Cambodia will have to wait a long time to see its first unicorn startup. Lack of international exposure among founders and a lack of investment in product development are two major obstacles to Cambodian startups expanding beyond the country.
There are, however, programs and players in a diversified startup ecosystem are assisting startups optimise their products and services for scalability from the very beginning.
Cambodia is a Vibrant, Young, and Growing Nation
Cambodia has a vibrant market to support a substantial digital economy of tech-driven products and services, with a young population of around 26 years old, 50 per cent of its 16.7 million population owning a mobile phone, and internet penetration of 58 percent.
“Cambodia is a vibrant, young, and growing nation.” According to the United Nations Development Programme (UNDP) Cambodia, youth under the age of 30 account for two-thirds of the country’s population.
There are many typical founders of startups who are enthusiastic, newly graduated students as well as professionals who have worked in the private or development sectors.
Later-arriving members of the startup community are more likely to have encountered challenges in the industry in which they previously worked. Despite their limited technical knowledge, they have an excellent understanding of the issues that clients face. As a result, the hardest challenge is to connect the two for a successful startup.
The majority of Cambodians who start businesses are full of energy and enthusiasm.
Today, homegrown PassApp and Nham24 are quite active with their transport and food/grocery delivery services on the streets of Phnom Penh and Siem Reap. These two firms started their journey many years before the global Covid-19 pandemic, preparing themselves for the sudden change as their market grew organically and quickly. Start ups like, Homeapp, Tenbox, Sneha Centre, Krudmedia are thriving in Cambodian market.
Cambodia is building the framework for its digital economy, given the fact that the region is on a new investor radar for potential unicorn startups.
By early 2022, Cambodia’s “internet users” had grown to 13.44 million people out of a total population of 17.06 million, with 74.9 percent of those living in rural areas.
Support from the Government and Private Sector
Cambodia is on a mission to support small and medium-sized enterprises (SMEs) and technology startups. A new approach from the Government took shape by injecting entrepreneurial energy into the pool of tech talent and startup founders.
The Cambodian Ministry of Economy and Finance built an Online Business Registration System, using the Cambodia Data Exchange (CamDX) system.
The online portal and digital service is available at Registrationservices.gov.kh
Incentives for Investment
In October 15, 2021, Cambodia promulgated the Law on Investment (LoI) to create an open, transparent, and predictable legal framework to attract and encourage quality, effective, and efficient investments in Cambodia by Cambodians and foreigners.
The LoI encourages investment in key areas and activities, primarily through a tax-related system of basic incentives, extra incentives, and special incentives.
Any sector or investment activity with a strong potential to contribute to Cambodia’s national economic development may be eligible for special incentives outlined in the Law on Financial Management.
The Law on Investment (LoI) applies to “Qualified Investment Projects” (QIPs), “Expanded Qualified Investment Projects” (EQIPs), and “Guaranteed Investment Projects” (GIPs) registered with the Cambodian Development Council (CDC) or Municipal Provincial Investment Sub-Committees.
Contact Council for the development of Cambodia for more information and help: https://cdc.gov.kh
Khmer Enterprise: Promoting Cambodia’s Start-up sector to the World
The Cambodian Ministry of Economy and Finance (MEF) launched Khmer Enterprise (also known as Entrepreneurship Promotion Center) in early 2019 to transform early-stage startups.
The Entrepreneurship Development Fund (EDF) will be implemented by KE with the goal of assisting Cambodia in developing a strong entrepreneurial ecosystem. Techo Startup Center is another MEF initiative that provides services to startups.
Due to the recent Covid-19 outbreak, the ministry infused additional $100 million to support SMEs, agriculture, and the agro-industry sectors in early 2022.
The Cambodian government has already pledged $5 million to boosting tech startups in 2019.
Even though the pandemic period resulted in losses for local businesses and startups, there are signs that local investment is unstoppable. In 2020, the Cambodian Angel Investors Network (CAIN), commenced its operation. CAIN was founded by its parent company, Cambodia Investor Club, to solve a gap in the venture capital market.
Large companies like Smart Axiata and Cellcard, Wing Bank , Prince Holding Group, and business consultants like Phoenix Lab Asia are playing major role in the development of new startups.
Coworking Spaces are Becoming Incredibly Common
The trend of providing a desk with chairs, with and without cubicle office space is growing as new emerging startup founders prefer shared office space for their teams to validate their ideas.
Co-working spaces in major cities such as Phnom Penh and Siem Reap have transformed Cambodia into a viable alternative to Thailand and Indonesia for startup founders and digital nomads.
The rise of shared office or co-working culture has been supported by both the private and non-profit sectors. This competition among coworking space providers is a sign of the growth of new startups, as it is driven by market need.
Conclusion
For startups in Cambodia, there are numerous opportunities in Deep Tech, AI-driven Solutions, Big Data, Automation, Interconnectivity, Healthcare etc. There are many more advantages to invest in Cambodian startups. There are a lot of new talents on the rise. Keep a watch on Cambodia in the next years; it has a huge amount of potential.
