A Glimpse into the Startup Ecosystem in Myanmar
“There are very few places in the world that present such an opportunity to make a difference”, says Rita Nguyen, founder and CEO of Jzoo, a digital loyalty program, and named on Forbes’s ‘Power Women to Watch’ list. We sit in a stylish cafe in downtown Yangon just across from Junction City, a shopping center, which only opened two months ago and makes you feel as if you were in a super mall in Dubai rather than in a country that only recently opened to the world.
My feeling was vastly different the first time I was here in early 2014. The country had only been open to tourists for two years, the first few ATMs had been set up a few weeks earlier, and SIM cards still cost $200 each. Internet was more or less non existent and if I were to find wifi, it was so slow, I’d give up and return to enjoy some internet-free days.
This time, I’m surrounded by local and international tech entrepreneurs that are part of Myanmar’s nascent startup ecosystem. They are eager to solve the country’s problems and seize the opportunities that the recent liberalization of the communication market has brought along, which increased mobile penetration to 60% and internet penetration to 25%. At Seedstars Yangon, startups presented ideas to combat local challenges e.g. Neh Thit by providing a chatbot based job platform for low-skilled workers, Kargo that provides an innovative on-demand logistics solution, InstaCash, which reduces interest rates, and startups that try to empower and educate farmers (Greenovator and Agtrade).
Ye Myat Min is one local founder, who has already succeeded. He is the CEO of of Nexlabs, a digital agency and is on Forbes’s ’30 under 30’ list. When we met, I stepped into an office that was bursting with people as the company had grown to over 75 employees. As many entrepreneurs and founders in Myanmar, Ye is a repatriate. Having studied in Singapore, he experienced the mindset there and asked “if these people can do it, why can’t people do it in Myanmar?”
Both Ye and Rita tell me they struggle to find like-minded and critical employees. Ye experienced that “a lot of people are scared to leave their comfort zone and rather react than tackle problems proactively.” Similarly, since the ecosystem is young and exposure to startups is limited, not many people have experience in scaling a business. “Though talent is a challenge, if they want to learn, they are really in“, says Rita. Judging from everyone I’ve had the opportunity to talk with, I can only agree. When I arrived in Yangon, I rushed from the airport to an event at Phandeeyar, the local accelerator, and it was packed with young motivated people. All the entrepreneurs I had the opportunity to work with during Seedstars’s two day bootcamp — on topics such as growth hacking and team dynamics — were eager to learn and open to feedback.
A struggle all entrepreneurs in Myanmar face is the regulatory framework, reports Ye. The ‘Ease of Doing Business Report’ currently ranks Myanmar 170 out of 190 countries. This high rank is especially attributed to getting credit, enforcing contracts, and protecting minority investors. But the country is working hard to improve these numbers. Part of the report is the ease of starting a business, which Myanmar improved to 146 in 2017 from 170 in 2016 by e.g. reducing costs and procedures to set up a business.
One needs to be aware of the context. After being one of the richest countries in Southeast Asia under British rule, the Burmese pursuit of Socialism turned it into one of the world’s poorest countries. In 1987, the United Nations named it one of the least developed countries. Only eight years ago, in 2009, Myanmar was rated the least free country in Asia (then a tie with North Korea). Also merely ten years ago, Transparency International ranked Myanmar as the most corrupt country in the world (tied with Somalia). Although Myanmar still has the lowest life expectancy among ASEAN countries (World Bank) the country is speeding toward recovery, with McKinsey expecting the economy to quadruple in 2030. According to the Asian Development Bank, Myanmar’s GDP grew by 7.5% in 2017 — the highest growth rate in Southeastern Asia.
These developments also spur the entrepreneurial spirit in the country. However, the local entrepreneurs are also facing an issue typical to young ecosystems: the struggle to find funding and mentorship. To access capital and expertise, many founders have to look abroad. Simultaneously, not many startups are ready for investment yet and a lot of guidance is needed. This is the perfect point in time for initiatives like Seedstars to step in. By bringing expertise and investors to the country, we can create value and support the local ecosystem development. Rita is convinced: ”We will see more and more investors entering the country. Now is finally the time where we are ready for tech investments in Myanmar.”