Recognizing the transformative potential of market-based financing for SMEs, ICMR previously conducted a comprehensive study titled “Market-based Financing for Malaysia’s SMEs: Issues, Challenges, and Way Forward“. One of the key findings from the study is that enhancing market-based financing for SMEs is critical for a more diversified financing ecosystem, especially given their susceptibility to changing credit market conditions. The lack of market-based financing can be a binding constraint for many SMEs’ growth and innovation, as well as the need to increase their focus on digitalisation and ESG efforts for their financial resilience in the post-pandemic landscape. The other important finding is that the motivations for SMEs or startups to access finance in the form of market-based financing, specifically equity financing compared to bank-based financing, differ in that SME and startup owners are less inclined to dilute their ownership if not for the growth prospects and other forms of capacity-building and ecosystem support offered, not available with traditional debt financing.  

The report also highlighted that beyond financial capital, SMEs and startups require various forms of capacity-building and ecosystem support, including talent development, networking, mentoring, and enhanced market access. One of the key insights on talent development is the talent deficit that exists within SMEs themselves, which can act as a major barrier to growth. Hence, this paper delves further into the overarching issue of talent development, particularly within the context of SMEs and startups. 

In the dynamic landscape of SME development, talent development encompasses initiatives to nurture a skilled workforce equipped with the expertise needed to drive innovation, adapt to changing market demands, and fuel growth within SMEs. The talent gap significantly limits their potential for innovation and growth, making it crucial to address this issue. However, current approaches to talent development are falling short in meeting the needs of the current market demands. Given that a proficient workforce forms the bedrock of SME ecosystems, this paper places talent development at the forefront of the discussion. It examines the challenges of talent acquisition within the SME landscape, drawing key insights from the ICMR study and proposing actionable recommendations.  

To address these challenges, the paper explores talent development through multiple channels, including MSME development programs, mentorship via incubators or accelerator programs, and the pivotal role of universities in breeding the talent pool required by the ecosystem.  

Through these insights, our aim is to strengthen Malaysian SMEs and the broader financial ecosystem, guiding them toward resilience and prosperity in a dynamically evolving economic landscape. 

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