Cambodia Investment Review
Rising Giants (RG) and Cambodia Investment Review (CIR) inaugural Start-Up & Innovation Festival Cambodia 2023, featured its first speaker panel discussion on the “Key issues impacting venture capital in Southeast Asia”. The sold-out event took place on April 8 at FACTORY Phnom Penh and brought together leading players in the startup space from Cambodia and Southeast Asia.
Read more: Cambodia’s Inaugural RG & CIR Start-Up & Innovation Festival 2023: A Resounding Success
Moderated by Bora Kem of Mekong Strategic Capital, the panel included Jeremy Au of Monk’s Hill Ventures, Ollie Forsyth of Antler, Frédéric H. Proulx of Haystack, Chhor Sophanak of IG International Group, and Tean Ly of Seeva Capital.
Venture capital dead or evolving
The discussion began with Bora Kem asking the panelists whether venture capital was dead or evolving. Jeremy Au of Monk’s Hill Ventures responded, “Venture capital is about forming an alliance with brilliant founders who see the future and working together with patient capital to build that future. We’re entering an age of sober patient capital, working in partnership with founders, governments, and engineers.”
Frédéric H. Proulx of Haystack emphasized the resilience of Southeast Asian entrepreneurs, saying, “They understand the value of real businesses and cash flow. If entrepreneurs can focus on practicality, bootstrap as much as possible, and learn from their failures, they have a significant advantage.”
Ollie Forsyth from Antler explained how the sector is reshaping itself: “We’re seeing VC going through a cycle of reshaping how it will look in the future, with the rise of micro funds offering more targeted support for founders. There’s so much opportunity in Southeast Asia, and we’re excited to back anyone who has an idea.”
Tean Ly of Seeva Capital highlighted the importance of a hands-on approach for investors in Southeast Asia: “It’s important for investors to be hands-on and flexible with the type of financial instruments they offer to startups. Providing responsible capital and technical assistance to help nurture and grow companies is key to achieving a good return on investment in the region.”
Unique approach taken by VC firms in the region
Chhor Sophanak of IG International Group shared his perspective on the unique approach taken by venture capital firms in the region. “Apart from financial support, these firms also provide mentoring and guidance to businesses, focusing on their potential for growth and expansion. This holistic investment approach is seen as crucial in Cambodia, where companies often require additional support in areas such as human capital development and scaling,” Sophanak explained.
Read more: Challenges and Opportunities of Investing in Cambodian Startups
Proulx of Haystack spoke about learning from traditional business practices, noting that entrepreneurs can gain valuable insights by observing small-scale vendors in local markets. “This practical, hands-on experience can be as crucial to success as formal education,” Proulx argued.
Jeremy Au of Monk’s Hill Ventures discussed the increasing trend of digitization across various industries. He shared, “Venture capital firms are exploring the digitization of traditionally non-tech sectors, such as agriculture and manufacturing. This approach presents unique opportunities and challenges for businesses in Southeast Asia, as they look to extract and generate value through new technologies.”
Addressing the question of whether non-tech entrepreneurs should seek investments from venture capital firms, Tean Ly responded affirmatively, stating, “Most of our investments are in agri-processing and manufacturing. Investors are committed to helping businesses digitize their operations, regardless of their sector.”
Red Flags and market transparency
During the audience Q&A, Forsyth mentioned that a lack of transparency, not listening to feedback and first-round investors not investing in second rounds are significant red flags during the fundraising process. Proulx added that founders need to balance confidence and humility, while Au emphasized the importance of trust-building and being transparent about challenges.
Sophanak discussed the importance of startups entering the digital world, noting that technology is vital for enhancing business processes and value in various industries. Proulx mentioned the role of Singapore in helping Cambodian entrepreneurs establish a strong base before expanding to other countries.
Regarding operating in an environment that’s not fully transparent, Proulx highlighted the importance of partnering with countries that have well-established banking systems, such as Singapore, Korea, and Japan. Tean Ly added that building a network of local contacts in the industry and conducting due diligence is crucial to making informed investment decisions in countries where access to public data is limited.
When asked about sectors of interest, Tean Ly mentioned agri-processing and light manufacturing contributing to climate and gender impact as relevant to Cambodia and Laos. Forsyth expressed excitement about the creative economy and generative AI. Au emphasized opportunities in local to global markets, local economy-focused businesses, and education.
Female entrepreneurs and inclusion
Addressing gender-related concerns, Forsyth mentioned Antler’s commitment to supporting female founders through dedicated community groups and global operator networks. Au highlighted Monk’s Hill Ventures’ equal representation of women in their company, senior investment team, and portfolio companies.
Read more: Cambodian women entrepreneurs graduate with new business skills
Proulx shared his belief in the importance of female representation in management and decision-making roles however did not believe in the need for quotas. Tean Ly emphasized the importance of considering the gender lens at various levels, including management, board, supply chain, and product levels.
As the moderator, Bora Kem concluded the discussion by emphasizing the need for an inclusive framework and reducing inherent biases in investment decisions. “We must ensure that everyone, regardless of gender or background, has equal opportunities to succeed and access to funding. As the venture capital landscape evolves, adaptability, resilience, and collaboration will drive growth and innovation in Southeast Asia,” Kem said.
The Start-Up & Innovation Festival Cambodia 2023 highlighted the importance of practicality, mentoring, and digitization in guiding entrepreneurs toward success. It also showcased the commitment of venture capital firms in Southeast Asia to fostering growth and innovation in the region.
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