Getting Funds For My e-Business

Microsoft Malaysia, October, 2000

With opportunities opening up for small and medium-scale enterprises (SMEs) to venture into e-commerce, how does an SME finance its journey into e-Business?

While trying to get credit facilities from banks may be, more often than not, an exercise in futility, there are other avenues for SMEs to get funding for their plunge into e-commerce.

Mindful of the problems faced by SMEs in getting such funding, the government's Small Medium Industries Development Corporation (SMIDEC) recently launched a special scheme for this purpose. Its E-Commerce Grant aims to assist SMIs quickly integrate into the world of e-commerce to ensure their survival in a changing globalized market place.

Under the scheme, successful applicants may receive a maximum of RM 10,000.00. Assistance is given in the form of a matching grant where 70 per cent of the cost is borne by the Goverment and the balance by the applicant.

However, before you rush off to the SMIDEC office to get financing for your company's website, there are several pertinent conditions to consider. The grant cannot be used to develop individual homepages or e-commerce portals.

It is meant only for SMIs companies to defray expenses in joining an existing e-commerce portal or community. Each SMI company can register to join up to a maximum of five e-commerce portals/communities.

The grant can be used for expenses such as consultancy fees, set-up charges, first year web hosting, and first year payment gateway - Secured Electronic Transfer (SET) and Secure Socket Layer (SSL) - charges.

Apart from the SMIDEC scheme, the private sector has also introduced various initiatives to make it easier for SMEs to join the e-commerce revolution. Malaysia-based website eOneNet.com launched recently an e-business ownership campaign with the SMI Association of Malaysia.

It is sponsoring 500 SMIs to get online by offering them free web designs and a hosting service package for only RM300. Fione Tan, the CEO and president of eOneNet believes that e-business is the new way to do business.

Jaring, the country's first Internet Service Provider, will sponsor a business Internet account for each of these SMIs by waiving the registration fee and giving them free Internet access worth RM5 each. Well, it is not much but it is a start!

Also aiming for the SME market is Celinco Consolidated (M) Sdn Bhd, a subsidiary of Celinco Consolidated, a Sri Lankan-based international group.

SMEs will be able to transact business with over 1.2 million merchants from 129 countries through its eCeylinco.com portal. It is an e-trading hub which draws together a virtual community of buyers, manufacturers and sellers globally.

Another foreign company targeting SMEs and multinational corporations operating in Malaysia is Hong Kong's Pacific Century Cyberworks (PCCW). It plans to invest US$100 million over the next five years to offer e-business enabling and Internet access services in Malaysia. It will provide web-hosting, web-design, e-mail hosting, domain name service, Internet access and global Internet roaming services.

The potential of SMEs in commerce has been acknowledged worldwide with some of the Internet's biggest players building e-commerce marketplaces or communities specifically for SMEs. This means that for relatively little expense, small companies now have an abundant choice of providers of virtual store fronts and related facilities.

On Sept 21, Microsoft launched its "Business Web Services", a collection of hosted Web tools, e-mail, e-commerce and marketing services that will be available on its bCentral small-business service.

According to Microsoft, these services will be available later this year and cost US$24.95 per month. Microsoft's Business Web Services will enable SMEs and SOHOs to register their business name and build commerce-enable websites. It will offer e-mail, calendar and document storage applications based on the Microsoft Exchange Server 2000 and Microsoft Outlook.

There is another indirect route for SMEs to get money to fund their e-commerce ventures. SMEs can reinvent themselves as dotcoms or incorporate a subsidiary to handle the business' e-commerce activities. After that, they can go the way most Internet start-ups embark on - seeking funding from 'angels' or venture capitalists.

Given the crash in NASDAQ and financial troubles afflicting many dotcoms worldwide, trying to get VC funds is no easy task. But for those companies with commercially viable business plans, tenacity, persistence and perhaps, a huge dose of luck, they may yet attract investors to their web businesses and become winners in the New Economy.