This article first appeared in Digital Edge, The Edge Malaysia Weekly on January 12, 2026 – January 18, 2026
As we step into 2026, there is a lot to unpack in Malaysia’s start-up landscape. Accelerators, corporate challenges and university innovation centres have multiplied. More local start-ups are getting funded, entering regional markets and winning competitions. Everyone involved has a reason to walk into the new year with their heads held high and a sense of momentum.
Start-ups are not only market vehicles, but also helping to tackle some of the world’s most pressing challenges, from inequality and financial exclusion to food security and the climate crisis.
Yet, innovation rarely follows a master plan. It emerges from many small bets, most of which will not scale, while a few generate outsized value. Outcomes tend to follow a Pareto pattern, in which a minority of ventures deliver the majority of the impact. To find those few, many experiments must run, and well-designed start-up initiatives are some of the most efficient ways to enable this at scale.
In Malaysia, however, most of this momentum remains concentrated in and around the Klang Valley. Capital, networks and flagship programmes are clustered in a few postcodes, while promising founders, innovative businesses and entire cities elsewhere operate with thinner support. This is more than a geographic imbalance, it is economic value left uncaptured.
Most serious start-up initiatives remain urban, while founders in smaller cities and rural areas face a patchwork of opportunities that are fewer in number and thinner in support. The result is a dual-track economy where innovation flourishes in one part of the country, while others remain locked out of higher value opportunities.
For governments, corporates, investors and universities, the challenge is strategic, not merely moral. How can we design inclusive, impactful start-up support in regions outside the main hubs that unlocks their economic and social value?
Who gets to solve which problems?
On paper, programmes are open to all. In practice, they still tend to favour founders with stronger education, higher incomes and city-based networks. That concentration is a missed opportunity.
Founders from smaller towns bring a different lens and deeper insight into local opportunities and constraints. Imagine start-ups in Kota Bharu, Kelantan, reshaping batik textile value chains, or ventures in the Bario Highlands in Sarawak applying more circular and sustainable models to rice farming.
Well-designed start-up programmes in smaller cities and rural areas can provide a structured, low-risk environment for individuals to explore ideas, test assumptions and access early support — critical first steps before a business can become viable.
Making this opportunity real requires deliberate choices in programme design. Outreach has to move beyond familiar networks so that women, first-generation graduates and other underrepresented groups actually hear about and consider applying.
Schedules that fit around work and care, modest stipends or travel support and mentors who understand local realities all widen who can participate and make entrepreneurship feel attainable.
From ideas to product market fit
Once a team moves from early validation to building a real business, the risks increase. Here, start-up refers to early-stage, innovation-driven firms, tech-based or otherwise, testing new products, models or markets under high uncertainty.
Many of these start-ups enter the valley of death, the gap between a promising concept and a business with product market fit and potential to scale.
At this point, support must go beyond short boot camps and one-off grants. Higher-touch programmes that embed mentoring throughout the journey are far more effective. Commercialisation pilots with corporates or public agencies can help founders prove their solutions in real conditions, accelerating trust and market entry.
Early funding, whether from grants, soft loans, angel investors or equity crowdfunding, is most effective when it is tied to clear learning and commercial milestones. The goal is not to shield ventures from risk, but to give viable ones enough runway to move through this stage and emerge as investable, resilient businesses.
Designing programmes that remove or lower practical barriers to launching and growing a business, including access to professional services, talent, and adequate physical and digital infrastructure, also helps level the playing field for ventures in smaller cities and rural areas.
The network around founders
Start-up programmes do not run forever. Cohorts graduate and funding cycles end. What lasts is the local network around founders, the ecology of institutions and relationships that decide whether entrepreneurship can take root and grow.
This is especially true in smaller cities and rural areas which, while less dense, often serve as economic centres for the surrounding districts.
Across Malaysia, many of these places already have the building blocks of strong ecosystems. Local governments, universities and polytechnics, and large corporations, from telcos and banks to plantations are present in some form. Each stands to benefit from a deeper start-up base through more resilient local economies, better graduate outcomes and more capable suppliers.
The strategic shift is to see these institutions not as isolated actors but as the backbone of a connected start-up ecology. When local governments, educational institutions, corporates, regulators and agencies coordinate around shared focal points, they can pool resources for programmes, events, commercial pilots and shared infrastructure.
Over time, this kind of coordination can grow into a more decentralised, networked ecosystem, with smaller cities and rural areas developing their own hubs while being better connected to each other and to larger markets. Building such networks can feel like planting seeds in the desert, but conditions do change, and when they do, the systems that prepare early will benefit most.
What sceptics get right and why inclusion still matters
Any push for inclusion in start-up programmes will meet scepticism. Policymakers worry about stretching limited budgets. Corporates and investors fear diluting focus away from the highest potential founders and sectors.
Sceptics are right that not every programme needs to do everything, and that place-based initiatives must be disciplined. Inclusive design is not an excuse to keep non-viable businesses alive, it is about matching instruments to realities, setting clear expectations and exiting what does not work.
This way, inclusion is not a social add-on to start-up policy, it strengthens the overall engine by widening the pool of founders and firms driving more resilient and inclusive growth.
Inclusion as strategy, not slogan
From 2026 onwards, inclusion should be treated as a core strategic lever. When more kinds of founders, firms and places are able to participate meaningfully, innovation spending is more likely to translate into productive enterprises, quality jobs and more balanced regional growth.
The pipeline of ideas and ventures becomes deeper and more diverse, portfolios are less exposed to a narrow set of sectors and locations, and the link between entrepreneurship, social mobility and long-term competitiveness becomes stronger.
Measuring impact is a key part of designing start-up support. Turnover and headline valuations have their place, but they tell only part of the story.
For many founders and places, especially in regions outside the main hubs, more relevant indicators are gross value-added, the quality of jobs created and the intellectual property built.
Focusing on these gives a clearer picture of whether start-up activity is strengthening local and regional economies. If you are serious about inclusion, change what you fund and what you measure.
The real choice now is whether start-up support continues to reinforce a narrow, urban slice of the economy, or is redesigned to tap the full spread of talent, firms and regions that can drive Malaysia’s next phase of growth. For a country that aspires to be both innovative and inclusive, the answer should be clear.
Ahmad Azuar Zainuddin is an educator, an entrepreneur and the CEO of Satu Creative, a consultancy working on advancing social innovation and creative economy growth across Asean.
