Unicorn firms in Cambodia akin to mythical creature's being

• Published date: 26 November 2020
• Publication title: The Phnom Penh Post

As overall fund size expand so does the pressure on venture capitals and private equities to secure quality investments, essentially making unicorns an unlikely sighting for now "If any start-up or founder comes and says they are building a unicorn, I would say just get out," Tapas Kuila, general partner of logistics tycoon Rithy Sear's venture capital (VC) firm Ooctane, said. He was talking about the idea of start-ups achieving over a billion-dollar valuation in Cambodia, which he found to be somewhat preposterous.

"I am not kidding because unicorns are not possible in Cambodia, not today unless you have a very good business model and you know how to replicate it in the region. "And by region, I mean it has to at least be Myanmar or Vietnam, or there is no way you can become a unicorn," he said.

Tapas has been sieving the market for over a year now looking for prospective start-ups with good business models because, at the end of the day, the objective is "not only to put money but to get back returns". He stressed that the present moment is not right because Cambodia is quite small.

"Whatever you do and if you are raising a company to become a unicorn for the sake of making it into a unicorn, yes I can do that but it is not sustainable and it is completely unfair. "I can't even convince myself that this is something of a unicorn.

I don't think Cambodia can [create one]. If the focus is only Cambodia, then it is not possible," Tapas said.

As Cambodia is not ready, the ecosystem needs to be nurtured with various accelerators and venture builder programmes, he added. Raising a company to be a unicorn is undoubtedly a tall order, not only in Cambodia.

In Southeast Asia, there are only 13, all of them tech-related, and in the world, 501 with a cumulative valuation of $1.6 trillion as of November 2020, according to tech research CB Insights. And over 85 per cent of them are located in five countries.

Data by management consultant Bain and Company's brief on Investing in Southeast Asia: What's behind the boom in 2018 showed that 10 unicorns at the time had a total market value of $34 billion. Till today, two-thirds of the figure is shared among Indonesia and Singapore.

They host ride-hailing apps Go-Jek by PT Aplikasi Karya Anak Bangsa, and Grab Holdings Inc, gaming hardware and software Razer Inc, e-commerce platforms Ali Baba Group's Lazada, Sea Ltd, PT Tokopedia and PT Bukalapak.com, and online travel app PT Traveloka Indonesia.

Even the three new players, PT Visionet International's payment system OVO, PT Jingdong Indonesia Pertama's e-commerce platform JD.ID and Singapore-based retail tech company Trax Technology Solutions Pte Ltd are from these two countries.

Vietnam, which bred online gamer VNG Corp, and Philippines' Revolution Precrafted Properties Inc are the only two non-conformists on the list. One apparent point for their success is the scalability of business models, ensuring that the "use case" fits any market, and by that, it should be able to address the pain points in its operating sectors.

Ultimately, it creates a need and solution, making them necessary applications in daily living such as Grab which operates in eight countries. Its current valuation stands around...