Eager to leverage on low-cost Internet technologies, international venture fund Media Development Loan Fund (MDLF) has acquired a 29 percent stake in Mkini Dotcom, the parent company of Internet daily Malaysiakini.com
MDLF's RM1.3 million investment into the Malaysian company is its first in an online media organisation, adding to its investments in radio, television and print media in other emerging markets.
The Prague-based venture fund, which specialises in investing in media organisations, said its interest in Mkini was to identify technological know-how which could be re-applied in other countries facing similar infrastructural constraints.
"We want to leverage on the tools developed by Mkini to help media clients in other parts of the world who may be interested in expanding the operations in the Internet," said Patrice Schneider, MDLF's chief investment adviser for new technologies and the Internet.
According to Schneider, some of the technologies developed by Mkini which had captured the attention of the fund included its innovative approach in introducing an e-coupon payment system to bolster its subscription model introduced last month.
"The e-coupon is a clear indication of how to move into a subscription model in markets where payment methods are not clearly defined," he said.
The alternative payment system has been introduced to enable users who may not have credit cards, to make online payments via stored value cards which are available from retail outlets.
Although other technologies have been developed in more advanced Internet markets, companies in emerging market may have difficulty using these technologies because of the high costs involved, explained Schneider.
"Many companies would find it difficult to find a revenue rational to justify the use of the expensive technologies and, therefore, fall into what is called a technology trap," he added.
Meanwhile, Mkini's chief executive officer Premesh Chandran welcomed the deal which will enable the company to address the growing international demand for reliable and cost-effective online publishing technologies.
"MDLF is the perfect partner for Mkini as it understands the goals of Mkini and at the same time is able to help the company in reaching global markets as well as assist in providing training," added Premesh.
He dismissed links to currency speculator George Soros whose foundation is one of the funds' many contributors.
"The MDLF has 15 key investors and the Open Society Institute (one of Soros' foundations) is only one of its many donors," stated Premesh.
Last February, Mkini came under intense criticism after funding for the company was allegedly linked to OSI.
Soros was blamed by Prime Minister Dr Mahathir Mohamad as being responsible for causing the Asian financial crisis via his speculative investments into the region's currency, which also allegedly caused the fall of the ringgit.
"The association was made through a long chain of organisations. It was simply a matter that grew out of proportion," Premesh explained today.
To assure readers of its independence, the partners also announced the signing of a separate agreement in which the MDLF agrees not to intervene with news arm, Malaysiakini.com's editorial policy.
" Malaysiakini is independent from the influence of the government or any other interest groups. So far, no other press have signed such agreements with their investors," said Malaysiakini.com editor-in-chief Steven Gan.
"We insist on the signing of this agreement with regard to all investors whether local or foreign," he added.
The Mkini deal represents the first investment by the MDLF in Malaysia. MDLF first worked together with Mkini via its media division Centre for Advanced Media Prague to develop new software.
The deal leaves a majority 61 percent stake in the hands of the company's founders, Premesh and Gan, with a remaining 10 percent allotted to an employees share incentive scheme.
Since its inception in 1996, the MDLF has invested approximately US$21 million in loans, equity investments and other types of financing in new media organisations. Its operations span more than 30 countries in Central and Eastern Europe, the former Soviet Union, Asia, Africa and Latin America.