Logo of Phnom Penh Post newspaper Phnom Penh Post - Start-ups urged to register abroad

Start-ups urged to register abroad

Individuals work at the co-working space of Saint Blanquet & Associates in Phnom Penh in June 2015.
Individuals work at the co-working space of Saint Blanquet & Associates in Phnom Penh in June 2015. Kimberley McCosker

Start-ups urged to register abroad

On their second scouting tour of Cambodia, a group of angel investors in search of start-ups worthy of seed capital urged these firms to register in countries such as Singapore and the US in order to ensure transparent investment.

“We have already invested in some Cambodian start-ups and are conducting due diligence to make sure that we are investing in good businesses,” said Steve Landman, a member of the Mekong Angel Investor Network (MAIN), which is leading a group of 10 angel investors to Cambodia this week in search of viable investment opportunities.

MAIN’s angel investors, who hail from the US, Australia, Europe and Vietnam, are conducting a series of workshops aimed at helping local start-ups develop their business model and receiving pitches from local entrepreneurs.

Landman, who is also the managing partner of the Vietnam-based Lotus Fund, said the more investors that MAIN brings in, the more money will follow. According to him, private sector funding of start-ups can come in the form of equity purchases or convertible debt – finance that can be turned into equity in the future.

However, he urged local start-ups to register abroad in order to give foreign investors a greater sense of security in their Cambodian investments.

“We are trying to convince companies that we invest in to become registered in the US or Singapore,” he said. “Because, unfortunately, we don’t have a lot of rights in the [Mekong] countries yet.”

MAIN’s angel investors have already made firm commitments in two Cambodian companies, local online transport company BookMeBus and the Cambodia Investors Club (CIC).

David Beatty, a member of MAIN and managing director of the New York-based company Golden Seeds, made no illusions of the organisation’s intentions.

“What are angel investors?” he asked a crowd of young entrepreneurs at the Emerald Hub co-working space yesterday. “We are individual investors that want to get a return on our investment. We are not a charity. We are not part of a government. We are red-blooded capitalists trying to make money and help others make money.”

Beatty explained that the start-up business was tough, but that great ideas and great people, who are energetic about their businesses, will attract capital and given the right chance, would succeed.

“MAIN is only going to work if we come away with success stories,” he said.

Beatty later added that under the MAIN program – which was established by the Asian Development Bank’s Mekong Business Initiative with financial support from the Australian government – only investors willing to commit $10,000 each to projects across the Cambodia, Laos, Myanmar and Vietnam (CLMV) region were flown in to view a list of prospective local start-ups.

“That means we have $100,000 to spend on this trip,” he said.

This was Beatty’s third visit to the region in less than a year, a fact that he noted demonstrated the seriousness of investment commitment.

He added that because Cambodia’s legal framework was unknown to the investors being brought in, business registration in Singapore or US would make investment decisions easier.

However, Clint O’Connell, head of tax practice for investment advisory and tax firm DFDL Cambodia, said that while Cambodian start-ups could register in Singapore, they would still need to be a legal Cambodian entity.

“For a small start-up, practically speaking, Singaporean registration is costly,” he said, “as they would have to be registered in Cambodia in the first place.”

O’Connell added that investors in Cambodian ventures could potentially set up a holding company, but that would require a sizeable staff presence to qualify for registration.

“If foreign investors think that being registered in Singapore would remove them from the risks of corruption, it wouldn’t, because they would be aware that the money is still flowing to Cambodia.”

MOST VIEWED

  • Wing Bank opens new branch in front of Orkide The Royal along Street 2004

    Wing Bank celebrates first anniversary as commercial bank with launch of brand-new branch. One year since officially launching with a commercial banking licence, Wing Bank on March 14 launched a new branch in front of Orkide The Royal along Street 2004. The launch was presided over by

  • Girl from Stung Meanchey dump now college grad living in Australia

    After finishing her foundational studies at Trinity College and earning a Bachelor’s degree from the University of Melbourne in 2022, Ron Sophy, a girl who once lived at the Stung Meanchey garbage dump and scavenged for things to sell, is now working at a private

  • Ministry using ChatGPT AI to ‘ease workload’; Khmer version planned

    The Digital Government Committee is planning to make a Khmer language version of popular artificial intelligence (AI) technology ChatGPT available to the public in the near future, following extensive testing. On March 9, the Ministry of Post and Telecommunications revealed that it has been using the

  • Wat Phnom hornbills attract tourists, locals

    Thanks to the arrival of a friendly flock of great hornbills, Hour Rithy, a former aviculturist – or raiser of birds – in Kratie province turned Phnom Penh tuk tuk driver, has seen a partial return to his former profession. He has become something of a guide

  • PM urges end to ‘baseless’ international Ream base accusations

    Prime Minister Hun Sen urges an end to “baseless” foreign accusations surrounding the development of the Kingdom’s Ream Naval Base, as the US has consistently suggested that the base is being expanded to accommodate a Chinese military presence. Hun Sen renewed his calls while

  • Almost 9K tourists see equinox sunrise at Angkor Wat

    Nearly 9,000 visitors – including 2,226 international tourists – gathered at Angkor Wat on March 21 to view the spring equinox sunrise, according to a senior official of the Siem Reap provinical tourism department. Ngov Seng Kak, director of the department, said a total of 8,726 people visited Angkor Wat to