Myanmar startups draw international investor interest

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Interest in Myanmar’s startups has been on the rise as investors scour the market for potential returns.

Yesterday, Germany’s development finance institution DEG and agRIF, an impact focused fund which provides funding to financial intermediaries targeting smallholder farmers and the rural population, announced a joint investment of US$6 million in Rent 2 Own (Myanmar) Ltd (R2O).

agRIF is managed by Incofin Investment Management, a global impact asset manager.

Daiwa PI Partners, an investment arm of a major Japanese securities firm group, is also taking a stake in the venture by fully purchasing shares from one existing shareholder.

R2O, which provides rural populations with easy access to motorcycles by offering flexible and affordable contracts, first launched in January 2016. Since then, R2O has served 70,000 clients through its network of 34 branches covering an area of Central Myanmar that ranges from the Ayerwaddy delta to the mountains of Shan State, the startup said.

The startup now supports one third of all motorcycle sales taking place in the shops they cover. “We’ve partnered with over 400 motorcycle dealers in the country to offer their clients a fully insured bike, as well as maintenance, for a monthly fee, R2O CEO Philippe Lenain said in a statement.

“So far, the only limitation to R2O’s growth has been our limited capacity to access funding,” he added.

Venture capital

Meanwhile, Emerging Markets Entrepreneurs (EME), an early stage venture capital firm focusing on Myanmar, which launched its fund in the country on October 31, has announced its first two investments in animation and illustration startup Joosk Studio, as well as online car trading platform CarsDB.

EME, which is backed by Emerging Markets Group Holdings and UMJ Ikeya Investments, said it is interested in early-stage tech startups in the entertainment, education, human resources, commerce, finance and healthcare sectors which display potential for “exponential growth.”•

The fund provides selected startups with initial investments ranging between $50,000 and $200,000. Its strategy is   to work with each startup to develop a 3-5 year plan for returns by way of acquisition, buy outs, dividends or winding up.

Identifying potential

Interest in incubating potential startup that could rise in value has also spiked. One example is New Day, the Myanmar technology startup, which won the Seedstars Yangon competition on November 2. New Day, or Neh Thit, which is the country’s first low-income jobs mobile platform, was named “Best Startup in Myanmar.”

That earns it the opportunity to represent Myanmar at the Seedstars Asia Summit 2018, which is a weeklong training program conducted for 65 winners from other fast-growing economies. The final day of the summit is dedicated to pitching in front of an audience of more than 1000 attendees, with the possibility of winning up to US$1 million in equity investment.

Seedstars World is the world’s largest startup competition in emerging markets. It has been five years now that the Seedstars Team has taken off every year for a 9-month world tour to scout for the best early-stage startups in over 65 countries.

Despite high demand and 80 percent smartphone penetration in Myanmar, employers and low-income job seekers have no efficient, reliable platform from which to connect. If it takes off, New Day’s platform, which uses chatbots to help match job seekers with suitable employers, could be a potential option to fill that gap.

New Day beat nine other startups who participated in Seedstars Yangon. Recyglo, with its waste management solutions for businesses and households, put up a strong fight, as did Lae Lar, with its online learning platform which provides courses in the local language. The other startups invited to pitch their models to a panel of local and international judges were MMTutor, Klenic, Giant Pay, 360ed, MyHealthcare and Next Code.

However, Luminate, which is a global philanthropic organisation, will sponsor the participation of Recyglo, Lae Lar, MMTutors, Klenic and MyHealthcare at the Seedstars Asia Summit in Bangkok, enabling them to benefit from mentorship and meetings with investors. Luminate is funded by Pierre Omidyar, who is the founder of eBay.

In identifying the nine startups, Seedstars worked throughout the year with its main partner Luminate, financial technology partner CB Bank, local implementing partner Thura Swiss, and networking partner AWS. Further support was provided by Strategy First, outreach partner for the competition.

Its previous participants have raised over $92 million collectively, providing employment to more than 2,100 employees worldwide.

Source: Myanmar Times

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