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More angels coming in search of worthy investments

More angels coming in search of worthy investments

Two months since a group of angel investors visited Phnom Penh in search of startup investment opportunities, the organisation behind the initiative is planning an even bigger scouting mission, looking for investment opportunities in the Kingdom’s small but vibrant startup community.

Seven members of the Mekong Angel Investment Network (MAIN) visited the capital in June. Fourteen angel investors will join a delegation due to arrive early next month, according to Steve Landman, managing partner of the Lotus Fund.

“We are quite optimistic about the angel investment climate in Cambodia,” he said. “We saw many exciting and enthusiastic entrepreneurs that have done a great job in being investable.”

He said the first visit resulted in two investment decisions – one into local online transport company BookMeBus, which also won the Cambodia’s 2016 ICT competition for best startup, and the other in the Cambodia Investors Club (CiC) – a small- to medium-sized enterprise (SME) growth platform.

Angel investors were also eyeing TOT Delivery, Samai Distillery and 3 Sisters (Cambodia) Enterprise, as well as performing due diligence for a large investment on one additional company, he said.

“While it is still early in the startup lifecycle in Cambodia, [the angel investors] are off to a great start,” he said.

MAIN was established by the Asian Development Bank’s (ADB) Mekong Business Initiative with financial support from the Australian government. The angel investor network aims to help at least 30 companies become established in the CLMV (Cambodia, Laos, Vietnam and Myanmar) region over the next three years.

David Totten, director of Emerging Market Consulting (EMC), a company that has participated in over 350 projects in the region over the last 12 years, said that the primary value angel investors bring is an alternative source of funding during the early stages before a business becomes “bankable”.

“[Angel investors] can bridge the gap that exists between startup – when the business is too risky for banks to lend or too small for larger equity investors to invest in – [and bankability],” he said.

The early-stage investment can validate a business model, accelerate development and improve governance, he said.

As for startups, Totten said, choosing the right angel investor is crucial as they become partial owners of a business and receive a return on equity if they succeed.

“The entrepreneur may be entirely and uniquely committed to the success of their venture,” he said.

“The angel investor, having multiple ownership interests in many companies, may not.”

“This is not necessarily a disadvantage, it is a difference, and differences between owners are sometimes important,” he added.

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