Among the other reasons, according to start-up founders who spoke to Channel News Asia (CNA), are cheaper rental rates and a slightly slower pace of life compared with Kuala Lumpur.
One person even said Penang was a good testing ground as it was difficult to get Penang people to part with their money. If a product succeeded here, it could succeed elsewhere, he said.
The existence of the free industrial zone in Penang, started about 40 years ago as the free trade zone by former chief minister Dr Lim Chong Eu, has laid the foundation for these start-ups to prosper.
This is because several multinationals had, and continue to have, manufacturing facilities here. Some of those who worked at these plants have now ventured out on their own, including involving themselves in start-ups.
The CNA report quoted state investment promotion agency InvestPenang general manager Loo Lee Lian as saying: “In the past, a lot of our focus was on manufacturing, and a lot of our start-ups were in manufacturing.
“The engineers who were working in the MNCs felt that they could do things on their own better than being employed by the MNCs, so they came out and started their own manufacturing companies.”
The report quoted local start-up community builder Curry Khoo as saying this technology background made Penang one of the best places to run start-ups in hardware and the Internet of Things(which is made up of devices – from simple sensors to smartphones and wearables – connected together).
Khoo, who set up Tech Events 4 Penang (TE4P) in 2012, was quoted as saying that an increased interest from investors and overseas start-ups in Penang had given the government confidence to pump in even more support for start-ups.
InvestPenang’s Loo said the Penang government started @CAT, an accelerating platform for emerging tech start-ups and entrepreneurs, in 2015.
“We converted the top floor of a very old historical building into a co-sharing space, which we let at very minimum or zero cost for community events. We also have a lot of events and conferences that are going on, where we try to showcase the Penang start-ups as well.”
Loo added that, looking ahead, InvestPenang saw many opportunities in the Internet of Things, hardware and software integration.
“Penang could use the intelligence from the manufacturing sector that has been a base for us over the last 40 years, then develop that together with the Internet of Things, so we could be a hub for that,” Loo told CNA.
The report notes that the federal government, too, is encouraging start-ups, including by the establishment of the Malaysian Global Innovation & Creativity Centre (MaGIC), aimed at creating a supportive, collaborative and inclusive start-up ecosystem.
The report also quotes the experiences of founders of several start-ups in Penang.
One of them, Leong Shir Mein, of online food delivery portal DeliverEat, was quoted as saying that Penang was a “safer” place for start-ups to test their ideas before moving on to larger, more competitive markets.
This, he said, was because “it’s not easy to convince people to part with their money in Penang. This is a good learning platform to leverage before being eaten alive in places like KL”.