A Silicon Valley of the East: Penang’s thriving start-up community

A Silicon Valley of the East: Penang’s thriving start-up community

Drawn by a slower pace of life, family-friendly environment and lower cost of living, a growing number of start-ups are choosing to set up shop in Penang. Lianne Chia finds out what the place has to offer.

PENANG, Malaysia: It is barely 10am but the Piktochart office in Bayan Lepas, southern Penang, is already buzzing. A yoga class has just ended and staff are getting to work in the large, open-plan office painted a cheery shade of yellow. But if a break is needed, a massage chair, foosball table and lots of board games are kept in an adjacent space.

For co-founder Goh Ai Ching, creating a great company culture and a healthy work-life balance is key. “I came from a corporate background and I really didn’t feel very good about having to deal with one-and-a-half-hour-long PowerPoint presentations,” she said. “Six years ago when I quit my corporate job in Kuala Lumpur, I wasn’t quite sure what start-up I wanted to do. But the number one thing I was sure about was that I didn’t want to drag my feet to work every day.”


Piktochart has set aside a space in its office for staff to take a break if needed. (Photo: Lianne Chia)

The slower pace of life and more family-friendly environment that Penang offers are among the reasons why Goh chose to return to her hometown to set up Piktochart, an infographic design platform for non-designers.

And despite being based in what some may call a “second city” in comparison to places like Kuala Lumpur or Singapore, Piktochart has grown from strength to strength - in just four years, the platform boasts more than five million users from 184 countries.

Piktochart is not alone; a growing number of successful start-ups appear to be making Penang their home base.


COMPARATIVE ADVANTAGES

Being away from the hustle and bustle of the capital city has helped Goh stay focused. “When I lived in Kuala Lumpur, commuting from place to place for meetings could take up my whole day, and being away from all that helps distract us less, which is really important when building a business,” she said.

She added that being in Penang also helps stretch her dollar further. “In Kuala Lumpur, I spent all my money on food, drinks, cafes and going out … it was really expensive to live there.

“Rent here is also much less than in Kuala Lumpur ... my friends tell me that in Kuala Lumpur, I can expect to pay, on average, five times more per square foot.”

And while being away from the buzz of larger cities may not be everyone’s cup of tea, Goh said this has worked in her favour when it comes to manpower.

“I found that in Kuala Lumpur, poaching and job-hopping is so common,” she said. “But if somebody has made the choice to relocate to Penang, they’re likely very serious about Piktochart, and our retention figures are good and healthy.”

Penang can also be a “safer” place for start-ups to test their ideas before moving on to larger, more competitive markets, according to Leong Shir Mein of online food delivery portal DeliverEat. “It’s not easy to convince people to part with their money in Penang,” explained Leong. “This is a good learning platform to leverage before being eaten alive in places like Kuala Lumpur.”

Leong and her husband, Tan Suan Sear, developed an automated food delivery system with three apps, for customers to place their orders with various restaurants, for restaurants to know what to prepare, and for delivery riders to let them know where to pick up and drop off the food orders. Today, DeliverEat is Penang’s market leader in food delivery.


Riders from DeliverEat set off on their food delivery runs. (Photo: Lianne Chia)

But far from playing second fiddle to larger cities like Kuala Lumpur, Penang has its own unique selling point - a strong base in manufacturing and hardware.

SILICON VALLEY OF THE EAST

The establishment of a free trade zone - now called the Free Industrial Zone - in Bayan Lepas more than 40 years ago drew many big-name multinationals like Intel, AMD and Hewlett Packard to set up shop in Penang.

This strong base in manufacturing has, according to state investment promotion agency InvestPenang, led to Penang becoming known as the “Silicon Valley of the East” - and also stood the city’s thriving start-up community in good stead.

“In the past, a lot of our focus was on manufacturing and a lot of our start-ups were in manufacturing,” explained InvestPenang’s general manager, Loo Lee Lian. “The engineers who were working in the MNCs felt that they could do things on their own better than being employed by the MNCs, so they came out and started their own manufacturing companies.”

Its background in technology has, according to local start-up community builder Curry Khoo, made Penang one of the “best places to run start-ups in hardware and the Internet of Things”.

SOLVING ITS OWN PROBLEMS

It was a bumpy road for Khoo when he began his first start-up back in 2000. “It was really not easy,” he said. “Even though we were funded by corporates, we didn’t even last a year.”

“And then we realised that places like Singapore, Kuala Lumpur and even other cities in the US are successful because they have strong communities with meet-ups, support, and this also attracts talent and investors to the cities.”

So instead of travelling to other cities to attend networking events, conferences and meet-ups, Khoo decided to take matters into his own hands and bring the events to Penang. That was how his movement Tech Events 4 Penang (TE4P) was born in 2012.


Born and bred in Penang, Curry Khoo is a mainstay of the start-up community in the city. (Photo: Lianne Chia)

Today, the self-styled tech hippie is a mainstay of Penang’s burgeoning start-up community. And having solved one problem in Penang’s start-up ecosystem, he is now moving to plug another gap with his new initiative, Second Startup.

“Now that the local tech community is up and running by itself, it’s time for us to level up,” he said. “If we look at the really new, early-stage start-ups, where is their support and who do they go to? Corporates usually prefer to look at those who have a bit of traction because if the start-up is too new, the risk is too high."

We want to focus on empowering the early-stage start-ups … this is where I’d like to come in,” he added.

MORE SUPPORT

An increased interest from investors and overseas start-ups in Penang has given the government confidence to pump in even more support for start-ups, added Khoo.

At the federal level, the Malaysian Global Innovation & Creativity Centre (MaGIC) hopes to create a supportive, collaborative and inclusive start-up ecosystem that is accessible by everybody nationwide.

It runs initiatives like the e@Stanford programme, which gives Malaysian entrepreneurs the chance to visit Stanford and Silicon Valley for two weeks to learn from industry experts and expand their network.

According to MaGIC, there is “growing demand and strong participation” from people in Penang for its programmes.

The CRADLE fund, which is an agency under the Ministry of Finance, was also established to provide funding to early-stage start-ups in Malaysia.

It was this support that Shir Mein from DeliverEat said helped tremendously.

“When we first started out, we didn’t know much ... we just Googled funding in Malaysia and landed on CRADLE,” she said.

“It forced us to refine our ideas further, and actually sit down and do a business plan,” she added. “If we had not gotten the grant, we probably wouldn’t have done so much homework, but it’s good homework to do and better to do it earlier rather than later.”


Co-founders of DeliverEat Tan Suan Sear and Leong Shir Mein. (Photo: Lianne Chia)

NEXT STEPS

Inspired by Singapore’s JTC Launchpad, the Penang state government started @CAT, an accelerating platform for emerging tech start-ups and entrepreneurs, in 2015. “We converted the top floor of a very old historical building into a co-sharing space, which we let at very minimum or zero cost for community events,” said InvestPenang’s Ms Loo. “We also have a lot of events and conferences that are going on, where we try to showcase the Penang start-ups as well.”

She added that looking ahead, InvestPenang sees many opportunities in the Internet of Things, hardware and software integration. “Penang could use the intelligence from the manufacturing sector that has been a base for us over the last 40 years, then develop that together with the Internet of Things, so we could be a hub for that.”

But beyond this, Khoo believes there is untapped potential in the area of medical tourism. “Medical costs are getting higher and higher, and even in this small city, we have four to five private hospitals here,” he said.

“It makes sense for a lot of people to come down here for their medical activities, and then you extend your stay to enjoy the food and street art in George Town.”

He is also hoping to find a way to merge creative art with technology through refurbishing an old bus depot in the heart of George Town. The space, Hin Bus Depot, currently houses several art galleries and cafes.


Curry hopes the refurbished Hin Bus Depot will give tech start-ups and creative people the chance to network under the same roof. (Photo: Lianne Chia)

“We want to get two different crowds coming under the same roof ... the geeks and nerds together with all the creative people,” he said. “We’ll provide them with tools and networks like mentorship, funding and connections.”

“When we have different people from different backgrounds under the same roof, amazing things could start to happen.”

Source: CNA/lc