Logo of Phnom Penh Post newspaper Phnom Penh Post - Funding is the biggest hurdle for Cambodia’s technology startups




Funding is the biggest hurdle for Cambodia’s technology startups

Panelists answer questions during an announcement of the first three startups to receive investment through the $5 million Smart Axiata Digital Innovation Fund (SADIF) last November.
Panelists answer questions during an announcement of the first three startups to receive investment through the $5 million Smart Axiata Digital Innovation Fund (SADIF) last November. Hong Menea

Funding is the biggest hurdle for Cambodia’s technology startups

Funding for the tech startup scene in Cambodia has been growing, but challenges persist for young entrepreneurs hoping to attract investment for their nascent businesses.

Investment in the startup ecosystem in Cambodia has been dominated for several years by small amounts of seed funding, usually amounting to a few thousand dollars, awarded via small-scale competitions. Recently, however, large funds have begun to focus on promoting Cambodian startups with heftier financial contributions. Yet many local startup founders say they are still finding it difficult to attract investment.

Melanie Mossard, director of community at startup business incubator ImpactHub, said that a lack of funding is one of the greatest challenges that tech startups face in the Kingdom.

“We see three main challenges for startups in Cambodia . . . access to network, technical business skills and access to funding,” she said. “There are very few [funding] options available in Cambodia, but I am optimistic about the future.”

She added that the launch of the Smart Axiata Digital Innovation Fund (SADIF) last year, a $5 million venture capital fund focused on promoting funding for tech startups by injecting between $25,000 and $500,000 into each viable startup it selects, has opened up opportunity for the digital ecosystem in the Kingdom.

“Most [startups] choose to bootstrap their activities by using personal savings, friends’ or family’s money or grants they win in competitions,” she said. “But the recent launch of SADIF and the new network of angel investors coming into Cambodia show that a new range of funding is available.”

Kem Bora, investment manager at Mekong Strategic Partners, explained that SADIF had already invested in a number of local startups, and learned in its year of operation that the most successful startups are those with the most dedicated customer bases.

“There are a lot of players in Cambodia, but there are no dominating players here,” he said. “We have to ask how we can add value when startups here often face a set of challenges that can seem insurmountable.”

One of the challenges facing the tech scene in Cambodia is a lack of access to stakeholders, according to both Roman di Geronimo, co-founder of the tech-focused online media platform Geeks in Cambodia.

“Most of the startups in Cambodia are tech-based, and the digital landscape is booming,” said di Geronimo. “But it’s hard for some startups to find funding. So we are creating a platform called Startup Cambodia that will help partner stakeholders with startups and encourage growth.”

Lack of communication between startups and potential funders is not the only problem facing young entrepreneurs in Cambodia. Many startups do not exhibit the qualities that investors are looking for, according to representatives of multiple investment firms.

Witt Gatchell, senior investment manager at private equity firm Belt Road Capital Management, said his company aims to invest between $2 million and $7 million in regionally-based tech startups that have proven to be money-making ventures.

“You have to focus on revenue,” he said. “A lot of startups focus first on just growing their user base, but they need to focus on revenues early on so they are in a better position to raise capital and stay afloat.”

Without that profitability, Gatchell said, startups would be hard pressed to attract any form of investment.

Shivam Tripathi, managing director at investment firm Obor Capital, said his firm is currently looking for opportunities to fund tech startups in the Kingdom, but added that it is often difficult to find strong candidates for a heavy investment.

“Not many startups here are yet able to grow into big companies, because they have issues with scalability, or with their teams,” he said. “There’s plenty of people willing to invest $10,000 to $30,000 – that amount is easily available – but there aren’t many willing to invest hundreds of thousands of dollars here.”

While there are not many investors focused solely on injecting funding into tech startups in Cambodia, he said, it is likely that the investors already in Cambodia will begin funding the tech scene when they see strong candidates for funding arise.

“Few companies are looking to actively invest in Cambodia and there are not many dedicated funds,” Tripathi said. “But investors will come when you show them there is an opportunity for growth.”​

MOST VIEWED

  • Body of woman killed in Bangkok returns

    The Cambodian embassy in Thailand is working to repatriate the body of a casino dealer who was shot dead in Bangkok on Monday night. Ministry of Foreign Affairs and International Cooperation spokesman Kuy Kuong told The Post on Wednesday that officials are preparing paperwork to

  • Chikungunya hits 15 provinces, says gov’t

    Ministry of Health spokeswoman Or Vandine said on Thursday that the chikungunya outbreak in the Kingdom has spread to 15 provinces. Some 1,700 people are now suspected to have the disease. Vandine urged people to prevent its further spread by eliminating shelters for the Aedes aegypti mosquitoes

  • Gov’t exempts visa A and B holders from Covid fees

    Airline passengers who are diplomats and officials of international organisations holding Type A and B visas for travel to Cambodia are exempted from paying Covid-19 testing fees, said the Ministry of Health in its latest adjustment of rules on Wednesday. Health Minister Mam Bun Heng

  • Bill covering dress code draws ire

    Ministry of Interior secretary of state Ouk Kim Lek responded on Tuesday to criticism concerning a draft law that would ban women from wearing overly revealing clothing, saying that input from all parties will be considered as the law moves through the promulgation process. Several

  • Police arrest 29 Chinese for PP kidnapping

    Phnom Penh Military Police arrested 29 Chinese nationals on kidnapping charges on Wednesday. The suspects are said to have abducted three other Chinese nationals from a hotel in Chaktomuk commune, Daun Penh district. The operation took place on Wednesday and was led by two deputy commanders –

  • What’s the deal with Cambodia and China’s FTA?

    Cambodia’s Free Trade Agreement (FTA) with China kicks off a series of FTAs in future but for now, critics wonder what else the parties could bring to the table apart from what it already has to date By the end of this year, Cambodia