Cambodia Investment Review

Investment Strategies for Cambodian Startups During Economic Challenges: Insights from the Techo Startup Center Digital Business Expo 2023

Investment Strategies for Cambodian Startups During Economic Challenges: Insights from the Techo Startup Center Digital Business Expo 2023

Cambodia Investment Review

Amidst challenging economic conditions, the Techo Startup Center Digital Business Expo 2023 offered a critical platform for dialogue and insights into the startup investment landscape in Cambodia. The event, featuring a panel of industry experts, delved into the complexities of the current market environment, investment strategies, and the future of startups in the region.

Bora Kem, a Partner at Mekong Strategic Capital, commenced the discussion by painting a picture of the current macroeconomic challenges facing startups. He noted the stark reality of low liquidity, a global economic slowdown, and rising interest rates, which have particularly acute implications for developing economies like Cambodia. “The era of pursuing growth at any cost is over,” Kem stated, emphasizing a market shift towards more sustainable growth models.

Bora Kem, a Partner at Mekong Strategic Capital.

Despite these challenges, Bora expressed optimism about the future. He pointed to the potential for growth, especially with the advent of affordable digital infrastructure and AI. “Local startups should consider how to use these tools to operationalize and build a local business model in sectors that lack innovation,” Bora advised.

He also noted the transformative effects of digitization in traditional firms and the increasing involvement of younger generations in modernizing family businesses. Concluding his opening remarks, Bora said, “Because we are no longer in a hype cycle, entrepreneurs can be more focused on building sustainable businesses with more patience and long term perspective.”

Good Governance & Data Is Key For Investors

The panelists, each a prominent figure in the investment community, brought diverse perspectives to the table. Michael Chon from ADB Frontier highlighted the dual strengths of their fund: the expansive network of a major bank and the nimble, on-the-ground capabilities of a smaller fund. Uk Remi of OBOR Capital discussed their unique investment range of $500,000 to $3 million, a segment often overlooked due to its challenging dynamics in terms of energy input versus return on investment.

Read more: RG & CIR Start-Up and Innovation Festival 2023 – The Best Ways to Raise Startup Funding in Cambodia

Max Thornton, representing Satori Giants, shared their innovative studio concept, focusing on providing startups with operational support, compliance assistance, and sales strategy development, all underpinned by a growing media network. Chea Vuthy from Incofin Investment Management emphasized the role of technical assistance and leveraging international networks in aiding the growth of firms.

Max Thornton, representing Satori Giants.

A key theme that emerged was the mutual understanding needed between startups and investment funds. Chea Vuthy stressed the importance of authenticity in impact investment, avoiding the pitfalls of “impact washing” by backing claims with solid data and compliance. Thornton revealed their strategy of forming partnerships with experienced operational experts and local corporates to facilitate access to funds through a permanent capital vehicle.

Fundraising strategies were another focal point. Michael Chon advised startups on the importance of establishing a strong track record or demonstrating a promising pipeline, particularly in impact investing where data and structured governance are crucial. Uk Remi emphasized the need for startups to present a strong team, solid financial statements, and a robust compliance framework to attract investment, highlighting the importance of a clear exit strategy in Cambodia’s small market.

Technology and AI Key Trends For 2024

Looking ahead, the panelists shared their vision for the next 24 months. Chea Vuthy advised startups to be clear and client-centric in their objectives. Max Thornton spoke of the long-term perspective, encouraging startups not to be disheartened by the current funding environment, and to prepare for increasing regional competition. Michael Chon emphasized the shift in investor focus from top-line revenue and customer acquisition to operational efficiency and structured growth. Uk Remi suggested that startups fortify their foundations and seek support from government and SME resources.

Read more: Aquarii Workshop Addresses Navigating Challenges & Embracing Growth Opportunities to Prepare SMEs For Investment Readiness

For 2024, the panelists expressed optimism, particularly about the potential of technology and AI. Chea Vuthy looked forward to advancements in digital business operations, while Max Thornton highlighted demographic advantages in Cambodia and neighboring countries. Michael Chon noted the potential for local product development and export, and Uk Remi mentioned forthcoming services in investment readiness programs.

Chea Vuthy from Incofin Investment Management.

The Techo Startup Center Digital Business Expo 2023 shed light on the nuanced realities and strategies in startup investment during challenging times. The insights offered by these industry leaders not only addressed the present difficulties but also charted a course for resilience and growth in the Cambodian startup ecosystem. As the discussions at the Expo revealed, while the path ahead is fraught with challenges, it is also laden with opportunities for innovation and strategic adaptation.

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