The ninth edition of Give a Day has featured several of Cambodia’s leading startup financers to discuss innovative financing models in supporting Cambodia’s entrepreneurs as well as a flagship presentation on the current ecosystem.
The event collaborated with Khmer Enterprise’s Entrepreneurial Ecosystem day at Sokha Hotel in Phnom Penh attracting over 100 attendees including the Permanent Secretary of State and Minister attached to the Prime Minister H.E. Vongsey Vissoth.
An overview of Cambodia’s startup ecosystem
Sopheara Ek Managing Partner at the research and business consultancy firm BDtruS presented the current state of Cambodia’s startup ecosystem highlighting there was more than $20 million of investment in the ecosystem up to 2021.
According to the presentation, some of the key challenges facing Cambodia’s startups are limited information on investment funds or investors, lack of financial records, lack of knowledge and experience in deal negotiation, and lack of a legal understanding of the due diligence process.
Key challenges facing investors are lack of qualified and investment-ready opportunities, lack of effective marketing to connect to startups, unregistered business, overvalue of the enterprise by startups, and lack of proper financial structure and planning.
The majority of Cambodian startups were in the fields of Fintech, Media & Advertising, and E-Commerce & Logistics while there were limited companies covering health, education, and agricultural technology.
Innovate financing models for startups
After the presentation, an expert panel discussion was moderated by Swisscontanct Country Director Rajiv Pradhan commenting on the importance of mutual trust between entrepreneurs and investors and the innovative financing models now available.
The panel discussion featured:
- Sabine Joukes Country Director and Chief of Party of Pact Cambodia
- Suy Sokraksmey, Member of the Investment Committee of ID Investors
- David Ray, Country Director of The Cambodia Australia Partnership for Resilient Economic Development (CAP-RED)
- Kong Somphyvatanak, Investment Manager at Khmer Enterprise
Sabine Joukes explained that with support from USAID Pact’s the WE Act project was launched in 2018 and is focused on young female entrepreneurs by hosting ecosystem forums adding collaboration within the ecosystem was key.
“Utilizing partnerships with development organizations such as Swisscontact and Khmer Enterprise as well as working with over 20 actors within Cambodia’s ecosystem We Act aims to assist women startups, as male counterparts are not as supported,” Sabine said.
“For us providing finance for women entrepreneurs for us, it is also about broader financial management. In addition, our organization has been working with financial institutions to allow female startups that are unregistered to access loans without collateral,” she added.
Suy Sokraksmey from the licensed financial management firm ID Investors said that the group worked hard to set its investment criteria focusing on the local SME sector and is looking to explore more collaborations. Additionally, the group was focused on companies at the growth stage as opposed to the ideation stage.
“Our investor association now has over 120 business members and has supplied over 20,000 job opportunities to the market so when talking about innovation we use the pool of trust from our members,” Sokraksmey said.
“The concept is that we look at companies that our members will be investors as well as potential customers. The three main sectors we target are real estate, services, and logistics with a ticket size of between $100,000 and $5 million available through many different financing options,” he added.
A focus on technology is key for innovation
David Ray, who is relatively new to Cambodia and head of Australia’s newly established AUD 87 million development project CAP-RED will be focused on developing Cambodia’s agriculture processing capabilities and investing in critical infrastructure, especially in water.
“From my short time in Cambodia, my main first impression is the need to diversify trade and increase enterprise investment. Cambodia is a new energetic player with youthful energy however is relatively unknown even in a regional context,” he said.
Reflecting on the recent growth of Cambodia’s economy Ray spoke about the structural changes that have occurred in the labor market as people moved from agriculture to the manufacturing sector adding there is an ongoing concern about productivity recommending a focus on technology to drive innovation and long-term growth.
“As Cambodia looks to graduate from least developed status this decade some of the major challenges moving forward for the country is finding its place between two major regional economies of Thailand and Vietnam, the eroding of trade privileges and a very undiversified export sector,” Ray said.
“At CAP-RED we want to find ways where we can assist Cambodia to move towards the technology frontier. Cambodia is a small market but a lot is going on with many development partners and from first impressions, there is a lot of duplication across the sector. However, above all else the key is ensuring Cambodia’s regulatory environment has the levers right for these SMEs to thrive,” he added.
Public relations has been important
Kong Somphyvatanak spoke about his experience being part of Khmer Enterprise which has now been operating for three years and has driven strong collaboration to help both the local ecosystem go to the next level.
“At Khmer Enterprise public relations has also been a key element that has allowed more people to learn about Cambodia’s developing entrepreneurial ecosystem both in the country and regionally,” he said.
“In addition, we are trying to reduce duplication from development partners in the ecosystem by providing support to establish more connections such as through these Give a Day events and pooling funds between funders,” he added.
The Give a Day program is funded by Khmer Enterprise and implemented by USAID’s WE Act Project through Pact Cambodia and Swisscontact. Monthly meetings are designed to create a routine and space through which ESOs can learn more about each other’s work and differentiate their programs.