Logo of Phnom Penh Post newspaper Phnom Penh Post - Startups discuss local challenges

Startups discuss local challenges

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

Startups discuss local challenges

Cambodian startups currently face several regulatory challenges in pursuing growth and profitability, according to three of the Kingdom’s most successful startup founders who shared their experiences over the weekend with the hope to inspire increased innovation and entrepreneurship.

A key outtake from the event organised by the Cambodians in Tech group was that business registration is an important step for any successful company but that given the local costs, registration should usually be avoided until a startup becomes sustainable.

Chea Langda, founder of online bus ticketing platform BookMeBus, said it was important for startups to test their ideas and develop a sound business model before taking on the financial risk of registering.

“It is very important for startups, before they start spending money, to prove their idea first,” he said, adding that registration not only involves paying an initial fee but also recurring taxes that could weigh heavily on thin margins.

The founder of BookMeBus, which started as a self-funded venture, added that outside investment was key for the future growth of a company. During the process of identifying potential partners, Langda explained that not all investors were equally suitable.

“There are many investors approaching BookMeBus and they all have large amounts of money, but not all of them are the right investors,” he said. “Some investors are really big but they have a different vision [for the company].”

Sok Sopheamonkol, co-founder and CEO of technology outsourcing firm Codingate, added that profitability should be a priority before taking on the financial burden that comes with registration.

“If you are not making any money with your business to cover yourself, why should you take the risk of registering? If you register, you have to pay taxes, so you will be losing money and also paying taxes,” he said. “That would be very challenging.”

However, when startups gain momentum and start seeing growth, business registration becomes much more important because most investors will only invest in legally established companies, he explained.

“Registering a business is very important and I would suggest if you are able to register from the beginning then even better, because it can create a lot of opportunities,” he said. “[After that] getting funded becomes possible, but if you are not legally registered it is very challenging.”

He noted that entrepreneurs should only start looking for investors once they have created a detailed plan of how to spend and develop, adding “when you do a pitch to investors, don’t let them ask all the questions. You have to ask a lot of questions because you have to choose the investors as well”.

Khmerload, a local viral news digital platform, chose to register in Singapore in order to facilitate investment due to the lack of regulatory clarity in Cambodia, according to the company’s co-founder and chief information officer, In Visal. He noted that previously, the company felt little incentive to register due to the costs it would face.

“I think you should undergo the registration process when you think it makes sense to register,” he said. “Because at the beginning, startups have nothing. They have limited budgets, they have limited human resources and they do not want to have so many things on their mind.”

After receiving their first major investment from Silicon Valley-based 500 Startups last month, Visal emphasised the need for entrepreneurs to be conscious of how much of their company is offered to investors.

“It would be great that you didn’t have to give a too big percentage of your company, maybe under 10 percent, because then you retain the power to control your company,” he said.

Khmerload officially registered under the parent company Mediaload in Singapore in November 2016 and expanded to Myanmar last August where it is seeing most of its growth. Visal said the ability to expand across the region is one of the biggest draws for investors looking to the Cambodian market.

“If [a startup] is in Cambodia alone, maybe they will not be very interested because Cambodia is a small market,” he said.

MOST VIEWED

  • Historic Battambang town bans billboards

    The Battambang town administration informed all house and business owners in Svay Por commune to remove all billboards by August 1 as it is preparing to submit the town to UNESCO for inclusion on its historical cultural heritage list. Its July 25 notice said all signage was

  • All foreigners' accommodations to be inspected: Sar Kheng

    The Ministry of Interior is undertaking a serious effort to inspect all the accommodations of foreigners in Cambodia – except diplomats – in order to find and identify human traffickers. Minister Sar Kheng said this would include inspections on the homes of foreigners employed by businesses, private

  • Ice cream, noodles flagged over carcinogen

    The General Department of Customs and Excise of Cambodia (GDCE) has identified three types of instant noodles and ice cream trademarks originating from Thailand, Vietnam and France that are suspected to contain ethylene oxide, which poses a cancer risk to consumers. The general department has

  • Exclusive interview with Josep Borrell Fontelles, High Representative of the EU

    CAMBODIA is hosting the 55th ASEAN Foreign Ministers’ Meeting (AMM) and Related Meetings this week with top officials from the US, China, and Russia and other countries in the region slated to attend and to meet with face-to-face with their counterparts on the sidelines. In

  • Rise in Thai air routes to Siem Reap fuels travel hopes

    Local tourism industry players are eager for regional airline Bangkok Airways Pcl’s resumption of direct flight services between the Thai capital and Siem Reap town on August 1 – home of Cambodia’s awe-inspiring Angkor Archaeological Park – which is expected to boost the growth rate of

  • ASEAN Foreign Ministers’ meet commences, Taiwan issue possibly on table

    The 55th ASEAN Foreign Ministers’ Meeting (AMM) and related meetings hosted by Cambodia kicks off in Phnom Penh on August 3, with progress, challenges, and the way forward for the ASEAN Community-building on the table. Issues on Taiwan, sparked by the visit of US House Speaker