Can a new generation of startups boost Cambodia's economic development?

Cambodia's startup scene is still in its infancy, with over 200 startups currently in existence. 119 of these are focused on the tech sector, encompassing e-commerce, fintech, software-as-a-service, edtech, and healthtech. The remainder are technology-focused companies. While these numbers are modest, considering the booming growth of neighboring countries, the majority of Cambodia's startups are focused on the tech sector.

Firstly, the Startup Cambodia Initiative is a national program approved in late 2019 as part of the Cambodia Digital Economy and Society Policy Framework, led by the Ministry of Economy and Finance. The initiative's mission is to support local startups and foster a vibrant entrepreneurial ecosystem in Cambodia by providing entrepreneurs, investors, and other ecosystem participants with a national digital platform for knowledge sharing, mentoring, networking, and resource access. At the start of 2025, Cambodia's startup ecosystem was thrust into the spotlight after all major business news portals in the region reported on the acquisition of Nham24, a leading Cambodian startup offering a variety of services, including food delivery, ride-hailing, travel, courier services, groceries, and quick commerce, by Grab, the region's most valuable startup and a Nasdaq-listed company. Grab's acquisition was widely viewed as a positive development for Cambodia's startup ecosystem, signaling increased investor confidence, providing exit opportunities for early investors, and highlighting the potential for local tech companies to scale and integrate into global markets. The transaction, combining Nham24's local expertise with Grab's technology and resources, is expected to spur innovation and growth in Cambodia's digital economy.

Secondly, the government provides various support systems for startups, primarily through state-owned enterprises and initiatives under the Ministry of Economy and Finance. These initiatives range from financial grants and tax incentives to incubator programs and streamlined business registration. Established in 2019, Khmer Enterprise, the implementing arm of the Entrepreneurship Promotion Center and the Entrepreneurship Development Fund, is a national platform in Cambodia that promotes entrepreneurship by supporting startups and the entire startup ecosystem. Furthermore, the Ministry of Commerce has launched a "single portal" system to streamline the business registration process, reducing the time, complexity, and cost of registering new companies. The tax incentive program will provide specific benefits for priority sectors identified in the Cambodia Industrial Development Policy 2015-2025, including agro-industries, IT-related R&D, and manufacturing.

Currently, startups obtain financing through a variety of channels, including mentoring, friends and family investments, angel investors, venture capital, crowdfunding, startup accelerators, loans from banks or online lenders, and grants from organizations. Startup financing is a phased process, beginning with a "seed round" for initial idea development, followed by a "seed round" for early-stage development. This is followed by Series A, B, and C funding to scale operations and expand into new markets. More mature startups may pursue Series D and above to achieve significant growth.

However, Cambodian startups face significant challenges, including a lack of funding and investor confidence, limited access to skilled talent and technical expertise, a complex regulatory environment, weak infrastructure, fierce market competition, and the need for more support and guidance to strengthen the startup ecosystem. Victor La, a startup expert and board member of the Canadian Chamber of Commerce in Cambodia, stated that startups face significant challenges in expanding into new markets. "Many startups struggle to even understand the Phnom Penh market, let alone international export markets."

Overall, local startups must focus on developing localized tools to quickly solve local problems. This is crucial for building a robust local ecosystem that can expand into other markets through value-added services. Farmers and local SMEs can leverage these localized solutions, making them efficient and scalable while generating immediate market impact, ultimately enhancing their capabilities and business acumen.