Cambodia’s nascent start-up scene is on the brink of booming as the country’s bright young sparks tap into the growing wealth of opportunities in the Kingdom. Marissa Carruthers finds out more. Photography by Lim Sokchanlina.
“I’ve noticed a lot of changes,” says Kongngy Sav, founder of My Dream Home, surrounded by the interlocking Lego-like bricks he has created in a bid to solve the country’s growing issue of affordable housing.
My Dream Home is one of an increasing number of Cambodian start-ups that are taking up the challenge of creating their own company. And as a new breed of entrepreneur emerges, hopes are high that this wave will elevate the country’s economy while providing a platform for future generations to shine.
Propelled by a series of factors – budding entrepreneurs inspired by the success stories of start-ups abroad, an increase in creative thinking and a rise in facilities and initiatives targeting the sector – the country’s start-up scene looks set to explode in the next few years.
“I believe with higher internet penetration and digital use, the fact the economy is growing, the government is much more supportive, as is the private sector and universities, is all very promising,” says Mélanie Mossard, director of community at Impact Hub.
“All of these are important stakeholders, who are playing a big role in developing this entrepreneurial eco-system.”
Sowing the Seeds
“We’ve been planting the seeds and expect to see the results in the next few years,” says Mossard.
In 2015, Impact Hub opened its doors in Phnom Penh as one of the capital’s most successful co-working spaces, business incubators and social enterprise builders.
Noting the swathe of NGOs in the country – Cambodia has the second most NGOs per capita in the world after Rwanda, according to the Cooperation Committee for Cambodia – its ultimate aim was to look at ways of taking a business approach towards these organisations, and creating profitable businesses with a heart.
“This was a bit of a new concept for Cambodia,” says Mossard. “Our first desire was to inspire and raise awareness about social entrepreneurship and connect stakeholders. We wanted to enable aspiring entrepreneurs to start a business by providing training, mentoring, access to networks and working space.”
Impact Hub – previously Social Enterprise Cambodia – quickly started shaping the market by hosting a variety of events and programmes aimed at helping budding entrepreneurs validate their ideas, prototype them and build a strong business plan that makes them stand out from their competitors.
“One problem in Cambodia is we see a lot of copycat businesses,” says Mossard. “But the creative mind set is something we see growing.”
And it is this development that has helped move the start-up scene along nicely. “Young people are beginning to understand more about starting their own business and are more interested in creating a unique venture,” says Sav. “Globalisation is helping with the ideas that they want to implement, which is good.”
Following in the footsteps of Impact Hub’s opening came a series of other co-working spaces and incubator hubs, such as Emerald Hub; each bringing with them their own expertise, programmes, events and competitions to help develop the scene to the next level. However, Adrienne Ravez, co-founder of Geeks in Cambodia, an online platform targeting the sector, said this created an oversupply in options. “There was a period where a lot of stakeholders created incubators and there was a lack of balance between the number of entrepreneurs that were ready and the number of resources. As an investor, it was difficult to find start-ups to fund.”
Other challenges included the fact that many start-ups were not registered, meaning even if they caught the eye of a potential investor, they could not receive any funding – and funding a few years back was scarce.
“Four years ago, the scene was very different to today,” says Sav. “For example, there weren’t many angel investors and locals could only get the advice from foreigners. Now, there are local role models here for young Cambodians to follow and much more information and help available.”
While starting a business in Cambodia is nothing new, it is the country’s younger generation who are pushing entrepreneurialism to the next level.
“By nature, Cambodians are very competitive and entrepreneurial,” says Tomas Pokorny, who founded payment and lifestyle app Pi Pay with another foreigner and three Cambodians.
“They have it running through their blood; it’s in their DNA. But there is a big difference between the woman running a coffee cart and starting a company.”
With 63.5 percent of the population under the age of 30, according to data from UNDP (United Nations Development Programme), the country’s growing economy, education increasing and opportunities for young Cambodians to travel abroad, the country’s creativity is also rising.
According to Ravez the majority of start-ups tend to focus on technology. “They can see the success stories in Silicon Valley,” she says. “So, we see a lot of ideas relating to mobile apps, websites and e-commerce.” Educational and social enterprises are other sectors that are surfacing, with the social aspect presenting a swathe of business ideas.
“The most promising start-ups are the ones that have impact,” adds Ravez. “NGOs are really part of the economic landscape and have influenced the youth. Often, when they want to launch a business, even if they want to make money, they also want to have an impact on their country. I haven’t seen this in other countries in the region. I think it is one of Cambodia’s fortes.”
And it is this sector that Impact Hub is nurturing. Mossard says the main profile of their members and those who sign up to programmes are young Cambodians who speak English, have been exposed to foreign countries for exchange programmes or short educational trips, and care passionately about their country.
“They want to do something that helps society but don’t want to be involved in the NGO world,” says Mossard. “In the last two years, Cambodians see that they might not have received all the knowledge they need from universities, and go out to develop their soft skills through volunteering and community-based projects and see a lot.”
Despite the over-supply of co-working spaces, plans are being formulated for them to work together to create a “pipeline” to jointly provide the best entrepreneurial support.
Universities are also getting in on the action. For example, Impact Hub ran a programme 18 months ago with the capital’s institutes, giving talks and inviting successful entrepreneurs to share their experiences in the hope of inspiring a new generation of start-ups.
“We are planting seeds,” says Mossard. “When we run a programme, we don’t expect all of them will be entrepreneurs and raise investment in the next year. It’s such an early stage market that you need to plant seeds first and develop the entrepreneur mind set. We believe we will start to see the results of this investment within the next few years.”
The reality of entrepreneur life is often very different to the dream of making a fortune and being your own boss.
Hard work, family pressure and gruelling hours are a must, with no guarantee of success at the end.
One of the major challenges Cambodians face is a negative response from the family.
“In Cambodia, the culture is more orientated towards community and family spirit,” says Ravez. “Being an entrepreneur means that for a few months or years you’re not going to be profitable, your salary won’t be big and you won’t count the hours of work. Some families may not be ok with that or understand this individual mind set.”
This was an issue that Sav faced when launching My Dream Home. Inspired during a trip to Australia at the end of 2013, he returned to his homeland, quit his job as a social researcher and started looking into how he could solve the Kingdom’s lack of affordable housing using an interlocking brick system that is similar to Lego, hugely cutting costs.
It took 18 months to research, recruit a team, develop a prototype and test the market before launching in May 2015. During that time, he was without a salary, investing his seven-years’ of savings.
“I worked with no salary for more than two years,” he recalls. “It was really hard and not easy to convince my wife and kids that we are going to do something for society, we know we are going to lose some money but in the future, we may make it back.”
Other challenges faced while starting up are finding partners and convincing the market and other stakeholders that the idea is a winner.
“To start, the important thing is to have followers that strongly believe in your idea and what you can do in the future,” says Sav, adding at the beginning he was unable to pay wages but managed to pull together a strong team, who believed in his idea, on a voluntary basis.
Several of them quit their full-time jobs to back him.
“Our main challenge was to convince other partners that we’re building something tangible,” says Pokorny, adding it took 16 gruelling months before the company launched in July.
Within seven months, it has secured 190,000 downloads, with a 70 to 80 percent conversion into active users. More than 1,700 merchants have also been signed and trained.
“Initially, when you go with papers saying Cambodia, which is mainly cash-based, is ready for something they’ve done in China, for example, it’s hard,” he says. “We had to convince everyone from our first banks and merchants, to the initial group of users and partners.
That initial trust and conviction is the hardest. Don’t lose hope when someone says no because the journey of starting a company is trial and error. There will be a lot of no’s before you get that yes.”
Mapping the Future
“I’m very optimistic about the future of Cambodia’s start-up scene,” says Mossard with confidence.
As well as Cambodians becoming savvier when it comes to coming up with innovative ideas and the process of setting up a business, a swathe of initiatives and developments have been launched.
The last 18 months have seen a series of formal angel investment groups operating in the country, offering funding to bright young sparks to turn their idea into reality. This takes the financial burden off start-ups in the initial phases.
The private sector is also starting to engage in the industry. “There is a lot of interest from this sector as they can see innovation as the future of development for Cambodia,” says Mossard.
In 2017, Smart Axia launched SmartStart, a young innovator programme to enable university students to launch their own tech start-up. A total of 120 students from the University of Phnom Penh were selected to take part in a two-day hackathon. This was eventually whittled down to five, who were set to pitch their finalised ideas as AsiaLIFE went to print.
The winners will go to Singapore to visit Google, Microsoft and Facebook to gain valuable experience and inspiration.
Ravez also last month launched Start-Up Cambodia, an online platform containing an up-to-date database of start-ups, angel investors and other stakeholders.
And the government is also on board, encouraging companies to be compliant and helping with the registration process, which has been made much simpler in recent months.
“This is a positive step,” says Ravez. “If you’re not compliant, then you can’t receive investment. Things are becoming more formalised.”
With all the pieces of the puzzle starting to fit into place, the future certainly looks bright for Cambodia’s start-up scene.
“Cambodians are starting to think more creatively and out-of-the-box,” says Sav. “We have more resources available and more interest from other countries. It is a very exciting time for the start-up scene here.”