An open, virtual investment bank

By JENNIFER JACOBS
22 February 2001

IF YOU are an entrepreneur still singing the blues to the tune of "matchmaker, matchmaker, make me a match," you may want to check out InvestmentBankAsia.-com, a virtual platform for entrepreneurs to find investors and and vice versa.

Its managing director Jacqueline Tai declares: "We have built a ship everybody can sail. Entrepreneurs can post their business plans on the site for free, while accredited venture capitalists can browse through the business plans for a fee."

Tai, a chartered accountant, said AlphaInvestmentBank.com was conceived in the first quarter of last year. She was with KPMG's UK office for seven years and KPMG Singapore two years before moving on to become a director and partner in a small boutique investment bank in 1995.

The concept of a virtual investment bank is new to the region. In fact, Tai said, it was only recently that Lehman Brothers introduced a similar model in the UK called TheMarket.com.

Entrepreneurs looking for either start-up capital or merger and acquisition opportunities can list their businesses on the website for free (subject to InvestmentBankAsia's approval).

The level of detail they want to offer is entirely up to them. "They can choose how much information they want to disclose. . . . full or partial disclosure, or even non-disclosure, where they can submit their business plans to us directly (rather than posting it over the website) and get us to arrange the investment for them.

"Many entrepreneurs are worried about their ideas being stolen. So firstly, once the plan is posted, it cannot be accessed by other entrepreneurs, only by accredited investors and professional advisers, for a subscription fee."

Unlike the US or Singapore, there are no "accredited" venture capital companies in Malaysia. InvestmentBankAsia has therefore set its own benchmark for investors who will be allowed to browse through the business plans.

"To be able to browse, a corporate investor would need a fund of at least RM10 million and an individual investor at least RM2 million. We are not accepting anyone who just sends a cheque for the subscription fee," she reassured.

She added as writing a proper business plan is not a strong point among many of the entrepreneurs, the site will also provide tools to help entrepreneurs clearly set out their ideas, for free.

"We provide a template they can fill up, which would basically incorporate the kind of information venture capital companies require when they look at a business plan. "We are also prepared to lead them stage by stage.

For example, if an investor responds requesting for more information, a detailed business plan will be needed.

We have a template for that too. "Our associate company Digital Hub Consulting Sdn Bhd which provides corporate finance services can also assist in writing up the business plan. But I want to stress that these services are optional.

"We are truly an open-ended portal in that members are not locked in to our services, but can use any adviser or investment bank that they choose. "And the service is not confined to the IT industry.

"We are opening it to industries across the board. We have very strong small and medium-scale manufacturing companies also looking for investors."

Tai suggested that the companies which have listed their projects with the Ministry of Science and Technology Information Centre (Mastic) also look at putting up their business plans on the portal.

"There are about 2,000 projects listed on Mastic which are under research and on an average, at any one time, some 10 per cent are ready for commercialisation."

However, the listings on Mastic are highly technical and most investors going there will not understand what the company is looking for.

We invite the companies with projects ready for commercialisation to go through the process of writing out their business plans based on our templates so that at least the investors will have a better idea of the project and who is behind the company.

"At the moment, nothing is available except for the technical details. I think the companies on Mastic which take the trouble to go through this process would probably find their projects financed more easily."

"All this can be done online once the site is officially launched in about two weeks. For the moment, entrepreneurs can e-mail their business plans to webmaster@AsiaInvestmentBank.com."

"We will start receiving registrations online after our official launch and announcement our MSC status."

"Banks or venture capital companies can browse and search for investment opportunities according to geographic, industrial and investment size preference, meaning the portal provides entrepreneurs with a much greater exposure to investors than the usual matchmaking services, where business plans are sent out to a select few."

"Just because a business plan is rejected by one investor does not mean that nobody will want it. It may be that the business plan does not match that particular investor's risk tolerance or that the price or profit margins are not what that investor seeks."

Tai added that as its name suggests, the portal is Asean-wide. "We have compiled a huge directory which lists some 1,000 financial institutions in all 10 Asean countries and close to 1,000 venture capital companies from three main regions _ North America, Europe and Asia Pacific."

"It's also a one-stop destination to find country, government and economic information. We link investors to information provided by third parties who will give them an independent view of each country."

"In Malaysia, for instance, those who want information on manufacturing will be referred to the Malaysian Industrial Development Authority (Mida), on the local IT industry to the Multimedia Development Corp (MPC) and on the capital market to the Securities Commission and Foreign Investment Committee "

Tai said AlphaInvestmentBank.com is finalising a strategic partnership with KWX Sdn Bhd (Knowledge Workers Exchange), a wholly-owned subsidiary of Meitech Development Sdn Bhd, the investment arm of the MDC and IdeasAsia.com (an ideas exchange portal).

"We are developing what is called a 3-Exchange.com, a platform that incorporates the three basic components of setting up an IT company."

"If you are looking for knowledge workers, you can go to KWX, while IdeasAsia.com incubates ideas. Once these ideas are ready to go to market, you can get on to InvestmentBankAsia to look for financing or strategic partners."

"The Government was talking about e-government, e-Asean and e-Commonwealth. Each Asean member was assigned a model to develop and for Malaysia, the 3-Exchanges model has been presented, approved and accepted by the 10 Asean member countries."

"The model has also been presented to the business councils of the 54 Commonwealth countries and it's been approved and accepted in principle."

"The site will be marketed and promoted in many countries and it will be translated into Chinese and Arabic very soon. Tai said AlphaInvestmentBank.com was set up in July 2000 and it now has a staff of less than a dozen people."

"We are a very lean company with multi-talented people who each perform several functions. Although we have only been around for eight months, we have spent at least a year in terms of man hours put in developing the website and compiling the directory. "

"The company is now talking to two potential investors to help take it to the next level. "We are seeking a partner who would give us the kind of support that would be needed to drive this project. "

"We are working on a number of projects and can generate our own financial resources. A partner would have to be strategically important because of the nature of our projects, and the fact that we are going out to so many countries."

As for revenue prospects, Tai said although companies listing on the website are not obliged to use its advisory services, she expects the bulk of revenues to come from corporate finance fees.

"We are providing free listing for entpreneurs while other websites are charging something like US$2,000 (US$1 = RM3.80) for the listing of business plans."

"However, if you want to go into the directory, you will have to pay a subscription fee of US$100 a year for individuals and US$295 for corporates."

"Now that it has set up a platform for the networking of entrepreneurs and resources, the company is looking to get a small portion of the fund that the Government has allocated for venture capital, Tai added.

"We welcome the setting up of the RM500 million fund for the venture capital industry in Malaysia, which we consider as a much needed injection."

"Considering the parched state of the market, this fund should be disbursed as quickly as possible to as many accredited fund managers as possible, she added.

"We would like to be able to help in the useful dissemination of the fund and we think it should be done soon. There are many companies out there in dire need of funding."

"InvestmentBankAsia is also looking to network and cooperate with those providing similar services, be they another virtual platform or corporate finance consultants. "We're not in competition with them.

This is really and truly an exchange and we want as many companies, consultants and venture capital companies to use it."