Cambodia has a long journey ahead to see its first startup unicorn. Limited international exposure among founders and lack of investment in product development are key factors for Cambodia’s startups to expand beyond the nation.
However, there are programs and players to help nurture startups to tailor their products and services for scalability from the very early stage in a diverse startup ecosystem.
Building Cambodia’s tech talent pipeline
“Cambodia is a vibrantly young and growing nation. Youth under the age of 30 represent two thirds of the country’s population,” according to the United Nations Development Programme (UNDP) Cambodia.
There are no typical startup founders. Notably, though, there are startup founders who are enthusiastic, freshly graduated students and seasoned professionals who have worked in the private or development sector. The later who enter the startup community have usually seen the challenges in the sector they worked in. Despite having little technology background, they have a good understanding of customers’ problems. So, the biggest challenge is to bridge these two together for successful startups.
“This is very exciting as it brings a different type of startup entrepreneur to the ecosystem,” said Jitka Markova, a former Cambodia Program Lead of 500 Global, a venture capital firm with more than $1.8 billion in assets that invests in early stage tech startups.
Her role was to oversee Angkor 500 program in Cambodia, a partnership between the San Fransisco-based 500 Global and Phnom Penh’s Khmer Enterprise (KE).
Startup founders’ mindset
Most Cambodians who build startups have a lot of enthusiasm and positivity. However, too many come with a preconception that launching a startup is easy. They tend to think that anybody can do it, that a 2-hour a day working in a startup can make millions of dollars tomorrow.
Jitka, who mentors Cambodian startups, advised that
“there is a need to re-adjust this thinking and expectations.”
While startup founders often think building a startup is easy, they instead need to sacrifice something to be successful. Startup founders must have 100% commitment and singularity.
"The most promising entrepreneurs are the ones with more working experience, exposure to the world, and who have a strong passion for a specific industry, and the problem they are solving,” wrote Mélanie Mossard of ImpactHub in an email interview.
At ImpactHub, she works with young aspiring entrepreneurs to build an entrepreneurial mindset.
‘Startup’ and ‘founder’ have become synonymous among Cambodian tech talents and aspiring entrepreneurs. Now it is a new trend to celebrate the entrepreneurial spirit.
It’s here in Phnom Penh where the startup ecosystem has evolved with home-grown entrepreneurs leading the way. The last few years have seen diverse initiatives further transform the emerging economy of the Southeast Asian nation.
Catching up with the trend
The success stories of Singapore-based startup Grab and Delivery Hero’s FoodPanda have been excellent examples for startup builders and entrepreneurs in a country like Cambodia. Today, on the streets of Phnom Penh, homegrown PassApp and Nham24 are super busy with their transport and food/grocery delivery. These two startups began their journey several years before the global Covid-19 pandemic, preparing themselves to take on the sudden transformation as their market has grown organically and rapidly.
Home to less than 6 million people, Singapore’s startup ecosystem is valued at more than $25 billion, TechCrunch reported last year based on data from Startup Genome, the world-leading innovation policy advisory and research firm.
The ASEAN island city-state’s strategy for its ecosystem is for its startups to go global and be part of the next wave of unicorns.
As the region is on a new radar, beyond the Silicon Valley, for investors to track new unicorn startups, Cambodia is still building the framework for its digital economy.
By early 2022, the number of “internet users in Cambodia has increased to 13.44 million of the 17.06 million population, with 74.9 percent live in rural areas,” according to Simon Kemp, chief analyst at DataReportal, an online resources that explore evolving digital behaviours.
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Not to miss the train, Cambodia is on a mission to foster small and medium businesses (SMEs) and tech startups. How? By injecting the entrepreneurial energy to the pool of tech talent and startup founders, a new strategy from the top government ministry took shape. To transform early stage startups, the Cambodian Ministry of Economy and Finance (MEF) established Khmer Enterprise (also known as Entrepreneurship Promotion Center) in early 2019. With KE to execute the Entrepreneurship Development Fund (EDF), the aim is to help build a vibrant entrepreneurial ecosystem in Cambodia. Also an initiative of the MEF, Techo Startup Center offers a range of services to new startups.
Disrupted by the recent Covid-19 pandemic, the ministry in early 2022 pumped another $100 million to “provide further support for SMEs, agriculture and agro-industry sectors.”
In 2019, the Cambodian government already pledged $5 million to strengthen tech startups.
Just like anywhere in the world, its founders should lead the way, and it is the government who is the feeder of the ecosystem success.
In the past decades, it’s all about investment building the nation’s infrastructure and human capital to reach lower middle-income status in 2015. By 2030, Cambodia aspires to attain upper middle-income status, according to the World Bank.
Educating the emerging entrepreneurs and startup founders in Cambodia
At the heart of building entrepreneurship, education and support for startups are the catalysts for Cambodian startups to take the next big leap.
Then, the inception of Angkor 500 Global Accelerator Programme began. KE strategically partnered with 500 Startups, a venture fund and seed accelerator in San Francisco, to launch Angkor 500. The reason to have the Silicon Valley-based company as a partner for this pragmatic program is not a surprise, but straightforward. 500 Global’s grand portfolio is of more than 2,500 companies in 77 countries, with 120 companies valued at over $100 million and more than 30 companies valued as unicorns.
This Angkor 500 initial two-year partnership program aims to take Cambodian startups to keep up with the region. It’s one of Cambodia’s first government initiatives designed to promote startups in the country to go global.
In addition to government’s initiatives, there is a growing list of players who help support and mentor Cambodia’s startup founders of the future.
Public and private players like NUM Digital Economy Lab and Cambodia Academy of Digital Technology also spearhead the role of nurturing new cohorts of startup founders through their tailored curriculum.
In 2019, National University of Management launched NUM Digital Economy Lab by adding Digital Economy, Financial Technology and Smart City Planning Management. By offering Cambodia’s top graduated high school students to study how digital technologies can impact the Cambodian economy, this Phnom Penh’s lab is a similar model to the US Stanford Digital Economy Lab. Early this year, students started to learn about cryptocurrency trading.
Aside from well-established Institute of Technology of Cambodia (ITC) and Royal University of Phnom Penh that have their top tech talent now work for global companies like Google and Meta’s Facebook, new Cambodia Academy of Digital Technology (CADT) emphasizes more on growing talents by providing a degree in digital engineering and business, research and development. Early this year, CADT partnered with private Phillip Bank Plc to offer student loans for digital technology education.
The road ahead for Cambodia’s startups
Expanding beyond Cambodia
As Cambodian startups are good at designing products and services tailored for the local market, they have struggled to put themselves in the shoes of others in foreign markets. There is really a big gap to design a product market scalable for customers worldwide or in the region.
To truly have global mindset? It’s easier said than done. The stark reality is a lack of experience of doing business in other countries or working in big international corporations, reluctant to invest in product development, to re-adapt, and re-adjust. “Most startups in Cambodia have very limited ambition to go global and to be really global players,” added Jitka Markova. There are more reasons for this. Because they’ve achieved domestically, most startup founders feel that they’re already the kings of the kingdom. Cambodian startups are very focused on the local markets they can empathise.
To scale Cambodian startups to regional or global market, the essence is “exposure to these target countries and local experts. Until you spend time in a new country, it feels like a totally different world,” said Mélanie, an ecosystem builder in Cambodia.
Reasons to invest in Cambodia’s startups
Every investor is constantly looking for new emerging markets and new startup unicorns to invest. As they’re looking for the best of return of investment, it’s important for founders to think where do Cambodian startups need to be in order for them to be attractive for international investors to put money in.
“The startup ecosystem needs to support, grow, and develop strong startups and the founders that can stand against startup competitors in the region," Jitka told Kiripost.
The fundamental is every investor want to make the right choice in term of investment. So this is where the work is to make sure that there are strong startups that really make investors excited.
One of the key challenges for most Cambodian startups is not about being good at pitching. But, instead of coming to see the same pitches and numbers after a year time,
“investors want to see product market fits, month-to-month growth, more customers, increased revenue.”
Jitka, who in 2020 did a research study on ‘government support for technology start-ups in Cambodia, Thailand and Vietnam,’ sees “there are a lot of opportunities in deep tech, Artificial Intelligence (AI)-driven solutions, big data, automation, and inter-connectivity for startups in Cambodia.”
There are more reasons when it comes to investing in Cambodian startups. With many years working to grow startup founders, ImpactHub’s Mélanie said,
“Lots of emerging talents are growing. Keep an eye on Cambodia, the next 5 years will be very promising.” She added that “agriculture, energy access, and Edtech,” are among the top areas to watch.
So far, Phnom Penh-based tech startup Groupin got the biggest investment in Cambodia’s startup history. It raised a $5 million Series A funding round from Belt Road Capital Management (BRCM) in 2019. Groupin is the parent company of e-commerce Little Fashion and Mediaload. The company name stands for the family team of In, the first name of the co-founders of 3 brothers and a sister.
If the pandemic period has brought loss to local businesses and startups, there are signs that increasing local investing is unstoppable. The Cambodian Angel Investors Network (CAIN), the first in the country, began its operation in 2020. Initiated by its parent Cambodia Investor Club, CAIN wants to fill the gap of venture capital firms.
The early dawn of startups in Cambodia
Let’s walk down memory lane.
Hackathons, bootcamps, incubators, accelerators, idea competitions and STEM education are the informal ingredients to synergise the growing and vibrant startup community in the city of Phnom Penh.
Businesses like Smart Axiata and Cellcard, Cambodia’s Cambodia’s leading telecommunications operators, are key players in nurturing new startups.
The growth of co-working spaces in response to market-driven demands
As new emerging startup founders prefer shared office space for their teams to validate their ideas, so is the trend of offerings a desk with chairs with and without cubicle office space. Across the nation's capital city, co-working spaces have spread, albeit a few had to close down due to fierce competition and other reasons.
In major cities like Phnom Penh and Siem Reap, co-working spaces have transformed Cambodia to be an alternative choice to Thailand and Indonesia for startup founders and digital nomads. The private and non-profit sectors have contributed to the rise of shared office or co-working culture. Market demand-driven, this competition in the co-working space providers is an indicator of growing of new startups.
Both Impact HUB Phnom Penh and Raintree are active co-working places located in the central city. In mid 2017, Factory Phnom Penh’s co-working WS1 became an addition to a list of the city’s tech hub with a blend of work, life and play.
Since 2016, The Asia Foundation’s Tek4Good has provided innovators office space to do hands-on prototyping and testing. USAID funded Development Innovation to infuse a culture of innovation through its co-working space 5D Lab and Lab@DI between 2013 until 2019.
Hub Entrepreneurs Club, a vibrant community grown by ImpactHub Phnom Penh and BlueTribe, a UNDP’s virtual incubation program have added the much needed support to the ecosystem.
Techo Startup Center’s Taing Nguonly said at the National Startup Program launch late last year that “startups in Cambodia are still in need for support,” urging for “a strong inter-action among stakeholders to make the ecosystem is even more healthy and vibrant.”
How Phnom Penh became the hub of Cambodia’s startups
Based on a literature study by Srang Sarot, head of research of Dynamics and Control at Institute of Technology of Cambodia (ITC), the evolution of Cambodia’s startup ecosystem began in 2010 when a group of software developers and tech geeks founded coLAB (formerly the HackerSpace), Phnom Penh’s first co-working space.
In the early 2000s, the first of the series of community-driven tech events called BarCamp Phnom Penh, have also gathered tech people to exchange ideas and collaborate.
With more diverse startup ecosystem and more founders of the future, it’s the entrepreneurial mindset to tackle problems and go on to be successful that matters more. Unicorn or not is just a matter of time.