Cambodia's startups have clamoured to attract foreign venture capital, and now even Silicon Valley is paying attention. Last month, local media and entertainment site Khmerload – described by some as Cambodia’s version of Buzzfeed – secured $200,000 in investment from the regional arm of California-based venture capital seed fund 500 Startups, marking the first-ever Silicon Valley investment into a Cambodian startup.
Now another fund created by Silicon Valley venture capitalists – and one with an impressive track record of early-stage investment in Southeast Asia – has expressed interest in the Kingdom’s startup scene.
Paul Bragiel, a founding partner of Southeast Asia-focused venture capital firm Golden Gate Ventures, said following a visit to Phnom Penh last week to meet local tech entrepreneurs that he left convinced of the country’s investment potential.
“I like to get involved early in ecosystems because that is when a lot of the biggest opportunities start,” he told The Post. “I’ll be watching Cambodia a lot more going forward with my fund, Golden Gate.”
Founded in 2011 by three Silicon Valley entrepreneurs, Singapore-based Golden Gate Ventures has invested in over 30 internet and mobile startups across Asia, including RedMart, Coda Pay and TradeGecko.
During his March 27 visit, Bragiel also met officials from the ministries of commerce, finance, industry and telecommunications, as well as the head of Cambodia’s investment authority. He said he was impressed by the government’s desire to further startup growth.
“They were super interested to attract more people like me,” he said. “It seems they are also making the regulation easier to start a company. I’m hoping that going forward they take some big risks and leapfrog some of the other countries in the region.”
Bragiel also sat down with Allen Tan, an active member of Cambodia’s STEM and entrepreneurial ecosystems, to discuss the possibility of collaboration in launching a Cambodia-based and focused technology fund.
According to Tan, the fund would be an early-stage investment platform that would serve to fill the funding gap that local startups face before they grow large enough to attract international venture capital firms.
“What we discussed with Paul is the possibility of starting a smaller fund here of local and international investors,” Tan said. “It would be a one to $2 million fund that serves as a feeder into the global fund market and that was able to do very early-stage startup support.”
The fund would aim to provide investments of $25,000 to $50,000, particularly for ventures in the technology and e-commerce space, Tan explained.
He said this kind of financial support, as well as investments from other funds such as Smart Axiata’s recently launched $5 million digital innovation fund, could help ventures grow beyond their initial concept stage.
“I think there is a lot of potential in the next 12 months for early-stage investment, but in terms of developed companies that are looking for second, third round and beyond investments, there are very few,” he said. “We’re just budding right now, but the benefit that Cambodia has is that it is all set for this explosion to happen.”
Factors such as high internet and mobile phone penetration, youthful demographics and improving technology skills add up to a big growth potential, according to Tan. He said Cambodia’s small market size of 15 million is often seen as a disadvantage, when it can in fact encourage local ventures to look beyond the country’s borders and focus on the scalability that most international investors are looking for.
“The benefits of being a small country like Cambodia is that to be really attractive, and to have a really successful product, you need to look beyond your country because you have a small market size, and that is why we see small countries punching above their weight,” he said.
The recent 500 Startups investment into Khmerload is a case in point. In Vichet, who founded the Cambodian web platform in 2011, said that despite ranking among the country’s top-three websites in terms of traffic, it initially struggled to attract investors because of its local focus.
“I was looking for funding and I sent emails to several [venture capital firms] but at first it was quite tough to get a response,” he said. “The market of Cambodia is too small and they did not believe that I could actually go regional, so we decided to go to Myanmar first, and after that, they became interested.”
According to Vichet, Khmerload sees an average of 3 million unique visitors a month and 17 million pageviews. The sister site it opened in Myanmar last August already generates 5 million monthly visits and 27 million pageviews.
Having incorporated in Singapore as Mediaload in November 2016 to accommodate international investments, the company is now looking to take its viral media format to a third ASEAN market. Vichet said his company has tested the market in Indonesia, though he pegs Vietnam as its most likely next destination.
The 500 Startups investment in Khmerload raised the local media platform’s valuation to over $1 million and gave some rare visibility to the Kingdom’s technology scene.
“Cambodia is a small market, but now that 500 Startups has made their investment here, other [venture capital funds] will start looking to the country,” he said.
Maya Gilliss-Chapman, a Cambodian-American entrepreneur with Silicon Valley experience and founder of Cambodians in Tech, said the growth of the Kingdom’s startup scene still needs to be contextualised regionally in order to maintain realistic expectations of its current potential.
“The greater Southeast Asia region is definitely drawing interest from international investors and as a result, Cambodia’s startup scene is definitely being observed, but not at the same rate as say Singapore, Malaysia or even Myanmar,” she said.
She noted that while the 500 Startups investment in Khmerload showed that investors were keeping an eye on Cambodia, very few firms here show the same level of scalability and revenue growth likely to pique the interest of venture capitalists. However, she added, it is now in Cambodia’s reach to build on the recent successes and prove itself as an up and coming startup destination.
“Getting an investment from any branch of 500 Startups is quite an accomplishment and Khmerload should be very proud,” Chapman said. “It’s a great opportunity to shine the light on Cambodia’s startup scene and hopefully prove that the Kingdom’s technology sector is one to watch.”
