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Ecosystem Health Check | January 30, 2023

An Inside Look at the Cambodia Startup Ecosystem Health Check
Written by: Sokha Phanith, Then Yanuth, Bunthan Sophavina, Taing Nguonly

Figure 1: Independence Monuments, Phnom Penh, Cambodia

Is Cambodia’s support system for startups in good shape? How can Cambodia survive
and prosper in the midst of a nascent entrepreneurial landscape? In September 2021, following
a self-assessment tool for ecosystem builders developed by Swisscontact and Deep Ecosystem,
the Startup Development Team at Techo Startup Center (TSC) conducted the first pilot study
on the nascent entrepreneurial startup scene in Phnom Penh. It appears that Cambodia iscapable of attracting a tech-savvy community of entrepreneurs. The data illustrated in the 2021
report pioneered the use of Social Network Analysis (SNA) data to map and better understandthe dynamics within the entrepreneurial ecosystem. In the 2022 report, this pilot study aimed
to use the Startup Cambodia Digital Platform (SCDP) as the primary data source since SNA
does not have a sufficient amount of data needed to do further assessment studies. In addition,SCDP is a one-stop digital platform that provides information-based models that are openly
shared and accessible to all actors in the startup ecosystem.
The primary objective of this pilot study is to assess the available resources in theStartup Cambodia database. This will enable us to analyze the key metrics based on theEcosystem Health Check assessment tool. In light of the limitations of data, it is imperative to2|Pagenote that the findings from previous studies and the current study have been gathered fromdifferent pools of databases. Due to the fact that different samples have been measured,comparison will only be made for the purpose of creating visual illustration in monitoring
Cambodia’s ecosystem. Part of this pilot study will analyze the data set available on WIPO's
Global Innovation Index in order to provide a comprehensive overview of the Cambodian
startup ecosystem. It will also benchmark on selected key metrics that Cambodia could
compare to those of its ASEAN neighbors.
According to the assessment tool, the study is based on four key dimensions, including
Community of Entrepreneurs, Entrepreneurship Support Networks, Social Capital, andGovernance. First, it is essential to consider two different indicators when mapping theCommunity of Entrepreneurs: Diversity and Inclusivity as well as Knowledge and Talent. The
second dimension relates to the Entrepreneurship Support Network. To assess the quality of
the Entrepreneurship Support Network, Startup Support and Specialization must be considered.
The third is Social Capital, consisting of Network Density and Innovation Culture. The fourth
dimension focuses on Governance, which includes Policies and International Connectivity.
Community of Entrepreneurs

Covering the metrics of Diversity and Inclusivity and Knowledge and Talent, there are
two chosen proxies including 1) shares of female startups founder, and 2) shares ofengineering/tech skill founders.
In the 2021 report, 35% of startup founders were women based on 22 tech startups.
This year, we found beneficial data on female founders listed on the SCDP; there are a total of
54 tech startups. Based on the SCDP data, the share of female founders accounted for 32% in
2022. It is important to note that women are chronically underrepresented in the tech sector.
Therefore, the startup female founders remain in a headwind of inequities and a long way for
equal representation.

3|PageCREDIT: TECHO STARTUP CENTER| HACKATHON DAYCYCLE 3

CREDIT: TECHO STARTUP CENTER| DIGITAL PLATFORM
ACCELERATOR (DEMO DAY)

Entrepreneurs have many tasks and responsibilities to be fulfilled, often playing bothCEO and CFO all at once. As a startup founder, you need to be able to oversee all aspects ofyour venture and expand the knowledge needed especially in technical or engineering skills
that will hold the startup in good stead. For the Knowledge and Talent metrics, the same sampleof 54 tech startups listed on SCDP was analyzed. According to the data, 56% of startup
founders obtained technical or engineering degrees, making the number relatively highcompared to 62% last year.

Figure 2: Community of Entrepreneurs Metrics

Entrepreneurship Support Network
There are two indicators at play when defining a supportive network such as 1) Startup
Support and 2) Specialization and Diversification.
Among Startup Support, mentors with startup experience are commended for theirinsightful advice that sheds light on the journey of starting a business. In 2021 report, the SNA
database illustrated those mentors with startup experienced accounted for 63%. However, theSNA dataset has not updated the information since then. We therefore decided to use the4|Pageinformation available on SCDP database. Based on the survey call, we were able to calculate
the share of mentors with startup experience. Of 37 mentors, 21 have clear previous startup
experience (57%), which is defined as previously starting their own companies and working
with international startup company.
Nevertheless, Specialization and Diversification are the important metrics whenassessing the innovation capacity of an entrepreneurial support network. Based on the SCDP’s
database, there are 97 startups listed on its platform categorized into 11 industries ranging fromFinTech to Cleantech. To understand whether the Entrepreneurship Support Network has agood balance in Specialization and Diversification, the report looks for a diverse set of startups
across different sectors to identify the maturity level of startups in the ecosystem. A diverse setof startups from different industries determines the maturity of the Entrepreneurship SupportNetwork. As suggested in the toolkit developed by Swisscontact and Deep Ecosystem,
Herfindahl-Hirschman Index (HHI) will be used as a measurement to evaluate the market
concentration and determine market competitiveness. Based on HHI formula, the result is85.7%, compared to last year’s 83.75%; Phnom Penh showed a very diverse result assumingthat there is also a diverse support network in the region.

Figure 3: Entrepreneurship Support Network Metrics

5|PageCommunity & Network Density
Connectivity between the founder and the mentor can be firmly established bymeasuring Network Density. The capacity for spontaneity and creativity in an ecosystem isrelated to the density of its network. The success of the startup community depends on amindset that values innovation. Two metrics were utilized to determine including 1) Network
Density and 2) Innovation Culture.
The first metric is Network Density, which mirrors the opportunities for stakeholders
to collaborate and connect. In the list of proxies, it is possible to obtain information about thenumber of tech meetups per capita. We have selected the number of tech-related meetups
available on the SCDP database, which listed the number of events and programs related tostartups that happened in Phnom Penh. The result shows that around 3 tech-related meetups
happened per week making 178 meetups in 2022. By taking a look into the 2021 report, there
were 54 tech-related meetups, for which Facebook is the prime source of information. The
tech-related meetups were benchmarked for a set goal of 260 meetups per year. As for thisyear, the data indicates a positive trend: the number of tech-related meetups has significantly
risen compared to last year, 2021. Therefore, we aim to hold more tech-related meetups in order
to meet the set target.

CREDIT: TECHO STARTUP CENTER | SPARK MEET EVENTCREDIT: TECHO STARTUP CENTER | SPARK MEET EVENT

6|PageIn the 2021 report, under the Innovation Culture, we have used the share of programs
asking for equity to understand the funding program studied by SNA. As this data had not been
updated, we looked for an alternative. In the 2022 report, the team looked into Business
Sophistication published by WIPO sub-score to assess Innovation Culture more broadly onknowledge workers, innovation linkages, and knowledge absorption. It demonstrates aninnovative and sophisticated approach to manufacturing. The greater the sub-score, the better.
The database in 2022 shows a score value of 17.6 compared to the previous year's sub-score of
16.2, indicating steady progress. The growth of Thailand's innovation capacity has shown rapid
progress in recent years. We found a quality data from Global Innovation Index 2022,
showcasing Thailand is placed 43rd among 132 economies, while Cambodia is placed 97th
among 132 economies. The benchmark has been set at 36 sub-score for Cambodia to keep up
with our neighboring country, Thailand.

Figure 4: Community & Network Density Metrics

Governance
Last but not least, the governance aspects were analyzed to see whether government
policies are supportive for business growth. There are two indicators to determine thecontribution from the government such as 1) ease of doing business and 2) offices ofinternational connectivity.
To measure a country’s ease of doing business, it involves determining whether
entrepreneurship is supported by regulations that reduce corruption, ease business processes,
and increase partnership. In the 2021 report, we first looked in data from World Bank.
However, the World Bank dataset presents information only for 2019. We therefore decided touse the updated source of information as our proxy. In this session, we examined based on theWIPO “Institution” sub-score; the report selected Malaysia to benchmark as this country isclassified as an upper-middle-income country in ASEAN. Based on the report from WIPO,
7|PageMalaysia received a sub-score of 68.8%, one of the highest scores among ASEAN countries.
Malaysia offers a dynamic and competitive business environment. The country has achievedfavorable scores in both regulatory and entrepreneurial policies and cultures. Cambodia is notmuch different from any other nation in ASEAN, where digital technology is expected to be
the leading driver of the country's economy in the coming decades. In terms of the Investment
Environment, Cambodia has made considerable strides in improving the ease of doing businessin the kingdom. The country ranked 50.4 in 2022, higher than some of the ASEAN countries
including Lao and Myanmar. Key reforms are needed for Cambodia to foster competitiveness,further diversification of the economy to foster entrepreneurship, and expand the use oftechnology to address emerging labor market needs.
A study of international connectivity was conducted to determine the number of unicorn
startups within the country that have international offices. In the section of international startup
unicorns, the number of globally successful startups opening offices in Phnom Penh was usedas the chosen indicator. The starting point was a list of over 400 global unicorns and thelocations of their headquarters. According to 2021 data, there was only one Singapore-based
firm Grab that has an office in Phnom Penh. Unfortunately, there is no update on international
startups unicorn this year in the kingdom. The team anticipate that the result will be the sameas last year, with only one international startup unicorn in Cambodia. Compared to PhnomPenh, Bangkok has around 7 international startups unicorn office operating in the country.

Figure 5: Governance Metrics

Analysis and Recommendations
Following the results of a previous study conducted in 2021, the result in 2022 remains
statistically similar although the assessment was conducted through different data pools ofsources. The findings of this study have speculated that the health of the Startup Ecosystem in8|Page

Cambodia shows positive momentum in the Community dimension, with the shares of four
proxies are significantly in steady performance. In contrast, the Environment dimension alongwith the Network Density and Innovation Culture metrics are underperforming. Hence, the one
metric in Environmental dimension lags behind its potential – in particular for the metric ofInternational Connectivity. This current pilot study examined Cambodia’s Startup Ecosystem
is slightly healthy due to the underperforming of the rating in business sophistication andregulatory performance to support startups. Hence, the kingdom is predicted not to have anystartups unicorn in the coming years as the country startups is in promising growth landscape.
Comparing to neighborhood countries like Malaysia and Thailand, policy and regulation in
supporting startup in Cambodia is still not at favorable level yet, while there is also not muchattention from international startup unicorn. There is a need for more actions to be taken to
promote healthier startup ecosystems in the kingdom from all startup ecosystem builders bycollaboratively minimizing the remaining constraints and increasing the strengths.
According to this finding, these are recommendations for relevant stakeholders andEntrepreneurial Support Organizations (ESOs) to take into consideration and further enhancecollaboration in promoting the entrepreneurial startup scene across the kingdom.
➢ Gender Diversityo Encourage to pursue tech degrees and entrepreneurship, while
ecosystem builders must make sure that programs are designed to
attract, include, and support female founders.
o Educate and empower women entrepreneurs by providing morescholarship opportunities and support programs to fill in skills gaps andimprove business performance.
➢ Innovative Communityo Continually cultivate an innovation-driven environment where people
feel inspired and supported.
o Organize more meetups allowing like-minded people to connect andexchange ideas, so that it allows them to explore further opportunity ofcollaboration and support.
o Encourage experienced entrepreneurs to share their knowledge andexpertise.

9|Pageo Provide opportunities for entrepreneurs to challenge and develop theiridea through support programs ranging from hackathons to acceleration
programs.
➢ Government Policy and Supporto By generating talent and tech developments in an economy,
Entrepreneur

SupportOrganizations(ESOs)

andEducationalInstitutions should collaborate to further encourage a culture ofinnovation and research.
o Engage relevant stakeholders and government institutions to continueenhancing and promoting inclusiveness and sustainable development of
the entrepreneur ecosystem.
o Develop a tech startup policy and regulation
Cambodia's startup scene was examined through an ecosystem health check tool. Tool
improvements can always be made in the future, as it is understood that everything can always
be improved. Our goal is to engage stakeholders in a more direct manner so that relevant
partners can provide up-to-date data and information on the SCDP in real-time, thereby
allowing all stakeholders to monitor the growth of startups in the ecosystem.
The information contained in the report represents the views and opinions of the authorand does not necessarily represent the views or opinions of Techo Startup Center. The reporthas been made available for informational and insightful access to startup ecosystem resourceson the Startup Cambodia Digital Platform.

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Figure 6: Cambodia’s Startup Ecosystem Health Check

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