A Malaysian Auto-Parts Maker Tests a Blueprint to Back a Profit-First Debut Venture Fund

A Main Market-listed automotive parts manufacturer is testing whether corporate balance sheets can provide a new blueprint for Malaysian venture capital, backing a first-time manager with a strict profit-first mandate.

New Hoong Fatt Holdings Bhd has committed up to RM20 Mn as the anchor investor in Cypress Drive Ventures Sdn Bhd, the debut venture fund managed by Cypress Asia Sdn Bhd. This covers 40% of the fund’s RM50 Mn target and secures a formal role in its investment decisions.

New Hoong Fatt disclosed the commitment in a Bursa Malaysia filing on September 10. Cypress Asia’s founders later set out the fund’s targets and strategy in an interview with The Edge Malaysia.

Cypress Asia will target technology-driven Malaysian companies that are already profitable, or close to it, and provide funding for pre-Series A to Series A stages. Unlike startups that rely on progressively larger rounds to sustain growth, these companies should require no more than one or two additional funding rounds after Cypress enters the capitalisation table.

Talks between New Hoong Fatt and Cypress Asia ran for more than two years. New Hoong Fatt wanted a foothold in newer technologies and an income source beyond car parts, without pulling management away from its core manufacturing business.

How the Fund is Built

The arrangement sits between two familiar routes. A company or a wealthy family seeking exposure to start-ups can build its own venture arm or family office, or invest in an outside fund as a limited partner (LP), which typically leaves deal decisions to the manager. New Hoong Fatt is an LP, too, but not a hands-off one.

Xelia Tong, chief executive and co-founder of Cypress Asia, says she once pitched a dedicated corporate venture unit to the family that runs the group, but the company was not ready for one at the time.

Each Cypress entity has a separate role. Cypress Drive Ventures is the fund vehicle that holds investors’ capital and makes the investments; Cypress Asia manages those investments; and Cypress Asia Capital Sdn Bhd is the promoter named in the share subscription agreement.

New Hoong Fatt is investing through its wholly owned subsidiary Jhi Soon Manufacturing Industries Sdn Bhd, which signed the agreement on September 10 to subscribe for up to 20 Mn Class A redeemable preference shares at RM1 each.

This RM20 Mn commitment will be funded internally and paid in stages, as the fund requests funds to make each investment. The preference shares entitle New Hoong Fatt to distributions as investments are realised, including a return of capital, a preferred return and a designated share of the profits. Cypress Drive Ventures has a seven-year term, with an option for two successive one-year extensions, each subject to New Hoong Fatt’s explicit written consent.

The governance structure gives the corporate anchor a say in every single deal. New Hoong Fatt and Cypress Asia Capital will each nominate two members to the four-person investment committee.

Decisions require a simple majority, but that majority must include at least one vote from a New Hoong Fatt nominee, effectively granting the anchor investor a veto over every investment the committee considers.

Profit before the Next Round

Cypress Asia, which Tong co-manages with Sivapalan Vivekarajah, a veteran entrepreneur and angel investor, plans to invest RM1 Mn to RM3 Mn per company. It will start with five to seven investments, growing the portfolio to 10 to 12 companies if it raises the full RM50 Mn.

Vivekarajah noted the core objective is to identify businesses capable of reaching RM8 Mn to RM10 Mn in profit within five years, giving them a credible route to either a stock-market listing or a trade acquisition.

This sets a tough challenge because the thesis depends on finding companies whose unit economics already work, so that new capital accelerates an existing business instead of financing prolonged operating losses. The fund is not trying to eliminate follow-on funding, but its managers want subsequent rounds to support expansion, not survival.

A company capable of producing RM8 Mn to RM10 Mn in profit has more options than one whose valuation depends mainly on the next financing round, allowing it to become a more credible acquisition target or potentially approach the public markets without first passing through several additional venture stages.

The fund intends to remain sector-agnostic within technology-driven businesses, with electrical and electronics, automotive, digital health and agriculture among the main areas under consideration. However, it will steer clear of companies that rely heavily on state-government contracts, operate in highly regulated industries, depend mainly on e-commerce or sell purely software products such as human resources tools.

Cypress is open to leading a round, investing alongside another fund or joining an existing group of backers, provided the company meets the fund’s requirement for high capital efficiency.

Why New Hoong Fatt is in

The commitment itself was built in stages. New Hoong Fatt originally committed RM10 Mn, which it increased to RM12 Mn when Cypress applied to the Emerging Fund Managers’ Programme of Jelawang Capital, the national fund-of-funds owned by sovereign wealth fund Khazanah Nasional, at the end of 2024.

The programme required managers to bring in private money equal to 20% of a fund of at least RM60 Mn, and RM12 Mn met that bar. However, Jelawang did not pick Cypress, and the fund lost the chance of Jelawang’s investment, which could have been up to 30% of the fund.

Tong said New Hoong Fatt kept its commitment because it backed the two managers’ track record, not the hope of government co-investment. It later lifted its commitment to RM20 Mn.

That leaves Cypress raising outside the main channel for Malaysian venture money. Government agencies and government investment companies supplied about 40% of the RM6.10 Bn committed to Malaysian venture funds at the end of 2025, the largest single source, according to the Securities Commission Malaysia.

Corporate investors, the category New Hoong Fatt falls into, supplied about 28%.

That is a far bigger state role than in the US or India. American venture funds raise most of their money from pension funds, university endowments, foundations and family offices. In India, the government’s main channel, SIDBI’s fund of funds for Startups, said in March 2024 that its INR 9,500 Cr in commitments had helped the funds it backs raise another INR 56,000 Cr from other investors.

State money isn’t required, though. Managers register with the Securities Commission and can raise entirely from private investors, the route Cypress is now taking for the rest of the fund.

From Accelerators to a Fund

Cypress Asia is now looking to raise the remaining RM30 Mn from family offices and other investors.

Vivekarajah and Tong previously worked together at the accelerator ScaleUp Malaysia, where they invested in 38 companies. Vivekarajah also founded the Soonicorn Collective, a network for later-stage technology businesses. Tong previously held key investment roles at Malaysia Debt Ventures and Cradle Fund before her time at ScaleUp Malaysia and her tenure as chief operating officer of equity-crowdfunding platform pitchIN.

The fund expects to draw potential investments from these platforms, accelerators and other venture firms, aiming for its first investment committee meeting in November and its first capital deployment in the first quarter of 2027.

A Different VC Test

Fundraising remains only one part of the test for this new venture model. The strategy assumes Malaysia has a large enough pool of technology-driven companies that can turn relatively small amounts of external capital into substantial profits within five years.

It also puts intense pressure on company selection, as a RM1 Mn to RM3 Mn cheque cannot compensate for weak unit economics. A business requiring repeated rescue rounds would fall entirely outside the fund’s stated thesis.

If Cypress succeeds, other cash-rich Malaysian listed companies could follow New Hoong Fatt into venture funds. It would also show that a fund can earn its returns by selling or listing profitable companies, not by riding the valuation of each new funding round.