KUALA LUMPUR: There will be a drastic decrease in foreign venture capital (VC) funding next year due to the global financial crisis, said the Multimedia Development Corporation (MDeC).

MDeC said the dearth of funding will make 2009 a tough year for technopreneurs. Roslan Bakri Zakaria, head of the technopreneur development division of MDeC, said international VC funds are expected to decrease from the US$35bil (RM134.7bil) this year to a mere US$5bil (RM17.5bil) next year.

Chris Chan, Technopreneurs Association of Malaysia (TeAM) advisor, said the drop in funding would stifle technopreneurs.

“Interest in information and communications technology (ICT) is waning. It is already difficult for companies to get programmers.

“There are less programmers and there will be less technopreneurs, The outlook isn’t too bright, ” Chan said.

Roslan said local technopreneurs will have to gear up for a difficult year. “They will have to concentrate on niche areas which the VCs are still looking at, such as clean technology and enterprise solutions for Web 2.0,” he said.

Examples of clean technology include solar power, wind power, biofuels, and green buildings.

However, Roslan said, there is still RM300mil worth of local VC funds up for grabs.

“We haven’t got any indication so far that this will also decrease next year,” he said.

He said the local funds would provide a cushion for the expected drop in international VC funding,

Silver lining

But it is not all gloom and doom, according to MDeC. It said that even if there is a fall in foreign VC funding , the venture capitalists would still be looking to emerging markets such as Malaysia because of the lower currency exchanges.

“So instead of committing US$2mil (RM7mil) to a US company, they can consider committing RM2mil to a Malaysian one,” he said.

“Draper Fisher Jurvetson (DFJ), a US-based venture capitalist, is considering setting up an office in Vietnam and we are trying to interest it in coming here,” said Roslan.

DFJ was involved in the funding of the Hotmail e-mail system, Chinese search engine Baidu, and the Skype voice-over-Internet protocol service.

He was speaking at MSC Malaysia InnoTech here last week, an event where local technopreneurs had the opportunity to pitch to 13 local and 8 international venture capitalists.