After 27 years in Malaysia’s startup trenches, Sivapalan bets on profitability over hypergrowth with Cypress Drive Ventures

KUALA LUMPUR, 10 OCTOBER 2026 —

Dr Sivapalan Vivekarajah has launched Cypress Drive Ventures Sdn Bhd, a new RM50 million venture capital fund designed to prioritize profitability and long-term business sustainability over the hypergrowth models that have historically dominated the global startup scene.

The new vehicle, managed by Cypress Asia Sdn Bhd, marks a significant strategic pivot for the veteran entrepreneur, who is leveraging nearly three decades of experience in Malaysia’s startup ecosystem to address what he identifies as structural flaws in the local funding architecture.

By anchoring the fund with a RM20 million commitment from Old-economy company New Hoong Fatt Holdings Bhd and co-founding the initiative with Xelia Tong, Sivapalan aims to create a capital structure that supports founders in reaching specific financial milestones rather than merely chasing market share.

The establishment of Cypress Drive Ventures follows a period of professional disappointment for Sivapalan, whose application to become a partner in Jelawang Capital’s Emerging Fund Managers Programme was rejected in 2025. Rather than viewing this rejection as a setback, Sivapalan channeled the experience into the creation of his own independent fund.

This move reflects a broader shift in his investment philosophy, one that rejects the "fund and flip" mentality often associated with Silicon Valley-style venture capital. Instead, the fund’s thesis is built around helping startups achieve RM10 million in net profit and ultimately securing an exit through a stock-market listing. This approach is intended to attract founders who are committed to building durable businesses rather than those seeking quick liquidity events.

Sivapalan’s decision to launch the fund is rooted in a detailed diagnosis of why Malaysia has produced so few companies of genuine regional scale despite billions of ringgit flowing into the ecosystem over the past two and a half decades. He identifies three primary structural problems that have hindered the sector’s progress. The first is the history of inconsistent and poorly conceived funding policies.

Sivapalan notes that government funding was often channelled through agencies run by finance executives who lacked entrepreneurial backgrounds or startup experience. These administrators attempted to instil a Silicon Valley mentality without understanding that Malaysia is not Silicon Valley, leading to numerous failures in policy implementation.

The second structural issue is the inconsistency and scarcity of available capital. Sivapalan points out that funding availability has fluctuated, with some years offering ample resources while others were marked by scarcity. The total number of funds in the market has been too low, and many of those that did exist were risk-averse. This combination meant that promising startups often could not secure the necessary capital to grow.

When the available funds are divided across a 25-year period, the amount is insufficient to cover the high costs of regional expansion for the potentially 1,000 companies that might have had the capability to scale. Some funds, including those under Penjana Kapital and Jelawang, struggled to deploy capital because they failed to raise the required matching-fund commitments, a process Sivapalan describes as terribly difficult.

The third challenge is the complexity of regional expansion. Sivapalan argues that the Malaysian market is too small to support large-scale growth on its own, but expanding into the rest of Southeast Asia is complicated by the lack of a single, homogeneous market. Each country in the region presents different languages, cultures, regulations, and affordability levels.

These complexities make regional scaling difficult and expensive, requiring higher levels of funding that have historically been unavailable in Malaysia. He cites Carsome as one of the few Malaysian startups to build a genuine regional footprint, noting that it raised almost US$200 million (RM818.62 million) to achieve this presence. This example shows the massive capital requirements for regional success, a threshold that most local funds have not been able to meet.

Sivapalan’s perspective on the current startup environment is shaped by the belief that the conditions for success have fundamentally changed over the last decade. He argues that a decade ago, growing markets, more opportunities, and less competition meant that a B+ founder could still build a successful company. Today, however, capital is harder to raise, growth is slower, and competition is fiercer.

The rapid advancement of artificial intelligence is further reshaping the technology landscape, raising the bar for entry. Consequently, Sivapalan believes that only A+ founders will succeed in the current climate. This shift in standards informs the Cypress Drive Ventures thesis, which demands that founders build real businesses, reach profitability, conserve cash, and be prepared to play the long game.

The fund’s strategy is a direct response to the perceived gap between the quality of Malaysian startups and the capital available to them. Sivapalan suggests that while funding has often been cited as the main problem, the deeper weakness may lie in the quality and ambition of the companies being produced, as well as their inability to become regional leaders.

He notes that although there have been various government grants, government-backed VCs, angel incentives, and initiatives like ECF and Penjana Kapital, the cumulative effect has been diluted by time and inconsistency. The new fund aims to provide a more focused and consistent source of capital for startups that are ready to prioritize financial discipline over rapid expansion.

Sivapalan’s journey in the ecosystem began in 1999, and he has been a consistent presence in the sector ever since. He was a founding member of the Technopreneurs Association of Malaysia (TeAM) in 2003 and later played a leadership role in the Malaysian Business Angels Network (MBAN). In 2019, he was involved in a key government task force focused on strengthening Malaysia’s startup funding architecture.

Through initiatives such as Proficeo and the Coach & Grow Programme, he has mentored and coached a generation of Malaysian founders. His academic background also reflects his deep engagement with the sector; he pursued a PhD at the University of Edinburgh in 2004, becoming the first student from Southeast Asia to enter the programme.

His written work further illustrates his long-term focus on the mechanics of startup value creation. Sivapalan has authored or co-authored three books spanning innovation, startup valuation, and the journey from startup to scaleup. These works mirror the issues he has spent much of his career analyzing: how entrepreneurs create value, how investors judge that value, and what it takes to build companies that last.

This body of work provides the intellectual foundation for his current investment strategy, which emphasizes sustainable growth and financial viability.

The involvement of New Hoong Fatt Holdings Bhd as an anchor limited partner with a RM20 million commitment signals a potential shift in the relationship between corporate Malaysia and the startup ecosystem. Sivapalan has previously noted that corporate Malaysia has been a disinterested and distant party, with few large corporations acquiring startups in recent years.

The participation of an established company in the new fund may indicate a growing recognition of the value that profitable, well-managed startups can offer to larger enterprises. This partnership could help bridge the gap between the startup world and the traditional corporate sector, providing a pathway for startups to integrate into established business structures.

Cypress Drive Ventures represents a new chapter in Sivapalan’s career, one that is defined by a pragmatic approach to venture capital. By focusing on profitability and long-term value creation, the fund aims to address the structural weaknesses that have plagued Malaysia’s startup ecosystem for decades. The fund’s launch is a testament to Sivapalan’s enduring optimism and his belief that with the right capital structure and investment thesis, Malaysian startups can achieve sustainable success.

As the fund begins its operations, it will be closely watched as a potential model for how venture capital can be adapted to the specific challenges and opportunities of the Southeast Asian market.