency-backed.
  • Must satisfy MDV’s Credit Criteria for the TSFRF.
MDV’s credit assessment will include evaluation on Management, Financials, Market Condition, applicants’ valuation trend and levels of institutional investor support.
2How can Tech Start-ups know that they are eligible to apply for financing under the TSFRF?
Tech Start-ups are advised to call or email MDV to ascertain their eligibility under the TSFRF. All applications for financing will be subjected to assessment by MDV.
3Why is the TSFRF only limited to Tech Start-ups
The Tech Start-up Funding Relief Facility was developed following engagements with Venture Capital companies and technology Start-ups. While SMEs benefit from SRF under the Government's stimulus package, tech Start-ups require another platform to sustain themselves during this period.

The TSFRF is offered to Tech Start-Ups to fill the gap in the unserved market for Start-ups in Malaysia given that most Tech Start-ups are unable to meet the commercial bank lending criteria.
4Is the TSFRF open to existing customers of MDV only?
No, the TSFRF is open to all eligible Technology Start-ups.
5Do I need to have VC investors
Yes, TSFRF is open to all Malaysian Tech Start-ups that are either backed by VC companies or any Government agencies. As at 31.12.2019, there were 122 VCs/PE firms and 304 investees.

Other than VC-backed tech Start-ups, TSFRF is also meant to assist emerging tech Start-ups that receive financial and non-financial assistance from government agencies, including entrepreneurial training, financial literacy, start-up bootcamps/workshops and other educational programmes to ensure that the next generation of technopreneurs and tech start-ups will be sustained and grow further.

Therefore, we will still consider other applicants on a case-to-case basis but subject to additional scrutiny on corporate governance and internal controls and reporting. Malaysia Debt Ventures will be inclusive and encompass tech start-ups that are innovative and exhibit great potential that may be owned by founders, individuals or non-VCs.

MDV looks into providing TSFRF for Tech Start-ups with VC or Government Agency backing as such institutions contribute to corporate governance and require sound reporting structure by the Tech Start-ups. MDV also leverages on the due diligence that was conducted by the VCs or Government agencies prior to reduce risk.

We wish to assure that all applicants will be assessed on appropriate credit risk criteria and approved by independent and capable external committee to ensure transparency and merit-based implementation and operations of the fund.

PURPOSE OF TSFRF

1What can I use the TSFRF for?
The TSFRF is available for the company’s working capital, operations expenditure and business expansion. For example, you can use the TSFRF to pay for your employee salaries, bridge payments for your suppliers and vendors, or pay rental for your office premise.
2Can the Tech Start-ups obtain the TSFRF to re-finance existing financings?
No. The TSFRF must NOT be used for re-financing of existing financing facilities, repayment of shareholders’ advances and redemption of any redeemable securities.

TSFRF PROCESS (LOAN APPLICATION, ASSESSMENT, APPROVALS & DISBURSEMENT)

1What is the minimum and maximum loan amount that I can borrow under the TSFRF?
There is no minimum financing amount under the TSFRF but the maximum financing limit for each Tech Start-ups is capped at RM2.50 million.
2Is this facility offered under conventional or Islamic financing modes?
The TSFRF is currently available under conventional financing.
3What are the legal documents required to be executed?
The Business Division team will submit to all applications a Checklist of documents that is to be submitted to MDV for loan assessment. Documents include, but not limiting to:
  1. Company Profile
  2. Latest Audited Financials
  3. Information Deck, Cash flows, revised Cash flows
  4. Relevant Agreements with VC
  5. Any other supporting documents deemed essential by MDV.
Legal documentations upon issuance of LO are as follows:
  1. Letter offer,
  2. Personal Guarantee and Debenture,
  3. Any other supporting documents deemed essential by MDV.
4What type of security does the Tech Start-ups need to provide as collateral to obtain financing under the TSFRF?
Applicants are required to provide personal guarantee (from founders/key personnel) and debenture. Depending on the corporate structure of the company, a corporate guarantee may also be required.
5Is there any handling fees or other chargers?
No, there are no additional fees and costs. Legal fees can be drawn down from the facility
6How will MDV determine the quantum and tenure of the financing amount?
MDV will be guided by the cash-flow deficits forecasted to be faced by the companies within the next 5 years.
7How is the warrant cover calculated?
For a RM1.00 million loan, a 10% warrant cover entitles MDV to purchase up to RM100,000.00 (i.e. 10% of the loan amount) in the Technology Start-ups’ equity. Where the share price is based on the last equity round.
8How is the interest calculated?
Interests are charged on the actual drawdown of your facility based on daily rest. Interest charged is paid in arrears. There is no commitment fees or charges on non-drawdown amount. E.g. If you have a RM1.50 million TSFRF loan from MDV and you have drawn-down RM1.00 million, the 3.5% interest will only be charged upon the RM1.00 million disbursed amount.
9What is the disbursement documentation?
Submission of drawdown request. No other documentation required.
10How fast is the disbursement process?
Within 3-5 days from the date the drawdown request is received by MDV. The 3 to 5 days required is to allow for administrative procedures in accordance to MDV’s loan disbursements procedures.
11What is the overall timeframe between application and actual disbursement?
The timeframe between application to actual disbursement takes approximately between 4 to 6 weeks, subject to full and complete submission of all documents and disbursement criteria requirement procedures fulfilled.

OTHERS

1Can Tech Start-ups apply for the TSFRF multiple times?
MDV, at its discretion, will review the utilisation of the financing by the Tech start-ups and may consider to increase the financing limit capped at RM2.50 million, subject to the Tech Start-ups’ capacity as well as the availability of funding for the TSFRF.
2Can I apply for other MDV financing products such as Term Loan or Project Financing?
Yes, depending on your financing requirements, MDV can offer you additional funding line beyond the TSFRF programme, such as contract financing and venture debt.

Project financing can be offered to tech companies with medium to long-term public or private technology infrastructure projects in hand.

Our venture debt financing on the other hand is offered to early or growth-stage Tech Start-ups with VC investments.

Please engage with our Business Building or Venture Finance teams to understand your financing needs better.
3Which Venture Capital companies are acceptable by MDV?
Acceptability of Venture Capital companies is subject to MDV’s determination at its discretion. MDV will be guided by, but not limited to, the Securities Commission’s list of VCC and VCMC.
4Given the uncertainties as to when the market will normalise and revenue will return to pre-crisis level, what would happen if borrowers cannot make initial repayment and interest commitments?
Roll-overs of interest and principal via TSFRF structure will enable better cash-flows management for Technology Start-ups during low revenue period until longer-term venture capital is available. MDV will also consider restructuring for viable companies. Roll-over of interest is limited to the first 6 month roll-over only.
5Is there a closing period for TSFRF?
The TSFRF will be closed for application once the entire fund of RM100.00 million has been fully committed.
6Where can I get more information?
To know more about the TSFRF, please engage with our Business Building and Venture Finance teams as below:
  • Amalina: aamalina@mdv.com.my
  • Azlina: azlina@mdv.com.my
  • Jairi: mnjairi@mdv.com.my
  • Rafiuddin: mrafiuddin@mdv.com.my
  • Raja Zainon: rzainon@mdv.com.my
  • Nell: nurazah@mdv.com.my
  • Philip: leongsy@mdv.com.my

Need a quick help
or have questions?

To understand the product further, please contact our Business and Venture Finance Teams:


Amalina:
aamalina@mdv.com.my


Azlina:
azlina@mdv.com.my


Jairi:
mnjairi@mdv.com.my


Rafiuddin:
mrafiuddin@mdv.com.my

Zainon:
rzainon@mdv.com.my


Nell:
nurazah@mdv.com.my


Philip:
leongsy@mdv.com.my