Cambodian Startups On the Rise, Despite Lack of Funding

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Southeast Asia has been racing towards tech in recent years, and several formidable ecosystems have appeared across the region. For Cambodia, one of its smaller nations with a population of just 15 million, progress has been slower: infrastructure is underdeveloped, and funding still comes primarily from NGOs.

But there are a growing number of positives in Cambodia, whose capital city, Phnom Penh, Red Herring visited this week. The city skyline is peppered with tarpaulin-covered new builds, Internet is cheap and relatively fast, and smartphone penetration grew by 41% last year alone: around 40% of Cambodians now own one.

Tech events began springing up around five years ago. But until two years ago they were extremely few and far between. Now, says Ki Chong Tran, one of Phnom Penh’s growing number of entrepreneurs, there’s something going on almost every week.

Ki, whose parents fled the Khmer Rouge regime in the 70s and settled in California, moved to Phnom Penh almost three years ago. He is the founder of ARC Hub PNH, a 3D printing firm based out of a university in the city center. When he arrived there was almost no knowledge of the technology at all. “We were just telling people what it is,” he says. “Now we’re explaining what people can do with it.”

With backing from Canadian NGOs ARC Hub has produced a pilot batch of 25 prosthetic hands for local amputees. Ki is also looking at the architecture market, which is booming thanks to an economy growing at a shade over 7% year-on-year—the region’s second highest behind Myanmar.

Ki is keen to put that growth in context, though. “Everything is lacking here,” he says. “But you can use that to your advantage.” GDP per capita is just $3,278. Scaling a company is incredibly difficult. Ki now employs seven people: finding them was tough, too.

“You need someone who can think outside the box,” he says. “And it’s not just about the technical skills, it’s about the attitude. We kind of had to do our own training program. In the Cambodian educational system it’s just a lot of root memorization and doing what you’re told, and not really thinking independently.

“Culturally I think there’s something there too about doing what you’re told,” Ki added. “But we’re looking for leaders, people who are able to say, ‘Hey, I don’t think that’s right.’ And that’s very hard to find here.”

Cambodia’s tech community, however, is growing. Tharum Bun is a blogger who has spent years documenting the local scene. He agrees that the education system desperately needs a shake up: “It’s hard to get a good education in tech and digital. I have a friend who graduated here, and continued to get a Masters in Japan. When she returned she started teaching at a university here. She told me that the kind of curriculum that’s ten years old is still being taught. They need to introduce new things, to keep up.”

Costs are less of an issue. Coworking spaces such as Impact Hub, Colab and the South Korean-funded KOTRA offer desks for around $400 per month. Millions in foreign aid, which poured into the country upon the end of its war with Vietnam in 1991, has also boosted the scene. Development Innovation, a project of USAID, has been particularly instrumental in promoting entrepreneurialism.

Companies are beginning to thrive. BookMeBus, founded by puckish programmer Langda Chea, began to solve the problem of convoluted transport booking in Cambodia. “I thought it was very simple: get a website of all the companies’ information so everyone can see all the timetables,” he says. “Then, when I started, I saw something bigger.”

Now BookMeBus processes 2-3,000 tickets per month and $38,000 in revenue. It is one of very few privately-backed tech firms in Phnom Penh. Langda has 11 employees at KOTRA, for which he pays just $50 per desk space. Working nearby is Exnet Taxi, an Uber facsimile. Uber itself even employs one staff member in the office, and plans to enter the local market soon.

“I wanted to make a community but it has become something,” says KOTRA global business developer Kim Il Jung. “We started in June. We have six startups here now, and 20 people.” Mentorship is severely lacking, he adds. And the difficult Khmer language is often a barrier for many entrepreneurs and clients.

Payments, too, can be a headache. BookMeBus offers seven forms of online payment—only two of which are international. “Not many people buy things online and they do not trust things online,” says Langda. “They want to know, ‘Where’s the ticket?’ This is one big challenge.”

The government, too, has done little to help startups. Corruption is endemic—Cambodia ranks a lowly 150 of 168 nations on Transparency International’s Corruption Perceptions Index—and rules and regulations are often subject to graft. Getting in 3D printing hardware was tough for Ki Chong Tran. “If you do it all by the book, you still might not get what you wanted to ship in, because somebody’s there asking for extra,” he says. “There are things like that that are completely different to the US.”

Compared to its neighbors Vietnam and Thailand, Cambodia’s government has not been active in promoting entrepreneurialism—“I don’t think they have enough resources to contribute investment,” says Tharum—but a trickle of international investors, such as Development Innovation and the Mekong Angel Investment Network, a wing of the Asian Development Bank, are looking at the tech scene.

Buoyed, firms are growing. Pathmazing, a software company founded by Cambodian-American Steven Path, has been at the vanguard of a trend towards mobile. Local messaging services like Line and Telegram are extremely popular, and 22% of Cambodia’s population “play” Facebook, as the local phrasing goes, according to local tech site GeeksInCambodia.

Most of these are between the ages of 18-24, and the country’s youthful population is yet another reason to predict an upward trend for Cambodia’s startup scene. Other promising firms include Stops Near Me, a public transport app; crowdsourcer TosFund; app developer Coding Gate and ArrowDot, a home automation brand.

ARC Hub itself is planning to unveil a maker’s space across the street from its current office, Ki says. “The idea is for people to come and make prototypes, business ideas, and we can offer community support and resources that are really hard to find when you’re a startup: accounting, or how to register a business, customs,” he says.

Things are far from perfect in Cambodia. Poverty is still rife, and a recent Economist Intelligence Unit report placed Phnom Penh 127th in a list of the world’s most livable cities—far behind regional capitals Singapore (46); Kuala Lumpur (70); Bangkok (101); Manila (104) and Hanoi (119). But the country’s economy is growing at a phenomenal rate, infrastructure is improving and, among all of it, a tech ecosystem is emerging.

See original article at http://www.redherring.com/startups/cambodias-tech-scene-needs-private-money/

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Founded by two travel and technology professionals with years of experience in Asia, Representasia specialises in sales & marketing representation throughout Southeast Asia for travel/hospitality technology providers and travel-related startups, as well as providing marketing consultancy services for hotels and travel businesses in the region.

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