With a population of about 16 million people, Cambodia is often economically sidelined by its bigger neighbors, Vietnam and Thailand. But for a country where 60 percent of its population has no access to electricity, Cambodia has progressed leaps and bounds in technology. According to a recent Asia Foundation report, Cambodia witnessed a surge in mobile phone ownership, with almost all of its population owning at least one (one-third of these being smartphones).
So what is so interesting about the Cambodian market, especially in the startup scene? What opportunities are there for a small but sizeable market? I asked Cambodia-based founders for their insights.
Opportunities in the economy
Tourism as a major contributor
Tourism is a vital pillar of the economy. The country had over 5 million visitors in 2015, bringing with them about US$3 billion in hard currency.
Langda Chea, the CEO of BookMeBus, a ticketing platform for bus, taxi, and ferry services in Cambodia, sees the opportunity in this. Ninety percent of the company’s monthly ticket sales are sold to tourists, who are likely more familiar with ecommerce. He is confident that the local segment will boom in the next few years when more online and mobile payment solutions come to the market.
Steven Path, CEO of Pathmazing Inc., a software solutions provider in Phnom Penh with an almost 100-strong development team, also shares a similar story. His company built Tesjor, a tourism-related booking services app. With the rise of tourist arrivals, the app’s usage surges as well.
“Cambodia has a unique proposition for tourism in that it experiences highly concentrated tourist traffic […]. Almost all [tourist traffic] is guaranteed to pass through the town of Siem Reap which has less than a 100,000 population. This is a great reason for a tourism startup like us because we get high traffic in a small area, which makes penetrating the market much easier. We also have less competition compared to places like Bangkok which has high traffic, high competition, and [a] large area.”
In Mean also has a bullish outlook on tourism’s hand in the growth of the economy. According to him, both Phom Penh and Siem Reap are “booming thanks to tourist arrivals.” This creates a fast-growing real estate market, which prompted him to create KhmerHome.com, a portal that helps real estate agencies, developers, and homeowners manage their property online, taking advantage of the rising demand.
A young growing population
Cambodia is literally blessed with youth. A 2013 census in 2013 showed that 62 percent of Cambodians are under the age of 30. A further report on the internet and smartphone usage revealed that a third of Cambodians use Facebook, making the internet/Facebook the second most popular channel to obtain information after television.
Vichet In, CEO of Mediaload, recognized the changing media consumption tastes of the young and sought to capture this audience. His company runs Khmerload.com, a digital entertainment media. He shared his vision in disrupting the traditional media business by customizing and localizing content to serve millennials in short, written, and video formats.
The business environment
Talent acquisition and retention
Steven previously lived in the US, with 25 years of technology and entrepreneurship experience. However, when he returned to Cambodia eight years ago, his biggest challenge was finding world-class software developers. “It took a lot of mentoring and patience,” he said. “It certainly has paid off. Today, we have nearly a 100 all-Cambodian staff of developers, designers, architects, and engineers […].”
Vichet shared a similar journey. “When we first started, we found it difficult to recruit talent to work for us,” he said. “The retention rate was not good at first. As we grew, the retention rate got better and more and more talent [wanted] to work for us.”
Jamon said that dealing with authorities is always a long, expensive, and complex affair. He explained, “Whether it’s registration, paying tax, changing address, etc., everything is not straightforward, and you definitely need local help on this. Even with a local full-time handling it, it can take days to settle any particular issue and dozens of trips to various offices.”
Despite the administrative setbacks he encountered, he found the government was business-friendly. “They try to keep businesses open and other disturbances to a minimum,” he said.
Steven’s assessment is the same. He was able to build a regional software powerhouse without hindrances from the government or its regulations.
With regard to the country’s complex government regulations, he had this to say:
“I do my best to make sure the private sector continues to work side-by-side with the government to implement new policies and tax codes that will foster more tech startups and incentivize international tech giants to invest in Cambodia.”
According to Steven, the startup scene in Cambodia is vibrant and exciting, with many nascent sectors and with first-mover advantages still wide open. In his estimates, several hundreds of tech startups have launched in the past several years, with many more coming.
He observed that successful entrepreneurs were more than happy to share their experiences and challenges at incubation centers, universities, and various tech events. The mindsets of Cambodian entrepreneurs have quickly evolved from local to global in the span of a few years. Now, many entrepreneurs have regional expansion strategies in mind.
Jamon shared similar observations. According to him, the scene has sped up over the last three years. He observed that Smallworld, a startup community in the country, has undergone many iterations itself and has seen many batches of startups going on to build companies.
The character of the Cambodian entrepreneur contributes to the startup scene as well. This is what Jamon had to say regarding this:
“Many Cambodians actually have a really good mindset about working hard and being entrepreneurial to move themselves out of poverty. The younger generation is also creating its first batch of groundbreaking entrepreneurs who are not only able to navigate the political landscape but also integrate modern design [and] technology to be successful nationally.”
Langda shared that it is hard to find funding from local investors to invest in early-stage startups due to a lack of knowledge and trust. On the other hand, international investors think the market is too small and the regulations of the country too complicated, further weakening the availability of funding. With the lack of external funding, In Mean sees startup founders turning to their families and friends for funding or going overseas.
Since Cambodia is a small market, Vichet said he positioned his company as a regional one to attract international investors. He felt it was the key selling point to get 500 Startups to invest in his company. He also urged Cambodian startups to incorporate in an easier regime like Singapore, since investors are not familiar with the investment laws in Cambodia.
While there were no VC tech funds in Cambodia in 2016, Vichet believes 2017 will be an exciting year for tech entrepreneurs in the country. Smart Axiata, the leading Cambodian telecom, just launched its US$5 million dollar fund in March, which will likely contribute to the tech scene in Cambodia.
Here are the founders’ final thoughts on Cambodia.
Langda acknowledged the Cambodian entrepreneurs who take up the challenge and are passionate in solving problems. However, entrepreneurs need to expand overseas as the market is small. “To run a successful startup […] we do not only [need] money, but also resources, knowledge, and [a] network. Open up your mind and choose the investors wisely if you want to go beyond the border!”
Steven sees that Cambodia has a very young population that is hungry and often desperate for opportunities to turn their dreams into a reality. However, not all of these young entrepreneurs will be rewarded with capital, mentoring, and networking.
He advised those seeking funding to “make sure you believe in your business 100 percent, [are] ready to commit for the long term, and have identified the key players and partners to help execute your idea. And most importantly, make sure you’re ready to lead people and be the daily salesman of your business. I believe the seasoned investors will be looking at all these qualities and filtering the true entrepreneurs from the wannabes.”
This article is the 12th of the ‘Through local eyes’ Series, where local startups give their take on Asian startup ecosystems.
This article first appeared on Tech in Asia.