A $5 million fund has been approved to invest in Cambodian startups, thanks to the launch of a Fund Syndicate that aims to help angel investors pool their cash into new businesses.
Cambodian Angel Investors Network (CAIN) recently committed to invest in startups in Cambodia, with a focus on finance, agriculture related, service and technology sectors. Private equity firm CiC Capital Partners will handle the investment process and potential risk identification.
[ Investing in Cambodia’s future: when startups meet angel investors ]
Cambodian startups have difficulty raising funds locally, while others do not know where to find individual investors (known as angel investors) in Cambodia, said Heang Rasmey, CIC’s Accellerator Program Manager.
“Meanwhile, due to our experience working with angel investors, we also notice they still have limits on taking risk, since it is a bit too risky for them to invest alone in startups,” Rasmey said. He added that investors also have limited knowledge and experience to evaluate startups.
“Thus, CAIN initiated Fund Syndicate to encourage angel investors to pool their fund to invest in potential startups in the form of a syndicate when they cannot or do not want to invest alone,” he said.
In the syndicate form, CiC Capital Partners will handle the investment process and potential risk identification. Even though CiC Capital Partners mostly invests in small and medium enterprises (SMEs), the venture can use its practices to apply to startup investment, Rasmey said.
CiC Capital Partners is a subsidiary of Cambodian Investors Corporation Plc (CiC Plc), which focuses mainly on investing in SMEs, Impact Businesses, Technology Start-ups (Tech Start-ups) and other potential investment projects.
Rasmey said the Fund Syndicate will focus on the four main sectors of Finance, Agri-related, Service and Technology (called FAST) as they also align with preferable sectors of angel investors.
He urged businesses in these sectors and startups that have the potential to discuss with CAIN if they would like to pitch to network.
“From the angel investment perspective, we strongly believe that our ecosystem can produce more quality startups with innovative ideas and creative business models, which can commercialize their products and services in our local market as well as expand to regional markets,” Rasmey said.
However, he added that along with the expectation to create quality startups, it is essential to join the angel investing movement by creating more quality angel investors to ensure potential startups have sources of funds to raise whenever they need to and are able to discuss business ideas with potential investors.
Holding experience working with startups, Rasmey said most face a multitude of challenges besides fund raising. This includes having a niche-market business idea, which is hard to sustain in the long run, and issues with scalability in the future.
The other challenge relates to business management knowledge of startups because most of the entrepreneurs are fresh graduates.
“We can see they have difficulties with understanding business management, operation, sales and marketing, finance, planning, investment planning, etc. More than having just an innovative or creative business model, they also need to strengthen their abilities to lead their business forward,” he said.
Rasmey added that CAIN can be a big help for them because they have a lot of potential partners in hand through accelerator programs, incubator programs and a group of networks that connect to senior entrepreneurs that have years of experience and skills in leading a business, and a technical team to support them in planning especially in the fund-raising phase.
He said CAIN team will assist startups who want to pitch their business by coordinating pitch preparation to present their business ideas to angel investors and assist in linking them to experts or mentors (if needed) that are available in the CAIN network to give input and advice to refine their ideas and seek for funds to develop business, enhance business model, and reach their business milestone.
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