Cambodian startups are gaining local and international attention. The Post’s Matthieu de Gaudemar sat down with Rithy Thul, the founder of the Smallworld co-working space and an angel investor, to discuss the challenges for startup growth in the Kingdom.
Why do you think Cambodia’s startup scene is behind other countries in the region?
The main thing is the growth of internet usage here. Connectivity to the internet has only grown significantly during the last two or three years, enabling more people to accumulate information related to startups, social media and business.
A lot of young people here have a very entrepreneurial mindset and Cambodia can surpass other countries very easily if there is more knowledge and education about technology and business. However, there isn’t yet a transfer of knowledge from experienced entrepreneurs to the startup community here.
Traditional school systems in Cambodia are also holding people back, but I don’t want to use that as an argument. With the internet, there are no barriers anymore.
What other factors hold back development?
A lot of Cambodians want to start doing business, and that is a big positive because we need more entrepreneurs in this country. But people are sometimes not willing to do the hard work and learn the skills needed for innovation. They often take the easy way out and copy what is already established. But there are a lot more solutions that could be developed.
Who in Cambodia is interested in investing in startups?
There are a lot of people in Cambodia who have a lot of money and want to invest in startups, but the majority of them do not understand the startup culture.
If you buy a majority stake in an early stage startup, which follows a traditional business mindset, the entrepreneurs have less motivation to develop their business.
I’ve worked with early-stage startups before and my experience is to never invest a lot of money too quickly. I try to invest as much as they need for their basic needs, especially for early-stage startups. In Cambodia, startups that can offer a product, like Bookmebus, for example, are very few right now, so more smart investments are needed to push for development.
How much of a role does the government play in shaping the Cambodian startup scene?
At the moment, I don’t think the government is pushing for more startup development. I would like to see a program for startups where they can register with the government and get preferential tax treatment in the early stages of development.
I think the government should also support and assist startups and make investors more comfortable investing. A lot of startups started in the dark, hiding from the government because they can’t get enough revenue stream to be able to pay all the different taxes.
What mistakes do startups often make in Cambodia?
The problem with a lot of startups is that they focus too much on their dreams and think they can reach a multi-million dollar valuation within a year or two. They end up borrowing too much money or they disappoint themselves and ultimately drop the project because they did not achieve their unrealistic goals. The other problem is when they focus too much on their product, they dedicate all their work to that and then forget to pilot their product and develop business strategies.
This interview has been edited for length and clarity