Following the launch of online bus-ticketing site Camboticket.com last year, venture capital firm SEA Ventures is scouting the Kingdom for further startup business opportunities. The Post spoke to the company’s founder, Rahul Anand, this week about both the potential, and the challenges facing startups in Cambodia.
Can you tell us about SEA Ventures and what drew you to Cambodia?
I have been following the frontier markets of the Southeast Asia region for the past couple of years and became increasingly interested in two economies, specifically – Cambodia and Myanmar.
I explored Myanmar briefly and realised that despite tremendous long-term opportunities, the country has substantial bottlenecks as far as foreign investments and ease of doing business are concerned. Around that time, in March 2014, I also undertook my first trip to Cambodia.
When one searches for information about Cambodia from secondary research, the negative themes like corruption, crime for example, far outweigh the positives. However, when I visited Phnom Penh for the first time, I was pleasantly surprised. I instantly saw incomparable positives about this country: attractive demographics with very high percentage of youth in comparison to the total population, immense amount of construction activity, fairly well developed telecom and mobile networks, very high mobile and internet penetration rates, good English language proficiency of the locals and a vibrant expat population.
If one considers just the young and educated workforce, investor friendly FDI regime, including extremely relaxed exchange control regulations and the USD-based economy, Cambodia offers unparalleled advantages over all the other emerging markets.
There were multiple opportunities that I identified and very quickly I had a long list of potential opportunities I wanted to pursue. I setup SEA Ventures to incubate some of most promising opportunities internally.
SEA Ventures operates as a personal incubator and startup accelerator. Besides the businesses we strategise and launch ourselves, we are also looking out for other passionate entrepreneurs with exciting ideas who might need some initial hand-holding in launching and gaining traction for their businesses.
What potential do you see for startups in Cambodia?
In my recent visits, I met with numerous startup founding teams. The fundamentals for entrepreneurship are in place, especially in the technology space. These are, namely, very attractive demographics, high mobile and internet penetration, a growing middle class, an educated and English language proficient population and the overall ease of doing business. There are increasing number of startup events and competitions taking place in Cambodia to foster the startup ecosystem.
However, there is still lack of quality startups with well- defined business and revenue models. What I see is because the average young Cambodian is well educated and has the means to explore what’s transpiring in rest of the world via internet access, there is an increasing appetite to apply some of the success stories in the developed and developing markets to Cambodia. I think it’s just a matter of time before we start seeing some quality startups establish.
What are the challenges you see for startups in Cambodia?
The main challenge for startups in Cambodia is the small market size compared to other markets globally or in the region. Cambodia being a fairly small country with only about 15 million people is a small market. In such markets, you need to be spot on with your business model as there is a limit to how much growth you can expect.
There is a lack of a startup ecosystem – while we can see some elements of the ecosystem needed to foster entrepreneurship and startups coming into place, there are still big gaps. Lack of seed stage funding, lack of mentors, lack of successful precedents are a few that come to mind.
There are manpower constraints too. Despite a large number of university qualified graduates, there’s an acute skills shortage. This is applicable to startups as well as established larger businesses.
The readiness of the market to accept new products or services can provide another challenge. This is especially relevant to technology-based businesses. Because the average Cambodian is still used to the traditional way of doing most things, the consumer needs to be made aware of the benefits of using a new products and services.
An example would be e-commerce or using electronic payment products. Most Cambodians still rely on physical trading practices and using cash.
The bus ticketing website was the first to get off ground. How is this progressing?
Camboticket.com is our first venture off the ground. The idea was conceptualised by my co-founder Shivam, who is based in Phnom Penh. We did our soft launch about two months ago.
We are targeting bus ticket bookings for now although Camboticket as a platform was conceptualised to be a generic ticketing website for all kinds of tickets – bus, inter-city taxi, events, movies for example.
For now, we are focusing only on bus tickets, targeting the international traveller to Cambodia and also the locals. Considering the underdeveloped public transportation systems in the country, buses remain the mode of choice for all users – travellers as well as locals.
To make the booking process as seamless and convenient as possible, we introduced the flexibility of paying for bus tickets by credit or debit cards, WING money and also cash on delivery within central Phnom Penh. We are now seeing increasing bookings from many cities across the world.
We hope to keep introducing newer features to the website for our users.
Edited for length and clarity.