Is the startup ecosystem in Cambodia ripe for a new era of growth?
A deep look at the anticipated tech boom in Cambodia. And how it can support the local Startup ecosystem of Cambodia
I recently wrote about whether the startup ecosystem in Laos, Cambodia was ready for a unicorn. Turn our attention to Cambodia today and hence explore if it’s ecosystem is ripe. For example the exponential growth as recently seen in Indonesia and Singapore.
Adopting a top-down approach; We will briefly analyse Cambodia’s macro-economy before exploring deeper if the population is ready for the tech boom. Lastly, we will dive in to explore whether the ecosystem is strong enough to cultivate and support this growth.
Rocketing economic growth
According to World Bank statistics; Cambodia’s economy is spearheading the economic boom in the region with an average GDP growth rate of eight per cent. Between 1998 and 2018, making it one of the fastest-growing economies worldwide. As a result, Cambodia reached a lower-middle-income status in 2015 and the government aspires to attain upper-middle-income status by 2030.
All these statistics paint the picture of a booming economy ready to take on the powerhouses of the region. The startups will play a key role in the transformation.
However, these macro indicators only represent the economy as a whole. Therefore, we will need to explore deeper if the anticipated tech boom can be supported by Cambodians.
Also Read: Global Startup Ecosystem Report 2019 | startup ecosystem
With a staggering 47 per cent of the population aged under 25, Cambodia’s greatest asset lies in its youthful population. Combined with a mobile and internet penetration rate of 120 per cent and 84 per cent respectively. It is safe to say tech-savviness resides among the top traits of the population. Instrumental to this growth? Cheap data plans.
With 4G data plans starting at US$1 for 10GB. It is small wonder why seemingly everyone in Cambodia utilises a smartphone. Hence access to internet and its wide outreach. The sky is the limit for Cambodia as it looks to technology to drive its next phase of growth.
What’s stopping them
The young local demographic and high mobile usage statistics certainly shows that Cambodians are tech-savvy and therefore, would be receptive to tech disruptors in the local startup ecosystem.
BookMeBus is leading the new wave of local tech startups in this charge. Started by Chea Langda in 2015, BookMeBus has since grown exponentially from an initial bus ticketing platform to providing full-suite SaaS (Software as a service) incorporating data analytics and marketing support for other transportation methods such as ferries and taxis.
Successfully won over its domestic market, BookMeBus now covers routes in neighbouring countries such as Vietnam and Thailand. They seeking to create accessibility and link the Kingdom closer to the region. With the vision to eventually build an ecosystem around transportation in ASEAN, the sky is certainly the limit for them.
Perhaps more telling is the fact that Cambodia has shown that it is able to produce successful startups. For instance that are ready to take on the region.
Therefore, it has been tough for B2C tech startups to provide the optimal consumer experience. Hence with both exorbitant payment processing fees and limited digital payment outreach hampering their overall service.
Similar to how successful entrepreneurs view difficulties as opportunities. This problem looks ripe for fintech startups offering digital payments to enter the fray and solve it.
Given the success of digital payments in Indonesia; it is not surprising that more than 50 new startups have entered to capture what could be a future goldmine.
The scarcity of mentors is a by-product of the relatively young startup ecosystem present in the Kingdom. Due to a lack of entrepreneurs with experience in the field of building and scaling a startup successfully; budding founders have few mentors to turn to for advice in times of need.
Given that research has shown that mentorship is one of the most important needs for a startup to succeed. The fact that over 50 per cent of founders have zero or very infrequent mentorship is chilling. I have felt the uncertain environment startups operate is due to the novelty of the problems they solve. This makes it even more important for mentors to be present in the ecosystem. Hence they can provide experienced guidance for these young entrepreneurs. Where more than 80 per cent reported to be working on their first startup project.
Despite the above-mentioned challenges faced by the startup ecosystem. There has been steps in the right direction to nurture startups in Cambodia. Corporate giants such as Axiata, Toyota and Grab have sponsored incubator-like programmes and hackathons. With a bid to provide young entrepreneurs with the platform to pitch their ideas and resources to assist in the implementation.
Regulatory frameworks in the Kingdom have also assisted in priming the ecosystem for growth. Over the last three years, the government has introduced significant policy initiatives. Aimed at propelling the tech sector and startup ecosystem to the next level. Looking at the five-year national development plan announced in 2018, an initial vision of Cambodia’s digital economy was panned out.
National Entrepreneurship Fund, with an aggregate capital of US$5 Million, was launched in 2019. They took government funding dedicated to the tech startup ecosystem to US$12 Million. Therefore, by virtue of the amount of resources poured in the build-up the ecosystem. It is clear that policymakers view startups as the next key driver for economic growth in the country.
Eyes on Cambodia
Overall, despite the young startup ecosystem in Cambodia being inexperienced. Local consumers taking time to warm to new technologies. It is ripped and ready to usher in a new era of growth. The ecosystem has been receiving increased government support. Hence both financially and in the way of policies.
Furthermore, the increased attention from others in the region has led to the creation of a conducive environment for investors to enter. And boost the confidence of budding entrepreneurs to take the leap and create startups that would ultimately fuel Cambodia’s economic growth.