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Challenging business for startups

Participants attend the first session of BarCamp at the Institute of Technology of Cambodia in October
Participants attend the first session of BarCamp at the Institute of Technology of Cambodia in October. PHOTO SUPPLIED

Challenging business for startups

The World Bank recently ranked Cambodia 184th out of 189 countries for ease of starting a business, but you wouldn’t have known it at Phnom Penh’s recent Startup Weekend.

Pitches for Cambodia’s first commercial organic chicken farm and for an app to connect tuk-tuk drivers to passengers were among dozens of ideas brought forward at the 54-hour event the weekend before last. In all, about 120 participants came together to form teams, conduct market research, develop business schemes and finally present their projects to a judging panel.

The Phnom Penh venue, a sleek office space with spiral staircases and gleaming interiors, looked like it belonged in Silicon Valley rather than in the capital’s dusty outskirts on Chroy Changvar – a fitting contrast for an entrepreneurial tech event in one of Asia’s least developed countries.

“Cambodia is way behind others when it comes to startups,” Tharo Sen, one of the participants, said. “But most of the ideas this weekend are based on what consumers here value [and can later] scale up to other countries.”

Tharo’s team won the competition with a mobile app that could let friends recommend shops to one another through photos in return for rewards. The team’s video pitch is now competing for $500,000 in prizes against more than 200 other teams from around the world.

This was the third Startup Weekend in Cambodia, but this year is the first time that Cambodia is joining the annual Global Startup Battle. A Phnom Penh win would be remarkable for a country where less than 20 per cent of the population have internet access and less than 10 per cent use social media.

At Startup Weekend, the majority of participants had backgrounds in business and marketing rather than technology.

This might make it “a bit difficult if the project is based on technology or the business idea relies on technology”, said Chantra Be, one of the organisers. “The ideas are good, but [it’s] still a bit difficult in really making a profitable business.”

The World Bank noted in an October report that would-be entrepreneurs in Cambodia must complete 11 separate procedures under government rules to start a business, with the whole process taking about 104 days.

Cambodia recently “made starting a business more difficult by introducing a requirement for a company name check at the Department of Intellectual Property and by increasing the costs both for getting registration documents approved and stamped by the Phnom Penh Tax Department, and for completing incorporation with the commercial registrar”, the report says.

“The main challenges of startups in Cambodia are lack of legal startup platforms and encouragement from government in terms of law and funding,” Chantra said, also adding that “the Cambodian market is too small”.

Such obstacles are frustrating the developers of Cambodia’s electric car, the Angkor EV 2013, which had been hailed as a national innovation in affordable, green transport. Although a model was unveiled in January, production has stalled due to a lack of funding.

Still, Cambodia does offer some advantages for entrepreneurs, said Chris Brown, a Startup Weekend judge and founder and CEO of Cambodia-based MangoMap, a tool for creating interactive web maps.

The low cost of living in Cambodia makes software developers’ services more affordable, he said. In Cambodia “the best guys get about $1,500 a month; the average guy gets about $1,000 monthly”. In the US or Europe, they earn about six times that, he said.

Moreover, the spread of multinationals to Cambodia’s larger neighbours means that the average retention time for software engineers at startups in Thailand and Vietnam is about one year, while in Cambodia, it’s four years – a situation that allows entrepreneurs in Cambodia to build stronger teams, he said.

These benefits have aided the launch of several successful Cambodian startups, from Yoolk, an online yellow pages service with clients around the world – and a Startup Weekend sponsor – to Chibi, a text message-based dating and networking service that won Cambodia’s first Startup Weekend in 2011 and now has about 10,000 active users.

Phnom Penh-based InSTEDD, another Startup Weekend sponsor, uses communications technology to track and share information about health issues, natural disasters and other concerns facing disadvantaged communities in four continents. And Startup Weekend mentor Ear Uy’s Asva the Monkey, a puzzle game with visuals drawn from traditional Cambodian culture, is a top download in several countries.

That all these businesses have ties to Startup Weekend is no accident – Cambodia’s tech community is a small network where most people know each other. But it’s also growing. The latest of Cambodia’s “BarCamp” tech forums, held in Phnom Penh in October, dwarfed similar events in neighbouring countries, drawing more than 3,000 participants including many students.

While nearly 80 per cent of Cambodia’s population live outside of cities and more than half live on less than $2 per day, internet users grew by 548 per cent in 2012, according to a report by the social media agency We Are Social. The report also found that by late 2012 there were 1.3 mobile phone subscriptions in Cambodia for every person. The country’s young people – more than half of all Cambodians are under age 25 – are likely to help technology spread.

In the meantime, Cambodia’s emerging tech community is looking forward to its next gatherings, including another BarCamp in December, which its organisers are publicising all over social media.

“See you soon in Sihanoukville,” they write.

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