Promises and Pitfalls in Cambodia’s Online Business World

PHNOM PENH — As he described his search for funding for Khmerload, a digital media company touted as Cambodia’s version of BuzzFeed, chief executive Vichet In recounted an arduous struggle. “We sent an email to 10 [venture capitalists] — no reply. We talked to a few investors — there was no interest. They couldn’t believe we could do an expansion to another country.”

Finally, U.S.-based investor 500 Startups, which describes itself as “a global venture capital seed fund,” came up with $200,000, cash that could help the company expand beyond Cambodia and Myanmar, where Myanmarload was launched in 2016. The websites churn out the kind of entertainment and celebrity gossip that was the foundation for the global success of U.S.-based BuzzFeed, a website that mixes entertainment, news and so-called viral content.

The 500 Startups deal, announced in March, was the first time a Silicon Valley venture capital fund had put its money into a Cambodian “startup,” a term for a newly-established business that nowadays usually refers to a tech, online or smartphone-related enterprise.

500 Startups did not reply to a request for comment on the Khmerload investment and on whether there were other such opportunities in Cambodia, but that landmark deal could soon be followed by others.

Potential for high returns

“Foreign investors are especially keen on Cambodia’s tech sector because a small investment in an emerging market can lead to a high return on investment,” said Maya Gilliss-Chapman, chief executive of Cambodians in Tech, a global network of Cambodian technology professionals.

However, it can also be tricky to nudge distant capitalists to put their money into a small and little-known market such as Cambodia. “Risk and lack of knowledge of the region” are hurdles, said Steve Landman, a member of Mekong Angel Investor Network.

The longer game is also likely on investors’ minds when looking at nascent digital markets such as Cambodia, according to Gilliss-Chapman. “When you invest in a company, you are looking for that company to exit [preferably via an initial public offering] and Cambodia has yet to see tech startups even near this stage,” she said.

But with its high proportion of young people — of Cambodia’s 16 million population, half are under 30 — and rising internet use, mostly via smartphone, the country is emerging as a small but potentially lucrative location for purveyors of digital media and e-commerce.

Cambodians are increasingly going online, with internet users growing by 43% over the course of 2016, according to social media marketing agency We Are Social.

 

Source: Nikkei Asian Review

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