Logo of Phnom Penh Post newspaper Phnom Penh Post - Kingdom’s startups stuck in the middle with no capital

Kingdom’s startups stuck in the middle with no capital

Youths work at a co-working space last year in Phnom Penh.
Youths work at a co-working space last year in Phnom Penh. Photo supplied

Kingdom’s startups stuck in the middle with no capital

Despite Cambodia having a vibrant startup scene with entrepreneurs launching ventures on a near daily basis, businesses trying to tap into financial resources for growth have difficulty accessing capital and are stuck in the unbankable “missing middle”, according to a recent study.

According to a study by the Dutch Good Growth Fund (DGGF), a $200 million investment initiative that is researching potential investments in the region, a third of Cambodia’s small- and medium-sized enterprises (SMEs) have outgrown microfinancing options but remain too small to attract large investors.

The study showed that while short-term capital loans are offered by banks to registered businesses, small businesses without assets are unable to secure funding and debt financing is largely nonexistent. The study added that when it comes to seed-stage funding, there is a limited number of firms in the Kingdom willing to take on the financial risks of lending smaller amounts.

Hav Kongngy, founder of startup My Dream Home, explained that he has been trying to expand his business, but has found it difficult to access capital.

“There are no funds who offer investment of about $50,000, but that is how much I need,” he said. “It is a real problem for me, and for other entrepreneurs, because it seems too hard to grow.”

Keo Mom, president of the Cambodian Women Entrepreneurs Association (CWEA), noted that a lack of access to growth funding had long been damaging the Cambodian economy.

“Other countries have products which help with access, including accepting different types of collateral and providing commercial loans, and we need to start pursuing these options,” she said.

Julia Kho, Knowledge Manager for DGGF’s investment manager Triple Jump, explained that regardless of the struggles SMEs face in the Kingdom, the business ecosystem in Cambodia remains strong.
“Cambodia’s business scene looks like it’s quite dynamic,” she said. “It’s a vibrant ecosystem, and we hope to find some vibrant initiatives here to help fund.”

MOST VIEWED

  • Would you like fries with that? US burger chain makes Phnom Penh debut

    California-based The Habit Burger Grill restaurant chain is all set to serve up a delicious array of charbroiled burgers and sides at its newest international location in the centre of Phnom Penh. The Habit is “renowned for its award-winning Charburgers grilled over an open flame,

  • Phnom Penh underpass opens to ease traffic

    Prime Minister Hun Sen has announced a temporary opening of the 488m underpass at the Chaom Chao roundabout in Phnom Penh’s Por Sen Chey district, which was recently completed to connect traffic from National Road 4 to Russian Federation Blvd. The move is to reduce

  • Banteay Meanchey flood victims receive aid

    Prime Minister Hun Sen on Wednesday provided aid to more than 10,000 families affected by flooding in Banteay Meanchey province’s Mongkol Borei district and offered his condolences to the 18 victims who drowned in the province over the past week. He said flooding had occured in

  • PM urges caution as Polish man tests positive for Covid

    The Ministry of Health on Wednesday reported that a 47-year-old Polish man tested positive for Covid-19 after arriving in Cambodia on Monday. There are a total of six Covid-19 patients currently in the country, all of whom are being treated at the Khmer-Soviet Friendship Hospital

  • Serving coffee with a side of robots

    The eye-catching glass building surrounded by greenery at the intersection of Streets 371 and 2002 in Phnom Penh’s Sen Sok district is more than just another coffee shop where you can while away a few hours. UrHobby House cafe is filled with robots and characters from

  • Banteay Meanchey floods kill one more as death toll reaches 15

    As floodwaters start to recede in Pursat, Battambang and Pailin provinces and Phnom Penh, Banteay Meanchey continues to bear the brunt as one more person was killed on Monday, bringing the total number of flood-related deaths to 15 in the province this month. Banteay Meanchey provincial