Malaysia Lowers the Bar for New VC Funds And That Could Change Who Backs the Next Wave of Startups

Khazanah and Jelawang Capital open year-round applications for the second cohort of the Emerging Fund Managers’ Programme, signalling a shift in how Malaysia is building its venture capital base

Malaysia is adjusting its approach to building a deeper venture capital ecosystem. Khazanah Nasional Berhad, together with its subsidiary Jelawang Capital, has opened applications for the second cohort of the Emerging Fund Managers’ Programme (EMP), introducing year-round submissions and more flexible entry requirements for newer fund managers.

The programme, backed under Khazanah’s Dana Impak initiative, is aimed at widening the pool of Malaysian venture capital managers at a time when early-stage fundraising has become more selective and harder to access. By lowering fund size thresholds and offering more flexibility during the application phase, the second EMP cohort reflects a policy shift toward nurturing fund managers earlier in their lifecycle—rather than waiting until they are already institutionally established.

A move to widen the investor base

Jelawang Capital said the updated EMP structure is designed to remove friction for Malaysian VC managers raising their first, second, or third fund. Beyond simplifying the application process, the introduction of a rolling request-for-proposals model allows managers to apply throughout the year instead of waiting for fixed submission windows.

This change comes as Malaysia, like many markets in Southeast Asia, faces a bottleneck not only in startup funding but also in the number of locally anchored fund managers capable of backing early-stage companies consistently. Industry observers note that while startup formation remains steady, the supply of new domestic funds has struggled to keep pace—particularly at the pre-seed and seed levels.

Early signs from the first cohort

Khazanah Managing Director Amirul Feisal Wan Zahir said the second cohort builds on encouraging early outcomes from the programme’s first intake, announced in June 2025.

“We are pleased to invite applications for the EMP second cohort 2026, now enhanced with all-year-round submissions,” he said. Since the first cohort was selected, the three appointed fund managers have attracted more than RM30 million from other capital providers beyond Jelawang’s commitments.

According to Khazanah, those managers have collectively deployed over RM60 million into more than ten early-stage companies, with most investments going into Malaysian startups. While still early, the figures suggest EMP is beginning to crowd in private capital alongside public backing—a key objective of fund-of-funds models globally.

Why the programme structure matters

Jelawang Capital operates as Malaysia’s national fund-of-funds, channeling capital through VC managers under programmes such as EMP and the Regional Fund Managers’ Initiative (RMI). Rather than investing directly in startups, the approach focuses on institutionalising fund managers who can deploy capital repeatedly across cycles.

The second EMP cohort introduces several refinements that mark a departure from the first round, including:

• Lower minimum fund size requirements, particularly for pre-seed and seed strategies
• Greater flexibility during early fundraising, recognising longer and more fragmented capital-raising timelines
• Year-round applications, replacing fixed intake periods

In contrast, the initial EMP round required applicants to target a minimum fund size of RM60 million and to secure at least 20% of that amount upfront as a base condition. The revised framework suggests Khazanah and Jelawang are adapting to current market realities, where first-time managers often struggle to anchor funds before demonstrating early deal flow.

Part of a broader policy push

Amirul Feisal said strengthening Malaysia’s venture capital sector remains a core pillar under Khazanah’s Advancing Malaysia strategy for 2026. “Through Dana Impak, we remain committed to building a deeper and more vibrant venture capital ecosystem,” he said.

Both the EMP and the Regional Fund Managers’ Initiative fall under the Ekonomi MADANI framework and are part of Khazanah’s RM1 billion allocation to the government’s GEAR-uP initiative, which is aimed at expanding early-stage funding and strengthening Malaysia’s venture capital landscape.

Who has benefited so far

The first EMP cohort comprised Vynn Capital, Kairous Capital, and First Move—all relatively young fund managers focused on early-stage investments. Their selection signalled Khazanah’s intent to back emerging teams rather than established, later-stage funds.

By opening the programme again under more flexible conditions, Jelawang Capital is effectively testing whether earlier and lighter-touch institutional support can accelerate the formation of sustainable local VC franchises.

Conclusion

The reopening of EMP applications with relaxed criteria highlights a pragmatic shift in Malaysia’s approach to venture capital development. Instead of optimising solely for fund size or speed, policymakers are prioritising depth—building a broader base of capable fund managers who can support startups over the long term.

For aspiring Malaysian VC managers, the second EMP cohort lowers the barrier to institutional backing. For the startup ecosystem, it could mean a more diverse and resilient pool of investors at the earliest stages. Whether this approach produces a lasting increase in high-quality local funds will depend on execution, but the direction is clear: Malaysia is betting that strengthening fund managers is just as critical as funding founders.

Quick Takeaways

• Khazanah and Jelawang Capital have opened year-round applications for the second cohort of the Emerging Fund Managers’ Programme, easing access for new Malaysian VC managers.
• The updated programme lowers minimum fund size requirements and offers greater flexibility for managers still in early fundraising stages.
• Early results from the first EMP cohort show private capital being crowded in alongside public backing, with over RM60 million deployed into mostly Malaysian startups.
• The changes mark a shift from stricter entry conditions in the first cohort, reflecting tougher fundraising conditions for first-time fund managers.
• EMP and related initiatives are part of Malaysia’s broader effort to deepen its domestic venture capital base and strengthen early-stage funding capacity.