Five-year old Khmerload, a Cambodian entertainment news website modeled after the American media giant Buzzfeed, has become one of the country’s first local tech startups to attract the backing of Silicon Valley investors.
The company received $200,000 from 500 Startups, a global venture capital seed fund and startup accelerator based in Mountain View, California.
In Vichet, Khmerload’s founder and CEO, told VOA that the new investment will help international investors see the potential of startups in Cambodia, one of the poorest countries in Asia.
“When I worked on getting investment from Silicon Valley, one of my motivations was to show that a Cambodian could convince a Silicon Valley investor to have trust in a Cambodian-founded startup.”
But reaching out to a far away investor in Silicon Valley is not easy for a new startup, which also has to focus on making ends meet. Indeed, Khmerload struggled to attract interest.
“They have never seen a Cambodian tech company that can generate millions of dollars in the future. They have not experienced that. In addition, there are no technology investors in Cambodia yet, so we didn’t have anyone to go to. We didn’t know who to talk to.”
There are now more than 120 tech startups in Cambodia, along with some 10 co-working spaces in Phnom Penh and Siem Reap, according to Thul Rithy, founder of Phnom Penh-based co-working spaces SmallWorld and Emerald Hub. He says their potential is partly limited by a lack of interested local investors, who have yet to decide to take risks and trust the mostly-young entrepreneurs of a nascent tech sector.
Chea Langda, 27, is CEO of online ticketing website BookMeBus.com. The company is the first Cambodian startup to receive an investment. It did so from both local and foreign investors in 2016. As the company has grown, it has recently moved out of Emerald Hub to its own dedicated office space.
Langda says 90 percent of technology startups worldwide fail and from his experience so he appreciated that his funding came with business mentoring.
“I personally don’t have any background in business. My background is in IT. So when we start running a business, especially having to compete with other startups and booking platforms like us in other countries like Thailand and Vietnam, the competition is hard for us.”
Although there has yet to be a Cambodian success story in terms of a return on investment, there are signs local investors are paying attention to the potential of tech startups.
One of the first local investors is Chy Sila, CEO of Sabay Digital, one of Cambodia’s largest digital media and entertainment companies. He started investing in local startups in 2014 because he understood the potential of these companies and his own company also used to be startup. He believes local investors have a lot of money to invest because tech startups only require a little initial capital, but stand to make high returns. He says BookMeBus is an example of how he and other investors invested a mere $15,000 for a 15 percent stake in the company.
“Recently we invested into BookMeBus. Since early this year, their revenue has grown by 150%. That’s a lot for a small company. I think this is a successful first step. It is a benchmark, an example for others to see that sometimes this [tech] investment is small but with big returns, as as long as we choose the startups that have potential.”
Sila is an angel investor, an early investor who is important for helping promising startups grow. He, Rithy, and other investors have recently formed Corco Angel, a club of local investors interested in investing in the tech sector.
Smart CEO Thomas Hundt told VOA that all technology companies, including Smart itself, have to start somewhere. Through the new fund, he hopes to see more professionalism in Cambodia’s startup investment, like in other countries.
“We don’t want to give just money. We want to make sure that they are starting with a proper business planning, with a proper case study, financial reporting, etc. I mean a professional startup company. That’s going to make the first investment in April.”
In February, Smart also launched another program, the StartSmart Young Innovator Program, to help students work to develop business ideas in tech before they find a startup.
Steven Path, president of the ICT Federation of Cambodia, which represents the fledgling tech sector, is encouraged by the new trend of startup investment. He agrees that local investors will become less hesitant to invest once a Cambodian tech startup has delivered a big return to them.
“ICT is fairly new to the country. So local investors will require some education and maybe some proven success stories, before the locals will really embrace it. So for now it is more foreign interest.”
Both five-year-old Khmerload and two-year-old BookMeBus have yet to deliver big investment returns.
But the founders of both Cambodian tech startups are optimistic that the new startup fund by Smart Axiata, the new group of angel investors, and their own recent successes, will encourage local investors to start taking more risks investing in the country’s potentially lucrative young tech industry.
In Vichet of Khmerload explains:
“When they do that kind of investment, they also help Cambodia. Each successful startup business model can be scaled to a global level and a successful Cambodian startup can become global. So they can help young Cambodians expand their successful tech companies to other countries and help Cambodia’s whole economy.”
As investment in startups have gained traction, Cambodian technology education remains underfunded.