Cambodia Investment Review

Give a Day: Cambodia’s impact investment funding trends towards growth and diversification

Give a Day: Cambodia’s impact investment funding trends towards growth and diversification

Harrison White

Leading impact investors and entrepreneurial support organizations have gathered to discuss the Kingdom’s impact investment landscape highlighting the need for Cambodia to diversify sector investment and better align with government agenda.

The well attended event featured keynote speaker Tommy Boukhris from Emerging Markets Consulting – Boukhris gave an overview of impact investing in South East Asia providing an in-depth presentation mapping the current market trends of impact investment in Cambodia and the region.

To read more about the recent AVPN meet up click here.

Investment mapping enables entrepreneurs to maximize how they use funds to advance shared goals, by identifying and aligning both existing and new funding streams to amplify their impact.

Impact investment landscape in Cambodia

According to data provided by Bourkisi in his presentation, the regional value of the market size of impact investing is estimated to be $715 billion. From 2017 to 2019 there was a 62% average year-on-year growth in impact capital invested by regional Private Impact Investors (PPI) while in Cambodia there were eight PPIs with a combined investment of $55 million.

Boukhris stated he believes this growth trend for Cambodia should continue adding that diversification of sectors was the next market trend as Cambodia’s own economic diversification continued. Currently, Cambodia’s financial services sector, specifically microfinance has accounted for almost all PII impact deals and capital deployed, he said.

Give a day
Sokhuy Lay from event organizaer Swisscontact opened the event.

Cambodia’s Development Finance Institutions (DFI) major players included the Asian Development Bank, International Corp, and FMO with an average ticket size of $27 million to $44 million in 2012, with deal values increasing in 2018 and 2019 to over $50 million.

That said, almost 70% of the total number of DFI deals and over 85% of capital was deployed as debt with a large part of DFI investments flow into on-lending institutions (banks, MFIs), for large scale energy projects, traditional agriculture businesses where debt is better suited for investment.

Attracting more quality impact investment

Boukhris also commented that creating an enabling environment of peace, infrastructure, and good governance remained vital for Cambodia rising the economic development pyramid.

Boukhris added that health, education, and infrastructure as well as sustainability remain the pillars of opportunities for quality investment. Centralized incubator and accelerator programs with a purpose are needed, they should be linked to a broader national strategy and direction.

To read more about priority sectors for FDI in Cambodia click here.

Tommy Bourkisi from Emerging Markets Consulting gave an overview of impact investing.

“Addressing factors such as weak or non-existing liquidity is a major barrier to investment flow with unreasonable demands to their borrowers and a highly volatile environment impeding returns both major factors,” he said.

“Leadership and government support are must needed to develop an effective policy for capital inflows with a regulatory framework designed for improving access of impact entrepreneurs to capital. While, increasing the positive coverage of mainstream investors who have put capital into Cambodia and encouraging more to be involved through increased confidence,” he added.

Solutions to ongoing problems

Group discussions then centered around three main questions on the form of pre-seed capital, innovative finance options, and right fit capital for entrepreneurs.

Some of the key group takeaways included that investors should work in separate sectors to avoid an overcrowded market, create a universal platform for investment needs and opportunities, and long-term support for entrepreneurs with organizations moving away from small short-term grants.

Key challenges presented for pre-seed and seed capital are grants and prize money are impacting on long-term viable business ventures as well as a lack of collaboration between impact investors and entrepreneurs for the right fit capital.

Proposed solutions and recommendations were stated as more funding for long-term business plans and developing mentorship programs for assisting to scale up a business and invite actual entrepreneurs to workshops and events.

The ‘Give a Day’ initiative was launched after a successful pilot program implemented with EuroCham in 2021 and is supported by Khmer Enterprise, USAID’s WE Act project through Pact, and Swissscontact.

To read more about the Give a Day initiative click here.

Group discussion centered around how to improve the impact investment ecosystem.

This event was the second of 10 planned workshops designed to improve Cambodia’s entrepreneurial support organizations (ESO) network was held last week as development partners aim to better connect the local start-up ecosystem.

Developing the local start-up community is considered key for Cambodia to achieve its aims to reach upper-middle-income status (GNI per capita between $4,036 and $12,475) by 2030.

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