A new accelerator program FYT101 has been launched to support high-growth startups and innovative SMEs with education, mentorship, and financing all the way from inception through until an Initial Public Offering (IPO) on the Cambodia Securities Exchange (CSX).
The initiative is a venture between back office support specialist Fourmi Rouge, brokerage firm Yuanta Securities (Cambodia) and top ITD Certified Trainer and serial entrepreneur Tommy Sim. The program will initially focus on startups in the technology sector.
FYT101 is unique from larger incubator initiatives as they only target top applicants they believes have the ability to grow into a company that can be listed on the exchanges “Growth Board”.
In addition to guiding startups to the end stage of an IPO the program also helps founders structure to develop their business plans, running daily operation and reach company milestones, which in turn to be investable company and attract funding from potential investors such as angels, venture capitalists, and private equities.
The CSX Growth Board was introduced in 2015 in addition to the Main Board and was designed for small and medium enterprises (SMEs) as a fundraising option after complaints of fundraising problems for investment and working capital.
Co-Founders of Fourmi Rouge Liv Bonito and Ly Leangseanghor told Cambodia Investment Review that the program offers an intensive program and then works with founders from registering the company, structuring the company properly, setting up necessary legal paperwork, complying with accounting and tax law to answering common questions that founders may have.
“FYT101 has been designed to help young startups with their backend requirements such as accounting, tax and compliance with Cambodia business law. Many young entrepreneurs may have a great idea or fantastic coding skills for example, that they should focus on.” they said.
“However, when it comes to accounting, tax and compliance these are details that many startups fail to implement properly and subsequently struggle to obtain investment funding in the medium to long term because of it, they added.
Despite launching over 6 years ago the Growth Board has one approved IPO as many SMEs have citied auditing concerns and too many regulation requirements which has made listing unattractive despite the government announcing favorable tax advantages.
Managing Director of Yuanta Securities (Cambodia) Kyung Tae Han told Cambodia Investment Review that an important aspect of IPO besides raising capital from the public is becoming a reporting company to the public, disclosing all the financial, operational, and organizational information.
Han added that compliance is in a broad sense to meet the requirements of transparency as a public company. As long as the company is transparent, public investors can make informed decisions for their investments.
“There are generally accepted standards recommended and required for publicly owned companies, but it takes time, commitments and money for the management and business owners of privately owned companies to restructure the organizations and implement the standards within the company,” he said.
“It is often the issue of being compliance with the standards that put many local businesses off going public,” he added.
The major requirements for listing on the Growth Board are that shareholders’ equity should be more than 2 billion riels ($500,000) in comparison to the Main Board’s 30 billion riels ($7.5 million) minimum. Potential listings also require either a positive net income for the latest year or positive operating cash flow or gross profit margin of 10 percent and/or more.